CMS Releases Final 2012 Medicare Fee Schedule; Obama Administration Still Committed to Repealing SGR System

On November 1, the Centers for Medicare & Medicaid Services (CMS) released the final 2012 Medicare physician payment rule, which indicates that (absent congressional action) the Sustainable Growth Rate (SGR) formula will cut Medicare payments by 27.4 percent on January 1, 2012.

However, in a statement accompanying the rule’s release, U.S. Department of Health and Human Services Secretary Kathleen Sebelius said she was committed to working with “legislators on both sides of the aisle to address this issue once and for all.” She stated that physicians are “the backbone of our health care system,” and noted that the “Obama administration is 100 percent committed to fixing the flawed Medicare payment system and protecting Medicare beneficiaries’ access to doctors.” The pattern of threatened SGR cuts, she said, and “last-minute Congressional rescues are in itself not a sustainable solution and must be remedied.”

The California Medical Association (CMA) and all of organized medicine are advocating for Congress to repeal the SGR this year in the Super Committee’s recommendations.

Geographic Practice Cost Index (GPCI) becomes fairer to California physicians
As a result of intense CMA lobbying, CMS adjusted the fee schedule so that an even larger percentage (3 percent) of the payments are adjusted for geographic differences in practice costs, which prevented large cuts in 2012 and will help California physicians enormously in future years. However, payments to physicians in several California payment localities will be reduced due to an overall reduction in rent according to the new American Community Survey database. Click here for a chart showing the impact by county.

Highlights of major changes in the fee schedule include:

E-prescribing
CMS finalized its proposal for the 2012 and 2013 incentive, and 2013 and 2014 penalty programs. Despite continued CMA and American Medical Association (AMA) opposition, physicians will need to report 10 times during the first six months of 2012 and 2013 to avoid application of e-prescribing penalties in subsequent years.

Physicians may use claims, registry or electronic health record (EHR)-based reporting methods. Improvements to the program, which CMA and AMA supported, include allowing the use of a certified EHR to e-prescribe and making it easier to avoid the penalties by (1) not requiring physicians to link the e-prescribing codes to qualifying visits, and (2) allowing physicians to apply for additional hardship exemptions online.

Physician Quality Reporting System (PQRS)
In response to CMA/AMA advocacy, CMS finalized its proposal to provide interim feedback reports for physicians reporting individual measures and measure groups through claims-based reporting for 2012 and beyond. These reports will be a simplified version of annual feedback reports that CMS currently provides and will be based on claims for the first three months of each program year. The interim feedback reports will be provided to physicians during the summer of each program year.

Despite strong opposition from the physician community, CMS finalized its proposal to use 2013 as the reporting period for the 2015 PQRS penalty. If CMS determines that a physician or group practice has not satisfactorily reported quality data for the 2013 reporting period, then its 2015 payments will be reduced 1.5 percent. The rule also redefined “group practice” under the Group Practice Reporting Option as a group of 25 or more eligible professionals.

Value modifier
While acknowledging the strong opposition of CMA, AMA and others in organized medicine, CMS finalized its proposal to base payment adjustments in 2015 on yet-to-be-determined cost and quality measures to be finalized in November 2012. Quality measures for the modifiers will most likely be based on PQRS and EHR measure sets. Cost measures to be used in the modifier will be based on average total per capita cost for the physician’s patients, and per capita cost for four conditions (chronic obstructive pulmonary disease, heart failure, coronary artery disease and diabetes).

CMA will continue to oppose the value modifier payment methodology and urge Congress to withdraw it. The Patient Protection and Affordable Care Act established the value modifier, which in 2014 will pay physicians more than the Medicare fee schedule if they successfully report on quality measures and spend less than the national average per patient. It will also pay physicians less if they spend more than the national average and do not successfully report on quality measures.

Multiple procedure cuts
In response to comments from AMA, the AMA/Specialty Society RVS Update Committee (RUC) and many specialties, CMS scaled back its proposal to apply a 50 percent reduction to the professional component (PC) of certain imaging services. Instead, the rule applies a 25 percent reduction to the payment for the PC of second and subsequent CT, MRI and ultrasound services furnished by the same physician on the same patient in the same session on the same day.

Lab test signatures no longer required
CMS has retracted the requirement for physicians to sign paper lab requisitions for clinical diagnostic laboratory tests – a policy change AMA strongly and successfully opposed.

Annual wellness visit (AWV) changes
CMS is increasing the payment for the AWV codes to recognize additional resources associated with adding a health risk assessment to the service’s requirements, but is continuing its policy of not covering a physical exam as part of these services.

RUC
In a significant accomplishment, the RUC persuaded CMS that the resources involved in hospital observation care visits and hospital inpatient visits are equivalent. CMS also accepted the vast majority of the RUC’s recommendations. However, the RUC had recommended that CMS begin paying for telephone calls, anticoagulant management, team conferences and patient education in 2012. CMS did not announce any plans to consider payment for these services, but emphasized that the agency will continue to work with stakeholders to ensure that care coordination and primary care services are appropriately recognized.

Open enrollment
The open enrollment period that will allow you to change your participation status in the Medicare Program is available until December 31, 2011. Changes are effective as of the next calendar year on January 1. To learn more about Medicare participation, see medical-legal document #0151, "Medicare Participation (and Non-Participation) Options."

The payment impact by specialty is available here. The Fee Schedule and additional information is available on the CMS website at www.cms.gov/physicianfeesched.

Contact: Elizabeth McNeil, (415) 882-3376 or emcneil@cmanet.org.