Monday, January 7, 2013

Physician Fee Schedule:  System Needs Fixin!

by Madeline Angela Meyer,
Senior Healthcare Consultant

2013 Resource Relative Value Scale:

On January 1, 2013, the ‘‘American Taxpayer Relief Act of 2012’’ (aka Middle Class Tax Relief and Job Creation Act of 2012 Act H.R. 8) was passed.  The Act provides an extension of current Medicare physician payment rates through December 31, 2013.  So, what does this mean for physicians?

Good News!  Conversion Factor (CF) for 2013

Prior to this new Act, physicians were faced with a -27% Medicare fee reduction.  In our December 7, 2012 article, we looked at what the reduction in fees meant in terms of impact to medical services.  We performed a comparative analysis of 2012 and 2013 fees using the CMS relative value unit (RVU) files.  The Physician Fee Schedule (PFS) file that we used for our analysis was based on the 2013 final Rule (Federal Register, November 15, 2012).  We found that if no action was taken by Congress there would be a -27% decrease across the board for the physician evaluation and managed (EM) services ( codes 99201-99480), and a decrease on the surgery, radiology and medicine codes ranging from 1% to as high as 94%.  The fee reductions were mostly due to the changes in the Resource Based Relative Value Scale (RBRVS) conversion factor (CF), but also to a lesser degree to changes in Relative Value Units (RVUs) and Geographic Practice Cost Indices (GPCI).  The 2012 CF is $34.0376.  The 2013 CF, as of November 12, 2012, was $25.0008.  As of January 1, 2013, due to the Tax Relief Act, the PFS conversion factor changed to $34.0230

PFS CauseàEffect

Although, the intention behind Medicare’s Sustainable Growth Rate (SGR) provision of Section 1848(d)(1)(E) of the Social Security Act (the Act) (cause) responsible for this PFS event (effect), is good, e.g., to address the gaping disparity between primary care and subspecialist services and to preserve Medicare dollars, such a dramatic fee cut would have been disastrous.  Industry consensus is that it would have been harmful to physicians, put medical practices and patients at risk and give the US healthcare system a black eye.

The System needs Fixin!

The CMS and the Relative Value Scale Update Committee (RUC) are required to identify and review the RBRVS and potentially misvalued CPT codes on an annual basis.  The final 2012 Medicare physician fee schedule reflects a consolidated 5-years of annual reviews of work and practice expense RVUs.  Based on the CMS and RUC reviews RBRVS reviews, they have identified 1,000 potentially misvalued CPT codes (Federal Register, 2012).  Of these identified codes, over 650 are surgical services. 

What’s Next?
For CY 2014 and beyond CMS is committed to working on necessary changes to improve the current RBRVS system.  The CMS reports it is imperative to identify new lists of potentially misvalued codes for review to appropriately adjust values.  They are contracting with professional organizations to attempt to create a workable model to validate the resource inputs for physician services under RBRVS, as well as, continuing to align physician fees as much as possible with the review process available under the Physician Quality Reporting System (PQRS) program.

Physicians may provide their personal input through their professional associations or directly through the RVU update process.  SeeRVS Update Process


American Taxpayer Relief Act of 2012’’ (aka Middle Class Tax Relief and Job Creation Act of 2012 Act H.R. 8) Read More  

CMS. (2013). Physician Fee Schedule Files. ReadMore

CMS. (2013). Physician Quality Reporting System. Read More

Federal Register. (2012). Potentially Misvalued Codes to be Evaluated. [Federal Register Volume 77, Number 146 (Monday, July 30, 2012)], Read More

Federal Register. (2012) Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule, DME Face-to-Face Encounters, Elimination of the Requirement for Termination of Non-Random Prepayment Complex Medical Review and Other Revisions to Part B for CY 2013. Centers for Medicare & Medicaid Services on 11/16/2012. Read More

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