2007 Medicare Physician Payments

Dear Heart Rhythm Society Member:

On December 1, 2006, the Centers for Medicare and Medicaid Services (CMS) published the final rule on the 2007 Medicare Physician Fee Schedule, which becomes effective January 1, 2007. The rule finalizes many payment policies included in the two proposed rules that were published in June and August. The Heart Rhythm Society (HRS) submitted comments on the proposed rules. Included in the final rule are updated physician work RVUs as well as changes to the methodology used to calculate practice expense payments.

Changes in Work RVUs
There are minor positive and negative changes to the work RVUs for electrophysiology codes. The overall impact of the changes in the final rule is estimated to be -2% for all of cardiology. The vast majority of the changes in physician work RVUs are a result of the five year review conducted in 2005. By law, CMS is required to review work relative value units (RVUs) at least every five years. HRS worked with the ACC to survey code 33208 – pacemaker insertion. CMS accepted the ACC/HRS recommendation to maintain the work RVU of 8.12.

Based on the results of the five year review, many evaluation and management (E/M) codes that heart rhythm specialists utilize receive increases (approximately 1-20%) in physician work RVUs. Due to these changes, Medicare expenditures in 2007 will exceed those from 2006 by approximately $4 billion. Medicare law requires that changes in RVUs must be made in a budget neutral manner, meaning that they cannot result in more than $20 million in increased expenditures in one year. Therefore, CMS has implemented a separate budget neutrality adjustor to be applied to the work RVUs for all codes in the Medicare fee schedule. The adjustor will uniformly reduce all work RVUs, including heart rhythm procedures, by approximately 10 percent to maintain budget neutrality.

Changes to the Practice Expense Methodology
The final rule implements a change to the practice expense methodology so that practice expense RVUs will be calculated based on the direct costs of the resources required to provide each service or procedure. This new methodology will be phased in over four years, with full implementation in 2010.

Following is a table comparing 2006 and 2007 payments for commonly-used EP codes.

Medicare Conversion Factor
Due to Congress's recent passage of the Tax Relief and Health Care Act, the Medicare conversion factor used to calculate payments will be frozen at its 2006 rate of $37.8975 for 2007. HRS thanks everyone who contacted their members of Congress to pass this legislation. Based on the sustainable growth rate formula (SGR), the conversion factor had been scheduled to decrease by 5% in 2007. While passage of the legislation was a positive development, physicians continue to face payment cuts over the next nine years. HRS will continue to advocate for replacement of the SGR with a formula based on increases in physician practice costs.

As part of the Tax Relief and Health Care Act, physicians who report performance measures as part of the Centers for Medicare and Medicaid Services (CMS) Physician Voluntary Reporting Program (PVRP) from July 1, 2007 – December 31, 2007 will be eligible to receive a 1.5% bonus payment. General information about the PVRP is available on the CMS web site. The HRS Quality Improvement Task Force is currently reviewing the existing performance measures to ensure applicability to electrophysiologists. Additional information and details on participating in the PVRP will be provided in the coming months.

Medicare Participation
The enrollment period for physicians to make changes to their Medicare participation status has been extended until February 14, 2007. Physicians should contact their local carriers for any changes to participation status. General enrollment information is available on the CMS web site.

The Heart Rhythm Society will continue working on ensuring appropriate reimbursement for heart rhythm procedures with both CMS as well as Congress. For additional information, contact Lisa Miller, Director, Reimbursement and Regulatory Affairs, at 202-464-3433 or via e-mail: lmiller@hrsonline.org.

Sincerely,

Dwight Reynolds, MD, FHRS
President
Heart Rhythm Society