CMS Proposes 30% Pay Cut for 2012

As expected, the Centers for Medicare and Medicaid Services proposed that physician fees for 2012 would be reduced by 29.5%. The proposed rule was released in the Federal Register July 1. The 29.5% pay cut is scheduled to take effect Jan. 1, 2012, unless Congress once again intervenes.

The reduction is required by the Sustainable Growth Rate (SGR) formula that was part of the Balanced Budget Act of 1997. But Dr. Donald M. Berwick, CMS administrator, said in a statement that the agency is hoping to find a way to avoid the statutory decrease.

"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," Dr. Berwick said.

"We are pleased that there is support from the administration and bipartisan members of Congress for permanent reform of this broken system, but agreement is not enough – action is needed," said Dr. Peter W. Carmel, president of the American Medical Association, in a statement.

The AMA has been seeking a review and revision of the Medicare Economic Index (MEI), a measure of cost increases that affect physician practices. That review has not yet begun, but revisions in the MEI could significantly reduce the legislative cost of permanent reform of the Medicare physician payment formula, said Dr. Carmel, noting that cost is an estimated $300 billion over the next 10 years, and is on its way to hit half a trillion dollars in a few years.

The reductions could be deeper for some specialties – especially for radiation oncology and diagnostic imaging – based on the impact of the Physician Practice Information Survey. The changes would reflect the third year of a 4-year transition to new practice expense relative value units. Additional changes will also be made because of the implementation of some recommendations of the American Medical Association/Specialty Society Resource Based Relative Value Scale Update Committee (RUC).

The CMS said in a statement that it is proposing to continue efforts to identify what it calls "potentially misvalued codes." As part of those efforts, the agency will look at all evaluation and management (E/M) codes to determine if they are undervalued. The agency also proposes to examine the highest non–E/M expenditure codes for each specialty to see if they are overvalued.

CMS estimates that the additional changes included in the proposed fee schedule will result in a 0% total payment change for general surgery services. Whereas general surgery still will be subject to the 29.5% Medicare payment reduction if Congress fails to act, this update also means that, unlike some other specialties, general surgery will not be subject to any further payment reductions in 2012.

CMS wants to extend the multiple procedure payment reduction (MPPR) policy to the professional component of advanced imaging services, which includes computed tomography (CT) scans, MRI, and ultrasound. The agency said the reduction would affect about 100 types of services. Reducing that component by 50% for subsequent procedures furnished to the same patient, on the same day, in the same session would result in an estimated $200 million in savings, according to the CMS.

For the first time, the agency is proposing quality and cost measures to be used in setting incentive payments for physicians who provide higher quality and more efficient care. That lays the groundwork for 2015, when the Affordable Care Act requires the CMS to begin making payment adjustments for certain physicians and physician groups. The requirement goes into effect for all physicians in 2017. The agency is proposing to use 2013 as the initial performance year.

Also included in the rule are proposals that would update a number of physician incentive programs, including the Physician Quality Reporting System, the e-Prescribing Incentive Program, and the Electronic Health Records Incentive Program. Additionally, it calls for expanding the multiple procedure payment reduction policy and for using quality and cost measures to establish a new physician value-based payment modifier.

The American College of Surgeons (ACS) continues to work with CMS on all of the programs addressed in the current proposed rule. Ten surgical organizations, including the ACS, recently sent a letter to U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius and CMS Administrator Berwick expressing concern regarding CMS’s action in the last Medicare Physician Fee Schedule. The organizations identified CMS’s departure from past practice in which it has traditionally accepted more than 90% of the RUC’s recommendations. The letter noted that CMS accepted only 71% of the 2010 RUC recommendations.

Citing the need to accurately reflect the work associated with a variety of physician services, the surgical organizations asked CMS to adopt the work values that were developed by the RUC. The organizations also stated that CMS’s decision regarding the valuation of work for physician services "must be made using a transparent, consistent process, and must be based on credible data."

