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Volume 7, Issue 4 September 2012
Time For Change


Each summer, the Centers for Medicare and Medicaid Services (CMS) release proposed rules addressing an extensive array of Medicare physician payment and policy issues for the following calendar year. Accordingly, the Medicare Physician Fee Schedule (MPFS), and the Medicare Hospital Outpatient Prospective Payment System (OPPS) proposed rules for calendar year 2013 were released by CMS on July 6, 2012 and published in the July 30, 2012 Federal Register.

The 2013 MPFS Proposed Rule was open for comments until September 4, 2012, and the Final Rule is expected to be published by early November. This newsletter will focus on those issues of particular concern to oncology clinics including the various components of the Medicare payment formula, the multiple procedure payment reduction (MPPR) policy, part B drugs and quality initiatives.

Risë Marie Cleland


Medicare Payment Formula


Sustainable Growth Rate
Any discussion of the Medicare physician fee schedule must also address the problematic “Sustainable Growth Rate” (SGR) formula. The SGR is a key component in the Medicare formula for determining annual updates for physician reimbursement for services. The SGR formula, created by Congress in 1997, was constructed as a budgetary restraint to keep Medicare’s spending for physician services from growing faster than the economy. The SGR sets a target growth rate for physician services and caps total Medicare expenditures on these services when utilization increases above this target.

There are four factors used in calculating the SGR:

  • The estimated percentage change in fees for physicians’ services.
  • The estimated percentage change in the average number of Medicare fee-for-service beneficiaries.
  • The estimated 10-year average annual percentage change in real GDP per capita.
  • The estimated percentage change in expenditures due to changes in law or regulations.

The change in Medicare payments for physician services is accomplished through the application of a conversion factor. When expenditures for the previous year exceed the target growth rate, the conversion factor decreases payments for the next year. When the expenditures are less than the target growth rate, the conversion factor increases the payments to physicians for the next year.

Each year since 2002, expenditures for physician services have exceeded the SGR target growth rate resulting in a negative update and a scheduled reduction in physician reimbursement rates. However, every year since 2003, Congress has intervened and temporarily prevented these scheduled cuts to physician reimbursement rates.

Meanwhile, the actions taken by Congress have only delayed the cuts, and each time the SGR cuts are delayed future scheduled SGR cuts get larger. The cost to fix the SGR formula also increases with each delay.

As they have each year for the last decade, physicians face a reduction in their Medicare reimbursement rates when the most current SGR fix expires on December 31, 2012. Without further congressional action, the SGR would result in a 2013 conversion factor of $24.7124 (down from $34.0376 in 2012) and Medicare physician payment rates would decrease by approximately 27% effective January 1, 2013.

Other Physician Fee Schedule Components
The four-year transition to the new Practice Expense Relative Value Units (PE RVUs), using the Physician Practice Information Survey (PPIS) data, will be complete in 2013. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) requires CMS to use the medical oncology supplemental survey data submitted in 2003 for oncology drug administration services. As a result, the PE/HR for medical oncology, hematology, and hematology/oncology reflects the continued use of these supplemental survey data.

CMS states that they are not proposing any revisions related to the data or methodologies used to calculate the Geographic Practice Cost Indices (GPCIs) for calendar year 2013. Nevertheless, they do include a discussion about the Institute of Medicine’s (IOM) Phase I report recommendations on the GPCI and state that they look forward to receiving comments on these recommendations.

CMS also notes that the expiration of the Physician Work Geographic Adjustment Floor of 1%, which is set to expire on December 31, 2012 unless Congress acts to extend it, is reflected in addenda D and E of the proposed rule. The 1.0 GPCI work floor was established by the MMA in order to protect Medicare beneficiaries access to health care in rural areas and while it was originally set to expire at the end of 2006, Congress has extended it each year since. Still, without further congressional action the GPCI work floor will expire at the end of this year.

