It happens every year: A new Medicare physician fee schedule recommends a painful reduction in the rates the government doles out for more than 7,000 types of medical services performed by hospitalists, primary-care doctors, and other healthcare providers. And then Congress intervenes to keep the reduction from going into effect.
This year, however, the fee updates and policy proposals have become intertwined in the larger debate over comprehensive healthcare reform and a push toward what SHM calls a “value-based health delivery system.”
Few think the whopping 21.5% reduction proposed for 2010 rates, which are due to be published Nov. 1, actually will go into effect in January. A combination of other proposed changes to the fee schedule could soften any reduction. But the larger issue of how fees are currently calculated has become a rallying point for SHM and other healthcare-reform advocates who’d like to see the entire formula scrapped in favor of a more equitable distribution that focuses on outcomes. SHM has expressed concern that the current fee-for-service payment system “fails to provide providers with incentives to improve efficiency or quality of care, and encourages overutilization of services.”
—J. James Rohack, MD, AMA president
The current fee formula, known as the sustainable growth rate (SGR) and stipulated by the Balanced Budget Act of 1997, has resulted in a proposed rate cut every year since it went into effect in 2002. Congress consistently overrides the reimbursement cuts in one way or another, usually enacting modest increases or, such as in 2006 and 2007, an across-the-board freeze.
Hospitalists and other physicians have greeted another high-profile proposal with more enthusiasm: the removal of physician-administered drugs from the definition of “physician services,” thereby eliminating a high-cost item from the SGR formula. A Centers for Medicare and Medicaid Services (CMS) spokeswoman says the agency previously felt it lacked the authority to propose the removal. But a review earlier this year reversed that position, leading to the change. The removal, she says, “wouldn’t change the 21.5% percent decline in 2010, but it could have an impact in future years.”
American Medical Association President J. James Rohack, MD, joined the chorus of approval with a statement that asserted, “The removal of physician-administered drugs from the broken Medicare physician payment formula is a major victory for America’s seniors and their physicians.”
A separate physician fee schedule proposal would eliminate payments for consultation codes in both outpatient and inpatient settings in favor of codes for evaluation and management services that carry lower reimbursement rates. Doctors would have a new way to bill for tele-health consultations, however. Leslie Flores, director of SHM’s Practice Management Institute, said the proposal has generated a high level of misinformation and misunderstanding among hospitalists who fear CMS will no longer reimburse for inpatient consultations. “It’s not that they won’t allow the work to be done anymore,” Flores says. “They’re just instructing people to bill in a different way for that work.”
CMS notes that the savings would be redistributed to increase payments for existing evaluation and management services codes, making the change cost-neutral. But Flores says a lack of details about the “crosswalk” from the old codes to the new codes, especially as they relate to transfers of care, is fueling hospitalists’ confusion over the true impact on their reimbursements.
“Our biggest concern with this consultation proposal that is now on the table is that CMS has not done anything to clarify how these transfers of care would be treated,” she says. For example, would hospitalists bill an admission code the first time they see a patient after being asked by a surgeon to take over that patient’s diabetes care? If so, “this proposal could actually result in some pretty good revenue increases for a lot of hospitalist practices that are doing a lot of surgical comanagement,” she says.