A long awaited cut in physician pay has been proposed by the CMS (Centers for Medicare and Medicaid Services) in its Medicare Physician Fee Schedule in calendar year 2012. The CMS has been told to base its fee schedule on current payment rules, which effectively means a 29.5% drop in reimbursements starting in 2012 – CMS said it used the SGR (Sustainable Growth Rate) formula when making its calculations. SGR was adopted in the Balanced Budget Act of 1997

Announcements of cuts have been made 11 times in the past; each time saved by last-minute Congressional reprieves, except in 2002. Three separate pieces of legislation were needed last year to avert the pay cut, as well as two additional enactments to authorize rises in the physician update, resulting in larger payments rates for doctors services. Whether or not the proposed cut will go through this time remains to be seen.

Over one million providers of essential health services to Medicare patients are paid under the Medicare Physician Fee Schedule (MPFS), these include doctors, osteopathic physicians, nurse practitioners, physical therapists and other limited license practitioners.

The CMS has estimated that total payments under MPFS for 2012 will be approximately $80 billion.

Dr. Donald M. Berwick, CMS Administrator, said:

“This payment cut would have serious consequences and we cannot and will not allow it to happen. We need a permanent SGR fix to solve this problem once and for all. That’s why the President’s budget and his fiscal framework call for averting these cuts and why we are determined to pass and implement a permanent and sustainable fix.”

Jonathan Blum, Deputy Administrator and Director for the Center for Medicare, said:

“We believe strong efforts are needed to evaluate Medicare’s fee schedule to ensure that it is paying accurately and ensuring that Medicare beneficiaries continue to have access to vital services, such as primary care services.”

CMS has also proposed some alterations in how payment in cost of practice is paid according to geographic variation. The Affordable Care Act included some provisional alterations that would be in place for 24 months while the Institute of Medicine, along with CMS examine these issues.

Some data sources are being replaced. Rather than using the HUD rental data, CMS will use information from the American Community Survey (ACS). ACS will also replace current data sources for non-physician employee compensation.

The proposed rule also includes the following changes:

  • Expanding its multiple procedure payment cut to the professional interpretation of advance imaging services to recognize the overlapping activities that go into valuing these services.
  • HRA (health risk assessment) criteria should be used in conjunction with AWVs (Annual Wellness Visits) for coverage which started in January 1st, 2011 under the Affordable Care Act. The aim is to provide a systematic approach to patient wellness and the foundations of a patient-targeted prevention plan.
  • To include smoking cessation services through telehealth.
  • Change how additional services are added to the telehealth list, focusing on clinical benefit. Any changes would not affect which services are on the list until 2013.
  • Update the ePrescribing Incentive Program, the Electronic Health Records Incentive Program, the Physician Quality Reporting System, and some other physician incentive programs.
  • Quality and cost measures that would reward doctors for better quality and more efficient care. Legislation requires that by January 1st, 2015 adjustments in payments to some physicians and doctors groups should be in place, and to other physicians by January 1st, 2017.

“Medicare Program; Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2012”
Centers for Medicare & Medicaid Services (CMS), HHS.

Written by Christian Nordqvist