The Centers for Medicare & Medicaid Services
(CMS) today issued a final rule with comment period that updates payment
policies and rates for physicians and nonphysician practitioners (NPPs)
for services paid under the Medicare Physician Fee Schedule (MPFS) in
calendar year (CY) 2012. More than 1 million providers of vital health
services to Medicare beneficiaries – including physicians, limited
license practitioners such as podiatrists, and NPPs such as nurse
practitioners and physical therapists – are paid under the MPFS. CMS
projects that total payments under the MPFS in CY 2012 will be
approximately $80 billion.
CMS is required to issue a final rule that reflects
current law. Under current law, providers will face steep
across-the-board reductions in payment rates, based on a formula– the
Sustainable Growth Rate (SGR) – that was adopted in the Balanced Budget
Act of 1997. Without a change in the law from Congress, Medicare
payment rates to providers paid under the MPFS will be reduced by 27.4
percent for services in CY 2012—less than the 29.5 percent reduction
that CMS had estimated in March of this year because Medicare cost
growth has been lower than expected. This is the eleventh time the SGR
formula has resulted in a payment cut, although the cuts have been
averted through legislation in all but CY 2002. The Obama
Administration is committed to fixing the SGR and ensuring these payment
cuts do not take effect.
“This payment rate cut would have dire consequences
that should not be allowed to happen,” said Donald M. Berwick, M.D.,
CMS administrator. “We need a permanent SGR fix to solve this problem
once and for all. That’s why the President’s Budget and his Plan for
Economic Growth and Deficit Reduction call for permanent, fiscally
responsible reform and why we are committed to working with the Congress
to achieve a permanent and sustainable fix.”
In the CY 2012 final rule, CMS is expanding the
potentially misvalued code initiative, an effort to ensure Medicare is
paying accurately for physician services and more closely managing the
payment system. This year, CMS is focusing on the codes billed by
physicians in each specialty that result in the highest Medicare
expenditures under the MPFS to determine whether these codes are
overvalued. In the past, CMS has targeted specific codes for review
that may have affected a few procedural specialties like cardiology,
radiology or nuclear medicine but has not taken a look at the highest
expenditure codes across all specialties. This effort results in
increased payments for primary care services that have historically been
undervalued by the fee schedule.
“We believe strong efforts are needed to evaluate
Medicare’s fee schedule to ensure that it is paying accurately and to
ensure that Medicare beneficiaries continue to have access to vital
services,” said Jonathan Blum, deputy administrator and director for the
Center for Medicare.
CMS is also making changes in how it adjusts
payment for geographic variation in the cost of practice. The
Affordable Care Act and the Medicare and Medicaid Extensions Act made
some temporary adjustments that were in place for two years while CMS
and the Institute of Medicine (IOM) began to comprehensively study these
issues. As part of this initiative, CMS is replacing some of the data
sources—such as using data from the American Community Survey (ACS) in
place of the Department of Housing and Urban Development (HUD) rental
data and also using ACS data in place of the data currently used for
non-physician employee compensation. Consistent with IOM’s
recommendation, CMS is also adjusting its payments for the full range of
occupations employed in physicians’ office as well as making other
adjustments called for in prior year public comments. Although these
improvements result in very little change to the indices, they show that
the data Medicare has used in the past and will be using in the future
produce consistent results—suggesting past year adjustments have
accurately reflected geographic variations in the cost of practice.
The IOM provided its first of three reports on
geographic adjustment factors to CMS on June 1. IOM provided a
supplement to its report at the end of September that largely supported
changes CMS is making in the final rule and recommended additional
changes, many of which would require a change in law. CMS is continuing
to evaluate all of the IOM’s recommendations.
