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Each summer, the Centers for Medicare & Medicaid Services (CMS) issues a proposed rule to update payment policies and rates for physician services for the following calendar year’s (CY) Medicare Physician Fee Schedule (PFS). The CY 2012 proposed PFS rule was placed on display at the Federal Register on July 1, 2011 and published in the July 19, 2011 Federal Register.
This year, of foremost concern is the 29.5% negative update to the conversion factor. The sustainable growth rate (SGR) formula for setting Medicare’s physician payments rates is determined by Congress and as such is very much a political issue.
Other issues of concern for 2012 are the expiration of the 1.0 work floor and the proposed expansion of the 50% multiple procedure payment reduction (MPPR) reduction to the professional component (PC) of advanced imaging services.
However, there is some good news too, as the proposals for the Physician Quality Reporting System (PQRS), the Electronic Prescription (eRx), and the Electronic Health Record (EHR) incentive programs are overwhelmingly positive.
In this issue, we will look at the calculation of the 2012 PFS and the 2012 proposals of most interest to oncology.
2012 PROPOSED RULE - AREAS OF INTEREST TO ONCOLOGY
PPIS Transition Continues
However, the transition from the SMS to PPIS data is not applied to the practice expense per physician hour (PE/HR) of the oncology drug administration services. Section 303 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) requires CMS to continue using the medical oncology/hematology supplemental survey data submitted in 2003 for oncology drug administration services. Therefore, the supplemental survey data continues to be used to calculate the PE/HR for medical oncology, hematology and hematology/oncology.
RVUs of Potentially Misvalued Services
CMS is statutorily required to review the RVUs of services paid under the PFS at least once every five years. The Affordable Care Act (ACA), enacted on March 23, 2010, adds the requirement that the Secretary specifically examine potentially misvalued services in seven specific categories including codes and families of codes for which there has been the fastest growth and codes or families of codes that have experienced substantial changes in practice expenses.
In the proposed rule, CMS reports that, in conjunction with the AMA RUC, they have made significant progress in identifying and reviewing potentially misvalued codes. They also propose to consolidate the 5-year review of Work and PE RVUs with the annual review of potentially misvalued codes.
CMS identifies two lists of potentially misvalued CPT codes that they are asking the AMA RUC to review. First, CMS is asking the AMA RUC to review all E/M codes and to provide CMS with recommendations for at least half the E/M codes by July 2012, for inclusion in the CY 2013 PFS final rule, and the other half to be completed by July 2013, for inclusion in the CY 2014 PFS final rule. Second, CMS is asking the AMA to review a select list of CPT codes identified as representing the highest non-E/M expenditure codes for each specialty.
The high expenditure codes identified for review have not been reviewed for at least six years and each code had 2010 allowed charges of greater than $10 million at the specialty level. There are three drug administration codes on the select list of procedural codes referred to the RUC for review:
Geographical Cost Indexes
For the past several years, legislation has extended a 1.0 floor for Work GPCIs in order to preserve access for Medicare beneficiaries in rural areas. However, the 1.0 Work floor is set to expire on December 31, 2011.
The expiration of the 1.0 Work floor will not affect Alaska and the frontier states as previous legislation set a permanent 1.5 Work GPCI floor for services in Alaska and a permanent 1.0 PE GPCI floor for services in the frontier states of Montana, Nevada, North Dakota, South Dakota and Wyoming.
Table 66 on page 164 of the proposed rule illustrates the impact of the changes of the GPCI values through the previously passed Affordable Care Act (ACA) and the Medicare and Medicaid Extenders Act (MMEA) and the combined impact with the changes under consideration in the 2012 proposed rule. Proposed changes include reweighting the work, practice expense and professional liability components with a larger share assigned to practice expense and less to work.
Expanded Imaging Payment Reductions
The MPPR currently applies to the technical component (TC) of advanced imaging services (CT, MRI and ultrasound) resulting in a 50% payment reduction on the second and any subsequent CT, MRI and ultrasound service furnished in the same session.
For 2012, CMS is proposing to expand the MPPR policy to include the professional component (PC) of the advanced imaging services. Under this proposal, full payment would be made for the PC and TC of the highest paid procedure, and payment would be reduced by 50% for the PC and TC for each additional procedure furnished to the same patient in the same session.