The permanent 1.5 work GPCI floor established by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) will remain in effect for Alaska as will the permanent 1.0 PE GPCI floor for physicians’ services furnished in the “Frontier States.” CMS is not proposing any changes to the list of Frontier States. Therefore, the Frontier States for 2013 are Montana, North Dakota, Nevada, South Dakota, and Wyoming.

CMS reports the proposed rule estimated impact on Hematology/Oncology to be -1% (assuming the conversion factor remains at the 2012 level).


  • New and Established Patient E/M Services
    • Increase 1-2%
  • Inpatient Hospital Care
    • Increase of 1%
  • Drug Administration Services
    • Decrease of approx. 3% overall
      • 96372 SQ/IM therapeutic injection - increase of 4%
      • 96416 Initiation of pump - decrease of almost 8%

*Assuming the conversion factor remains at the 2012 level


Proposed Congressional Bills


As of late August, there were three recently introduced Congressional bills seeking to address the sustainable growth rate (SGR) formula and the cuts to Medicare physician payments mandated by the SGR. With four months to go until the end of the year, we can expect additional bills aimed at preventing these cuts and proposing alternative payment methodologies to be introduced.

H.R. 6142
The Assuring Medicare Stability and Access for Seniors Act of 2012, introduced on July 18, 2012, by Representative Michael Burgess, MD (R-TX) simply seeks to delay the cuts for one more year by applying a zero percent update to the conversion factor for 2013 thus delaying the scheduled SGR cuts until January 1, 2014.

H.R. 5707
The Medicare Physician Innovation Act is a bipartisan bill introduced on May 9, 2012 by Representative Allyson Schwartz (D-PA) and Representative Joe Heck, D.O. (R-NV). This bill would permanently repeal the SGR formula, provide annual payment updates, and propose new payment models.

Summary of the Medicare Physician Payment Innovation Act:

  • Permanently repeals the SGR formula and prevents a 30 percent cut to physician reimbursements scheduled for January 1, 2013
  • Provides annual positive payment updates for all physicians for four years
  • Ensures access to preventive care, care coordination, and primary care services through increased payment updates for those services
  • Aggressively tests and evaluates new payment and delivery models
  • Identifies a variety of unique payment models to provide options for providers across medical specialties, practice types, and geographic regions
  • Stabilizes payment rates for providers who demonstrate a commitment to quality and efficiency within a fee-for-service model
  • Ensures long-term stability in the Medicare physician payment system through predictable updates that accurately reflect the cost and value of providing health care services in coordinated care models

S. 3337
The Access to Physicians in Medicare Act, introduced on June 25, 2012 by Senator Rand Paul (R-KY) proposes to eliminate the SGR, and replace it with an annual cost-of-living adjustment for physician payments. As proposed, reimbursement rates could increase slowly each year, subject to a three percent cap, based on a cost-of-living increase similar to that used to calculate increases in Social Security benefits.

In addition to the proposed legislature listed above, Congress has been hearing testimony on the need for a permanent fix to the SGR from major health care stakeholders including the American Medical Association (AMA), the Association of American Medical Colleges (AAMC), the American College of Physicians (ACP) and the Medical Group Management Association (MGMA).

On January 23, 2012, a joint-letter to the House Ways and Means Committee signed by 62 national medical associations (including ASCO) and 47 state medical associations called for a permanent fix to the SGR.

Make your voice heard, the AMA’s Legislative Action Center makes it easy to contact your legislators by providing editable text that can be delivered by email or a printed letter. Just choose the method of delivery (email or letter), enter your personal contact information (so that your legislators can be identified), edit the suggested text as you wish and click on send message.



In the proposed Physician Fee Schedule (PFS) rule, CMS continues their initiative of increasing payments to primary care physicians with the proposal to pay community physicians or non-physician practitioners (NPPs) for Coordination of Care in the 30 days following discharge from an inpatient hospital stay, skilled nursing facility, and certain outpatient services. In order to maintain budget neutrality, the new Coordination of Care service would be financed by a standard reduction in all other services.

