The Centers for Medicare & Medicaid Services (CMS) on July 13 published the proposed 2011 Medicare Physician Fee Schedule in the Federal Register. This rule includes both the standard annual update to the Medicare payment schedule and implementation of many provisions of the Affordable Care Act. The American Medical Association (AMA) has prepared a detailed summary of the rule; please note that it does not touch on every element within the 1,250-page proposed rule.
2011 Medicare Physician Fee Schedule
It is important to note this rule is proposed and not final. The final rule for the 2011 Medicare Physician Fee Schedule will likely be published in a November edition of the Federal Register. Of further note, information and numbers included in this proposed rule may and will likely change before publication of the final rule.
CMS is proposing to rebase the medical economic index (MEI), which is used to calculate the updated sustainable growth rate (SGR) formula and, thus, the conversion factor. The MEI was last rebased and revised in 2003 for the 2004 Medicare Physician Fee Schedule. The current base year for the MEI is 2000, which means that the cost weights in the index reflect physicians’ expenses in 2000. CMS believes it is desirable to periodically rebase and revise the index so that the expense shares and their associated price proxies reflect more current conditions. CMS proposes to rebase the MEI to reflect appropriate physician expenses based on 2006 expenditures. More information on the MEI will be available in the final version of the rule.
This proposed version of the 2011 Medicare Physician Fee Schedule details the proposed cost share weights for practice expense, professional liability insurance (PLI) and physician work. The rule provides an increase to the proportion of aggregate physician fee service payments for practice expense (PE) and PLI and a decrease to the proportion for physician work. CMS indicates the decrease to physician work is necessary to achieve budget neutrality. Additionally, please note these adjustments are across all specialties and not exclusive to sleep medicine.
A relative value unit (RVU) – which is determined from the PE, PLI and physician work – is used to determine the level of payment for a given specialty or service; however, they payment is dependent on the conversion factor. It is important to note the conversion factor has not been set by CMS’s Office of the Actuary (OACT). If the proposed methodology contained in the proposed rule is retained, an adjustment to the conversion factor will be made in the final rule to achieve budget neutrality.
To calculate the payment for service, the components of the final fee schedule (physician work, PE, and PLI RVUs), which is anticipated to be published in an edition of the November Federal Register, will be adjusted by a geographic practice cost index (GPCI). The GPCIs reflect the relative costs of physician work, PE, and PLI in a geographic area compared to the national average costs for each component. RVUs are converted to dollar amounts through the application of the conversion factor. The formula for calculating the Medicare fee schedule payment amount for a given service and fee schedule area can be expressed as: Payment = [(RVU work × GPCI work) + (RVU PE × GPCI PE) + (RVU PLI × GPCI PLI)] × CF
Again, this information is proposed in this rule. Until the conversion factor is set, no further information regarding physician fees is available.
CMS has indicated the potential reprocessing of approximately 380 million claims based on this update. While CMS said the reprocessing of claims is a priority, it did not outline a process. Please note that updated and correct fee schedules for all contractors should be available on their respective websites by July 19, 2010.
Effective December 1, 2010, physicians face a 23 percent cut to payments for services delivered to Medicare beneficiaries. It is anticipated that additional efforts will be made to prevent this scheduled cut to payments; however, new legislation that provides an update to the Medicare Physician Fee Schedule is not guaranteed.