CMS says the proposed expansion of the MPPR is consistent with the ACA requirement to identify, review and adjust the relative values of potentially misvalued services and is responsive to continued concerns about the significant growth in imaging spending. CMS estimates that the expansion of the MPPR to include the PC of advanced imaging services would result in payment reductions of approximately $100 million yearly, which would be redistributed through a small increase in the conversion factor and a small adjustment to all PE RVUs.
In their analysis of the proposed 2012 rule, the AMA states that while the Medicare Payment Advisory Commission (MedPAC) has also recommended the expansion of the MPPR to the PC of advanced imaging services, the AMA RUC’s review of codes indicates that the amount of duplication varies across codes and rarely amounts to 50 percent.
CMS is also soliciting comments on further expansions of the MPPR under consideration, including:
Part B Drugs and Biologicals
Citing a lack of data regarding WAMP to ASP comparisons, CMS excluded WAMP from the price substitution proposal. However, as they did in the 2011 proposed rule, CMS is once again proposing the method under which they would substitute the Average Manufacturer Price (AMP) for the Average Sales Price (ASP). In particular, CMS is proposing to substitute 103% of AMP for 106% of ASP only when ASP exceeds AMP by 5% or more for two consecutive quarters or three of the last four quarters. The change would be effective for one quarter, and would only apply in cases where the substituted price was lower than the 106% of the ASP calculated price for the target quarter.
As established under the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), Medicare’s eRx incentive program provides incentive payments to eligible professionals (EPs) who are successful eRx prescribers and payment adjustments to those EPs who are not successful eRx prescribers.
Those EPs who earn a Medicare EHR incentive payment do not qualify to earn the eRx incentive payment as EPs cannot earn both an eRx and Medicare EHR incentive in the same year. Nevertheless, qualified EPs must still successfully e-prescribe and report the eRx measure G8553 10 times between June 1 - June 30, 2011, or qualify for and report one of the eRx exemptions by June 30, 2011, in order to avoid the payment adjustment penalty in 2012. However, CMS has proposed changes to the 2011 eRx program which would expand eRx hardship exemptions and extend the deadline for submitting a hardship exemption. The eRx Incentive Program ends in 2014.
The 2012 proposal would continue the incentive requirements in place for the 2010 and 2011 eRx program. That is, the requirement for EPs to e-prescribe and report the eRx measure G8553 for denominator-eligible visits at least 25 times during the reporting period of January 1 - December 31, 2012. Eligibility requirements for the 2012 incentive payment also remain the same, including the requirement that at least 10 percent of an EPs total Medicare Part B Fee for Service charges must be comprised of the eligible denominator codes listed below:
90801, 90802, 90804, 90805, 90806, 90807, 90808, 90809, 90862, 92002, 92004, 92012, 92014, 96150, 96151, 96152, 99201, 99202, 99203, 99204, 99205, 99211, 99212, 99213, 99214, 99215, 99304, 99305, 99306, 99307, 99308, 99309, 99310, 99315, 99316, 99324, 99325, 99326, 99327, 99328, 99334, 99335, 99336, 99337, 99341, 99342, 99343, 99344, 99345, 99347, 99348, 99349, 99350, G0101, G0108, and G0109.
Furthermore, CMS proposes to continue a calendar year reporting period for both the 2012 and 2013 incentive payment.
Nevertheless, the 2012 proposed rule contains some significant and positive proposed changes to the eRx program including an additional 6-month reporting period for purposes of the 2013 payment adjustment and the ability to report the eRx measure with any service, rather than the limited denominator codes, during the additional 6-month period.
Under the proposed rule EPs and groups could avoid the 2013 payment adjustment one of two ways:
In addition, individual EPs can avoid the 2014 payment adjustment by:
Other significant proposed changes include:
The proposed rule would also expand the significant hardship exemptions for the 2013 and 2014 payment adjustments to include exemptions for EPs who:
Physician Quality Reporting System
While this program is still a voluntary pay-for-reporting program, we are rapidly approaching the date at which eligible providers (EPs) who are not successful PQRS reporters will be monetarily penalized. In addition, the incentive payments for successful reporters will decrease to 0.5% of their total estimated Medicare Physician Fee Schedule (PFS) allowed charges in 2012.