The new Care Coordination service would provide payment for non-face-to-face services, currently bundled into evaluation and management (E/M) services, through development of a new G-code. The service would be payable when furnished by the community physician or qualified NPP, or by clinical staff or office-based case mangers under the supervision of the physician or NPP. The new code would be payable once when provided within 30 days of discharge during the transition period to a single community physician or NPP who assumes the responsibility for the patient's post-discharge transitional care.

CMS proposes that the Coordination of Care service include:

  • Assuming responsibility for the beneficiary’s care without a gap.
    • Obtaining and reviewing the discharge summary.
    • Reviewing diagnostic tests and treatments.
    • Updating of the patient’s medical record based on a discharge summary to incorporate changes in health conditions and on-going treatments related to the hospital or nursing home stay within 14 business days of the discharge.
  • Establishing or adjusting a plan of care to reflect required and indicated elements, particularly in light of the services furnished during the stay at the specified facility and to reflect result of communication with beneficiary.
    • An assessment of the patient’s health status, medical needs, functional status, pain control, and psychosocial needs following the discharge.
  • Communication (direct contact, telephone, electronic) with the beneficiary and/or caregiver, including education of patient and/or caregiver within 2 business days of discharge based on a review of the discharge summary and other available information such as diagnostic test results, including each of the following tasks:
    • An assessment of the patient’s or caregiver’s understanding of the medication regimen as well as education to reconcile the medication regimen differences between the pre and post-hospital, CMHC, or SNF stay.
    • Education of the patient or caregiver regarding the on-going care plan and the potential complications that should be anticipated and how they should be addressed if they arise.
    • Assessment of the need for and assistance in establishing or reestablishing necessary home and community based resources.
    • Addressing the patient’s medical and psychosocial issues, and medication reconciliation and management.

In addition, the following tasks are to be included when applicable:

  • Communication with other health care professionals who will (re)assume care of the beneficiary, education of patient, family, guardian, and/or caregiver.
  • Assessment of the need for and assistance in coordinating follow up visits with health care providers and other necessary services in the community.
  • Establishment or reestablishment of needed community resources. Assistance in scheduling any required follow-up with community providers and services.

Further Reductions to Imaging Services


CMS has been applying the multiple procedure payment reduction (MPPR) policy to the technical component (TC) of certain advanced imaging services since 2006. Currently, under the MPPR policy for advanced imaging services (CT, MRI and ultrasound), full payment is made for the TC of the highest paid procedure, and payment is reduced by 50 percent of the TC for each additional procedure.

In CY 2012, CMS expanded the MPPR policy to the professional component (PC) of the same advanced imaging services, reducing the PC of the second and subsequent advanced imaging services furnished in the same session by 25 percent. Under the 2012 final rule, the MPPR policy for the TC and PC of advanced imaging was to apply to the second and subsequent advanced imaging procedures furnished to the same patient, in the same session by a single physician or multiple physicians in the same group practice. However, due to operational limitations CMS was not able to apply the MPPR to multiple physicians in the same group practice.

CMS now reports that the operational problems have been resolved and the MPPR will be applied to the PC and TC of advanced imaging procedures to multiple physicians in the same group practice (same group NPI). CMS states their belief that efficiencies are achieved whether the same physician or different physicians in the same group practice provides the multiple procedures involving the same patient in the same session.

According to CMS, they continue to welcome public comments on the advanced imaging MPPR policy as well as on the MPPR policy in general.


CMS will apply the Multiple Procedure Payment Reduction Policy (MPPR) for advanced imaging services furnished to the same patient, in the same session by a single or multiple physicians in the same group practice.