A final rule is expected by Nov. 1.

As expected, the Centers for Medicare and Medicaid Services proposed that physician fees for 2012 would be reduced by 29.5%. The proposed rule was released in the Federal Register July 1. The 29.5% pay cut is scheduled to take effect Jan. 1, 2012, unless Congress once again intervenes.

The reduction is required by the Sustainable Growth Rate (SGR) formula that was part of the Balanced Budget Act of 1997. But Dr. Donald M. Berwick, CMS administrator, said in a statement that the agency is hoping to find a way to avoid the statutory decrease.

"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," Dr. Berwick said.

"We are pleased that there is support from the administration and bipartisan members of Congress for permanent reform of this broken system, but agreement is not enough – action is needed," said Dr. Peter W. Carmel, president of the American Medical Association, in a statement.

The AMA has been seeking a review and revision of the Medicare Economic Index (MEI), a measure of cost increases that affect physician practices. That review has not yet begun, but revisions in the MEI could significantly reduce the legislative cost of permanent reform of the Medicare physician payment formula, said Dr. Carmel, noting that cost is an estimated $300 billion over the next 10 years, and is on its way to hit half a trillion dollars in a few years.

The reductions could be deeper for some specialties – especially for radiation oncology and diagnostic imaging – based on the impact of the Physician Practice Information Survey. The changes would reflect the third year of a 4-year transition to new practice expense relative value units. Additional changes will also be made because of the implementation of some recommendations of the American Medical Association/Specialty Society Resource Based Relative Value Scale Update Committee (RUC).

The CMS said in a statement that it is proposing to continue efforts to identify what it calls "potentially misvalued codes." As part of those efforts, the agency will look at all evaluation and management (E/M) codes to determine if they are undervalued. The agency also proposes to examine the highest non–E/M expenditure codes for each specialty to see if they are overvalued.

CMS estimates that the additional changes included in the proposed fee schedule will result in a 0% total payment change for general surgery services. Whereas general surgery still will be subject to the 29.5% Medicare payment reduction if Congress fails to act, this update also means that, unlike some other specialties, general surgery will not be subject to any further payment reductions in 2012.

CMS wants to extend the multiple procedure payment reduction (MPPR) policy to the professional component of advanced imaging services, which includes computed tomography (CT) scans, MRI, and ultrasound. The agency said the reduction would affect about 100 types of services. Reducing that component by 50% for subsequent procedures furnished to the same patient, on the same day, in the same session would result in an estimated $200 million in savings, according to the CMS.

For the first time, the agency is proposing quality and cost measures to be used in setting incentive payments for physicians who provide higher quality and more efficient care. That lays the groundwork for 2015, when the Affordable Care Act requires the CMS to begin making payment adjustments for certain physicians and physician groups. The requirement goes into effect for all physicians in 2017. The agency is proposing to use 2013 as the initial performance year.

Also included in the rule are proposals that would update a number of physician incentive programs, including the Physician Quality Reporting System, the e-Prescribing Incentive Program, and the Electronic Health Records Incentive Program. Additionally, it calls for expanding the multiple procedure payment reduction policy and for using quality and cost measures to establish a new physician value-based payment modifier.

The American College of Surgeons (ACS) continues to work with CMS on all of the programs addressed in the current proposed rule. Ten surgical organizations, including the ACS, recently sent a letter to U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius and CMS Administrator Berwick expressing concern regarding CMS’s action in the last Medicare Physician Fee Schedule. The organizations identified CMS’s departure from past practice in which it has traditionally accepted more than 90% of the RUC’s recommendations. The letter noted that CMS accepted only 71% of the 2010 RUC recommendations.

Citing the need to accurately reflect the work associated with a variety of physician services, the surgical organizations asked CMS to adopt the work values that were developed by the RUC. The organizations also stated that CMS’s decision regarding the valuation of work for physician services "must be made using a transparent, consistent process, and must be based on credible data."

A final rule is expected by Nov. 1.