Still, there are some very positive proposed changes to the 2012 PQRS program including the following:
Furthermore, CMS is proposing to retain all of the 2011 PQRS measures and to adopt 10 new measures groups as well as 26 new measures for claims and registry reporting in 2012. According to CMS, the expansion of PQRS measures is intended to increase participation in the program by providing additional reporting opportunities.
CMS proposes to retain the claims-based, registry-based and EHR-based reporting mechanisms for 2012 and future years. As in previous years, EPs can report through multiple mechanisms, but must satisfy the reporting criteria for a single reporting mechanism to be eligible for the bonus payment.
In accordance with statutory requirements, CMS has offered alternative reporting periods for the PQRS since its inception in 2007. For 2012 and subsequent years, CMS proposes to comply with this requirement by retaining the 6-month reporting period option for reporting PQRS measures groups via registry and eliminating the 6-month reporting period for claims and registry reporting of individual measures.
If finalized, reporting options for reporting individual measures via claims, registry and EHR, and reporting measures groups via claims and EHR for individuals and the Group Practice Reporting Option (GPRO) will require a 12-month reporting period.
PQRS Penalties are Just Around the Corner
However, providers looking to avoid the PQRS penalty must be successful reporters in 2013 as the 2015 penalty will be based on performance in the 2013 PQRS program year.
The most recent CMS reports show that providers who report the PQRS measures through a registry have the highest reporting success rate. In fact, 94.82% of the 311 oncology/hematology EPs reporting individual measures by registry in 2009 were successful reporters and earned the PQRS incentive payment.
Medicare’s Value Based Payment Modifier
CMS is proposing to measure performance on the core set of the 2012 PQRS measures, all measures in the GPRO of the 2012 PQRS, and the core measures, alternate core measures and 38 additional measures in the 2012 EHR incentive program.
To measure the cost of care, CMS proposes to use total per capita cost measures and per capital cost measures for Medicare beneficiaries with the following chronic conditions:
CMS reports that they may begin applying the value modifier to certain physicians in 2015 before expanding the program to all physicians in 2017. CMS also proposes that the initial performance period be calendar year 2013.
The comment period for the 2012 Proposed Rule ends August 30, 2011. It is expected that the 2012 Medicare Physician Fee Schedule Final Rule will be published in November 2011. Oplinc will provide a detailed review of the final rule once it is published.
PHYSICIAN PAYMENTS SET TO TUMBLE UNLESS CONGRESS ACTS AGAIN
The formula for calculating Medicare’s physician fee schedule payment amount consists of three key factors:
Medicare assigns each procedure (service) a value based on three Relative Value Unit (RVU) components: work, practice expense (PE) and malpractice (MP). The RVUs are adjusted by the geographic practice cost index (GPCI) which seeks to balance the variations in the cost of providing services across the country by applying a cost differential. The GPCIs are applied by multiplying the RVU for each component times the GPCI for that component. Finally, the geographically adjusted RVUs are multiplied by the Conversion Factor (CF), the dollar multiplier, to determine the physician payment.
The CF is updated annually and is based on the Sustainable Growth Rate (SGR) formula. The SGR formula calculates what the yearly CF update would be based on the following four factors:
Under the current Medicare physician payment formula, the SGR calculation is intended to control growth in Medicare physician payments by setting target expenditures. If the actual expenditures of a year exceed the allowed expenditures, a negative update will be applied to the CF and physician payments will decrease.
In fact, under the SGR formula, physician payments were scheduled to decrease each year since 2002. However, Congress does have the ability to override the cuts and they have done so each year since 2003 by passing legislation providing a temporary fix to the flawed formula.
There is consensus among CMS and legislators that the SGR methodology for determining physician payments must be fixed or replaced. On page 158 of the proposed rule, CMS addresses their commitment to work within Congress to permanently reform the SGR methodology.
Nevertheless, if Congress fails to act by December 31, 2011 the SGR formula will result in a negative 29.5% update to the physician fee schedule and a CY 2012 CF of $23.9635.
ABOUT THE EDITOR
CPT® is a Trademark of the American Medical Association Current Procedural Terminology (CPT) is copyright 2011 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.