MPPR In 2013:
  • 25% MPPR to the professional component (PC)
  • 50% MPPR on the technical component (TC)


Part B Drugs


Pricing of Part B Drugs
As mandated by statute, the Office of Inspector General (OIG) will continue to conduct studies to determine the Widely Available Market Price (WAMP) of Part B drugs and biologicals and to compare Average Sales Price (ASP) with the WAMP and Average Manufacturers Price (AMP) for these drugs. If the OIG finds that the ASP for a drug exceeds the WAMP or AMP by a certain percentage CMS is allowed to disregard the ASP and substitute the lesser of WAMP or 103% of AMP.

Although they are not proposing to make any WAMP based price substitutions at this time (citing complicated operational issues), CMS is proposing that the threshold percentage for WAMP substitution remain at 5% until a change in the threshold amount is warranted thus eliminating the need for annual rulemaking until such time.

For 2013, CMS retains the methodology, determined in 2012, under which they would substitute 103% of the AMP for 106% of ASP. Under this methodology, price substitution of AMP +3% will be allowed when ASP exceeds WAMP by 5%, or, AMP by 5%, for 2 consecutive preceding quarters, or 3 out of 4 of the last preceding quarters.

CMS clarified several conditions for price substitution, including the requirement that matching sets of NDCs be used in the comparison and that the value of the AMP based price substitution must also be less than the ASP payment limit that is calculated for the quarter in which the substitution is applied.

Finally, CMS addresses the drug shortage concerns, including beneficiary and provider access and the potential for drug shortages to suddenly affect drug prices for the provider, proposing that price substitution cannot be used for drugs that are listed by the FDA as being in shortage.

“Incident to” and Part B Drugs
CMS provides clarification on their payment policies regarding billing for Medicare Part B drugs provided incident to a physician’s service. The clarification by CMS was prompted by concern voiced in response to CR 7397 Transmittal 2437, which was updated on April 4, 2012 and which states, “Pharmacies may not bill Medicare Part B for drugs furnished to a physician for administration to a Medicare beneficiary. When these drugs are administered in the physician’s office to a beneficiary, the only way these drugs can be billed to Medicare is if the physician purchases the drugs from the pharmacy. In this case, the drugs are being administered “incident to” a physician’s service and pharmacies may not bill Medicare Part B under the “incident to” provision.”

In the 2013 proposed rule CMS states, “In the case of prescription drugs used in conjunction with DME, our guidance is clear that the entity that dispenses the drug needs to furnish it directly to the patient for whom a prescription is written. We do not believe that an arrangement whereby a pharmacy (or supplier) ships a drug to a physician’s office for administration to a patient constitutes furnishing the drug directly to the patient.” Later in the proposed rule CMS says, “Our policy clarification regarding Pharmacy Billing for Part B Drugs Administered Incident to a Physician’s Services which is discussed in section III of this proposed rule states that only physicians and not pharmacies (or DME suppliers) are allowed to bill Medicare under Part B for drugs administered in physicians’ offices.”

Nevertheless, CMS is seeking comments on their proposed clarification and they have delayed implementation on the updated CR 7397 until January 1, 2013, in order to evaluate the comments and determine whether the updated change request should be implemented as planned, revised or rescinded.



Under Medicare’s Value Based Purchasing (VBP) initiative, Medicare will transition from a passive payer, based on the volume of services provided, to an active purchaser, based on the quality of care provided. The Affordable Care Act (ACA) of 2010 includes a number of provisions meant to continue this transition. One such provision requires that Medicare implement a value based payment modifier (VM) that would be applied to Medicare Fee for Service (FSS) payments starting in 2015.

To this end, Medicare developed the Physician Feedback/Value-Based Modifier Program. The two main components of this program are the Physician Quality and Resource Use Reports (QRURs), through which physicians can compare their resource use and quality of care to that of their peers, and the implementation of the VM that will be used to calculate payments based on both the quality of care furnished and the cost of that care.

The application of the VM for FFS payments will be phased-in beginning in 2015 and is to be applied to all physicians by 2017. In 2015, CMS is proposing to apply the VM to groups of physicians with 25 or more eligible professionals. The VM for these groups will be based on their performance during the 2013 reporting period.

