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Payment Act Tries To Prevent Cut in Physician Fees
by Stephen Barlas
Geriatric Times January/February 2002 Vol. III Issue 1
At the end of the 2001 session, the U.S. Congress was trying to substantially reverse a draconian Medicare reduction in physician fees for fiscal year 2002. Medicare's announcement that it would reduce its conversion factor from $38.258 in 2001 to $36.199 in calendar 2002 -- a cut of 5.4% -- triggered a move by Sen. James Jeffords (I-Vt.) to limit the cut to 0.9%.
The cut in the conversion factor means Medicare reimbursement will be less for each CPT code, not just those billed by one or two specialties. Total Medicare billings for any physician may increase depending on the extent to which volume increases. Payment for each code is based on multiplying the conversion factor against a total relative value unit (RVU), which is made up of three main RVU components: practice expense, work performed by the physician and malpractice expense.
The cut in the conversion factor announced last November sent all medical specialty groups into a tizzy. "The Medicare program is covering new treatments, providing new preventive services, and caring for more patients," William J. Hall, M.D., president of the American College of Physicians-American Society on Internal Medicine, said in a press release. "These services cannot be funded by asking physicians to stretch limited resources even further."
The cut in the conversion factor was dictated by a Sustainable Growth Rate (SGR) formula, which increases or decreases the conversion factor in the coming year based on the extent to which physicians increased or decreased the services they provided to Medicare in the previous year. That change in volume is measured against any increase or decrease in the gross domestic product (GDP). In a year like 2001, when the economy went into a nosedive, it was almost impossible for physicians to slow their billing of Medicare to the same degree as the GDP stalled. It would have been just as difficult to avert some cut in the conversion factor for 2002. Last summer, the American Medical Association predicted that the reduction in the conversion factor might be 3%.
The AMA has been arguing for the past few years that the SGR formula needs to be corrected. The Medicare Physician Payment Fairness Act (S 1660) introduced by Jeffords and Sen. John Breaux (D-La.) instructs the Medicare Payment Advisory Commission to submit a study and recommendations on replacing the SGR to Congress by March. More importantly, it reduces the decrease in the conversion factor in 2002.
Jody Couser, a spokesperson for the AMA, said there has been no congressional or private estimate of what that reduction would cost Medicare in 2002 in increased payments to physicians. The problem is that Congress has essentially approved Medicare spending for fiscal 2002, which began on Oct. 1, 2001. Both houses passed U.S. Departments of Labor, Health and Human Services, and Education appropriations bills, and at press time they were working out the differences between the two versions. The main differences involve education funding. To accommodate the Jeffords/Breaux bill, the conferees would have to increase the previously agreed upon Medicare appropriation.
An unlikely alternative might include additional Medicare funds for physicians in an economic stimulus package.
Aside from the across-the-board reduction in the conversion factor, some subspecialties will be additionally affected by separate reductions in RVUs for their key codes.
The chief example is rheumatology. Medicare published new practice-expense RVUs for four knee joint injection codes, which represented a decline of between 25% and 28%, according to the American College of Rheumatology. Reductions in payments for those four codes help explain why Medicare forecasts that rheumatologists will see their average annual payment from Medicare drop 6%, the largest decrease of any subspecialty. General surgeons are expected to get the biggest average increase of 4% in 2002.
Medicare is also paying for some services for the first time. The big change is payment for telemedicine. There are two ways a physician can bill Medicare for a telemedicine visit, which is limited to an office consultation, outpatient visit, individual psychotherapy or medication management. Only CPT codes related to these four types of services can be billed. First, a physician can be located in a rural health care professional shortage area or in a county that is not included in a Metropolitan Statistical Area. In that instance, they treat a rural patient via an interactive hookup. In contrast, a physician in an urban area can bill for those codes if they are at the other end of an interactive setup from the patient and the referring telepresenter, who are in a rural area and in the room together.
Another change is that physician assistants, nurse practitioners and clinical nurse specialists will be allowed to perform screening flexible sigmoidoscopies, which screen for colon cancer. A number of physician groups were unhappy about allowing non-physicians to do that screening. At least one gastroenterology association agreed that there is a shortage of gastroenterologists in many rural areas, so screening by non-physicians was justified.