As expected, the Centers for Medicare and Medicaid Services proposed that physician fees for 2012 would be reduced by 29.5%. The proposed rule was released in the Federal Register July 1. The 29.5% pay cut is scheduled to take effect Jan. 1, 2012, unless Congress once again intervenes.

The reduction is required by the Sustainable Growth Rate (SGR) formula that was part of the Balanced Budget Act of 1997. But Dr. Donald M. Berwick, CMS administrator, said in a statement that the agency is hoping to find a way to avoid the statutory decrease.

"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," Dr. Berwick said.

"We are pleased that there is support from the administration and bipartisan members of Congress for permanent reform of this broken system, but agreement is not enough – action is needed," said Dr. Peter W. Carmel, president of the American Medical Association, in a statement.

The AMA has been seeking a review and revision of the Medicare Economic Index (MEI), a measure of cost increases that affect physician practices. That review has not yet begun, but revisions in the MEI could significantly reduce the legislative cost of permanent reform of the Medicare physician payment formula, said Dr. Carmel, noting that cost is an estimated $300 billion over the next 10 years, and is on its way to hit half a trillion dollars in a few years.

The reductions could be deeper for some specialties – especially for radiation oncology and diagnostic imaging – based on the impact of the Physician Practice Information Survey. The changes would reflect the third year of a 4-year transition to new practice expense relative value units. Additional changes will also be made because of the implementation of some recommendations of the American Medical Association/Specialty Society Resource Based Relative Value Scale Update Committee (RUC).

The CMS said in a statement that it is proposing to continue efforts to identify what it calls "potentially misvalued codes." As part of those efforts, the agency will look at all evaluation and management (E/M) codes to determine if they are undervalued. The agency also proposes to examine the highest non–E/M expenditure codes for each specialty to see if they are overvalued.

CMS estimates that the additional changes included in the proposed fee schedule will result in a 0% total payment change for general surgery services. Whereas general surgery still will be subject to the 29.5% Medicare payment reduction if Congress fails to act, this update also means that, unlike some other specialties, general surgery will not be subject to any further payment reductions in 2012.

CMS wants to extend the multiple procedure payment reduction (MPPR) policy to the professional component of advanced imaging services, which includes computed tomography (CT) scans, MRI, and ultrasound. The agency said the reduction would affect about 100 types of services. Reducing that component by 50% for subsequent procedures furnished to the same patient, on the same day, in the same session would result in an estimated $200 million in savings, according to the CMS.

For the first time, the agency is proposing quality and cost measures to be used in setting incentive payments for physicians who provide higher quality and more efficient care. That lays the groundwork for 2015, when the Affordable Care Act requires the CMS to begin making payment adjustments for certain physicians and physician groups. The requirement goes into effect for all physicians in 2017. The agency is proposing to use 2013 as the initial performance year.

Also included in the rule are proposals that would update a number of physician incentive programs, including the Physician Quality Reporting System, the e-Prescribing Incentive Program, and the Electronic Health Records Incentive Program. Additionally, it calls for expanding the multiple procedure payment reduction policy and for using quality and cost measures to establish a new physician value-based payment modifier.

The American College of Surgeons (ACS) continues to work with CMS on all of the programs addressed in the current proposed rule. Ten surgical organizations, including the ACS, recently sent a letter to U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius and CMS Administrator Berwick expressing concern regarding CMS’s action in the last Medicare Physician Fee Schedule. The organizations identified CMS’s departure from past practice in which it has traditionally accepted more than 90% of the RUC’s recommendations. The letter noted that CMS accepted only 71% of the 2010 RUC recommendations.

Citing the need to accurately reflect the work associated with a variety of physician services, the surgical organizations asked CMS to adopt the work values that were developed by the RUC. The organizations also stated that CMS’s decision regarding the valuation of work for physician services "must be made using a transparent, consistent process, and must be based on credible data."

A final rule is expected by Nov. 1.