Under the CMS proposal, groups of > 25 eligible professionals qualifying for an incentive payment under the Physician Quality Reporting System (PQRS) would have a VM of 0.0% applied to their payments and would therefore have no adjustment to their payment. On the other hand, those groups of > 25 that are non-satisfactory PQRS reporters in 2013 would have a VM of -1.0% applied and would therefore receive 99% of the Medicare payment amount in 2015.

In addition, qualifying groups would have the option to elect the Quality Tiering calculation of the VM, which would allow them to earn a positive payment adjustment for high performance and to be subject to a negative payment adjustment for poor performance.

The Medicare VM will be applied to services that are paid under the Medicare Physician Fee Schedule (MPFS) including E/M and drug administration services. Labs and drugs are not paid under the MPFS and would therefore not be subject to the VM adjustment. CMS is proposing to apply the VM at the TIN level for the group practice.

Value Modifier and the Physician Quality Reporting System

Value Modifier

Figure 1 Source CMS August 1, 2012 Value Based Payment Modifier Teleconference



Physician Quality Reporting System
The Physician Quality Reporting System (PQRS) applies to Medicare fee-for-service and does not apply to Medicare Advantage (MA) plans & MA fee-for-service plans. For 2013, the PQRS reporting period is for 12 months, unless reporting Measures groups through a registry.

Of particular interest to oncologists is the proposal to add an oncology specific measures group for the 2013 PQRS program. Eligible providers (EPs) reporting the measures group must report on 30 applicable Medicare Part B patients, or 50% of all Part B FFS patients if reporting by claims.

Incentive payments for 2012-2014 are 0.5% of allowable MPFS services. PQRS penalties will start in 2015 when EPs who are not successful PQRS reporters will see a -1.5% payment adjustment to their allowable MPFS services. The 2015 penalty will be based on the 2013 reporting period.

In the proposed rule, CMS states that to meet their overarching goal of increasing physician participation in the PQRS program, they are proposing that providers successfully report 1 PQRS measure or measures group to avoid the 2015 payment adjustment. The proposed rule also includes proposals to align PQRS measures for EHR based reporting with measures reported under the EHR incentive program.

Visit the CMS website at www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/ for complete information on the Medicare PQRS program.


  • Breast Cancer: Hormonal Therapy for Stage IC-IIIC Estrogen Receptor/Progesterone Receptor (ER/PR) Positive Breast Cancer
  • Colon Cancer: Chemotherapy for Stage III Colon Cancer Patients
  • Preventative Care and Screening: Influenza Immunization
  • Documentation of Current Medications in the Medical Record
  • Oncology: Pain Intensity Quantified
  • Oncology: Plan of Care for Pain
  • Oncology: Cancer Stage Documented
  • Preventative Care and Screening: Tobacco Use: Screening and Cessation Intervention

Electronic Prescribing
CMS is proposing two new exemptions for the 2013 and 2014 eRx penalties for individual EPs (and EP members of a group practice) who:

  • Achieve meaningful use for a continuous 90-day EHR reporting period within the 6-month reporting period (January 1, 2012 to June 30, 2012) for the 2013 eRx payment adjustment, or the 12- or six-month reporting periods (January 1, 2012 to December 31 2012, or January 1, 2013 to June 30, 2013, respectively) for the 2014 eRx payment adjustment would be eligible to request a significant hardship exemption. Or
  • That instead achieve meaningful use for an EHR reporting period that is the full CY 2012


  • 2.0 percent for 2010
  • 1.0 percent for 2011
  • 1.0 percent for 2012
  • 0.5 percent for 2013


  • -1.0 percent for 2012
  • -1.5 percent for 2013
  • -2.0 percent for 2014

Electronic Health Record Program
The Physician Quality Reporting System (PQRS) Medicare Electronic Health Record (EHR) Incentive Pilot allows eligible professionals to meet the clinical quality measure (CQM) reporting objective of meaningful use requirements  for the EHR Incentive Program through electronic submission while also reporting for the PQRS program.

To participate in the electronic reporting pilot, providers must submit 12 months of CQM data. EPs must submit the data between January 1, 2013 and February 28, 2013.

CQM data for the electronic reporting pilot must be derived from certified EHR technology. EPs can submit the data directly from their PQRS “qualified” EHR, or have a PQRS-qualified data submission vendor submit the CQM data for the electronic reporting pilot on their behalf.

EPs wishing to participate in the pilot program can register for the pilot program while attesting for the EHR Incentive Program on the online registration page.


This issue available for download

Published by Rise Marie Cleland. Sponsored by Lilly Oncology








Another component in Medicare’s VBP initiative is the Physician Compare website, which was launched in 2010. Physician Compare provides basic information for Medicare beneficiaries including the provider’s hospital affiliations, practice locations, gender, education, and languages spoken.

In addition to the basic provider information, CMS includes information on providers that have satisfactorily participated in Medicare’s Electronic Prescribing (eRx) and Physician Quality Reporting System (PQRS) Incentive programs. CMS is proposing to expand this to include quality measures performance rates of group practices participating in the PQRS Group Practice Reporting Option (GPRO) and accountable care organizations (ACOs) participating under the Medicare Shared Savings Program, starting with measures submitted in 2013.

Furthermore, as required under the ACA, CMS plans to include comparable information on patient experience of care measures on the Physician Compare website. CMS proposes to add patient experience survey-based measures including the Clinician and Group Consumer Assessment of Healthcare Providers and Systems (CG-CAHPS).

CMS is directing Medicare beneficiaries to look at the information listed on this website so they can make an informed decision about their choice of providers and services, for that reason providers will want to verify that the information listed is accurate.





2010 Newsletter Archives

Volume 7, Issue 3
Volume 7, Issue 2
Volume 7, Issue 1
Volume 6, Issues 4 & 5
Volume 6, Issue 3
Volume 6, Issue 2
Volume 6, Issue 1
Volume 5, Issue 6
Volume 5, Issue 5
Volume 5, Issue 4
Volume 5, Issue 3
Volume 5, Issue 2
Volume 5, Issue 1




Risë Marie Cleland

Oplinc, Inc.
113 W. 7th Street
Suite 205
Vancouver, WA 98660
360.695.1608 office
360.326.1733 fax




Comments and suggestions for future issues are welcome, please forward correspondence to Risë Marie Cleland by email at: Rise@Oplinc.com




Access all of our
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Risë Marie Cleland is the Founder and CEO of Oplinc, Inc., a national organization of oncology professionals. Through Oplinc, Inc., Ms. Cleland publishes the weekly Oplinc Fast Facts focusing on the timely dissemination of information pertaining to billing, reimbursement and practice management in the oncology office and Oplinc’s Best Practices Review, which provides a more in-depth look at the issues and challenges facing oncology practices. Ms. Cleland also works as a consultant and advisor for physician practices, pharmaceutical companies and distributors.




Please note that this newsletter is presented for informational purposes only. It is not intended to provide coding, billing or legal advice. Regulations and policies concerning Medicare reimbursement are a rapidly changing area of the law. While we have made every effort to be current as of the issue date, the information may not be as current or comprehensive when you review it. Please consult with your legal counsel for any specific reimbursement information. For Medicare regulations visit: www.cms.gov.

CPT® is a Trademark of the American Medical Association Current Procedural Terminology (CPT) is copyright 2012 American Medical Association. All Rights Reserved. No fee schedules, basic units, relative values, or related listings are included in CPT. The AMA assumes no liability for the data contained herein.

Copyright ©2012
Oplinc, Inc.
Oplinc, Inc., grants permission to distribute this newsletter without prior permission provided it is forwarded unedited and in its entirety.

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