Highlights of the 2011 Medicare Physician Fee Schedule Final Rule

On November 3, the Centers for Medicare & Medicaid Services (CMS) released a final rule with comment period that addresses, implements, and discusses certain provisions of both the Affordable Care Act (ACA) of 2010 and the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008. Key provisions include the expansion of preventive services for Medicare beneficiaries, improvement of payments for primary care services, and promotion of access to health care services in rural areas.

The final rule will also update other policies and payment rates for physician services and other providers and suppliers paid under the Medicare Physician Fee Schedule (PFS) during calendar year (CY) 2011, and make a number of significant changes in the Physician Quality Reporting Initiative (PQRI).

The final rule is now on display at the Office of the Federal Register's Public Inspection Desk and will be published in the Federal Register on November 29. In the interim, it is available as a PDF download on the CMS website.

CMS will accept comments on the final rule until January 2, 2011. Except as otherwise specified, the payment policies and rates adopted in the final rule will be effective for services furnished on or after January 1, 2011.

Highlights of the Final Rule

• The final rule with comment period announces a reduction to payment rates for physicians' services in 2011 under the sustainable growth rate (SGR) formula. The fee schedule rates are currently scheduled to be reduced under the SGR system on December 1, 2010 and then again on January 1, 2011 under current law. The total reduction in rates between November and January under the SGR system will be 24.9 percent.  While Congress has provided temporary relief from these reductions every year since 2003, a long-term solution is critical. The Calendar Year (CY) 2011 conversion factor is currently set at $25.5217 to be effective January 1, 2011. The previous 2.2 percent update to the 2010 fee schedule as provided by the Preservation of Access to Care for Medicare Beneficiaries and Pension Relieve Action of 2010 effective from June 1, 2010 through November 30, 2010 expires on November 30th. Therefore, effective December 1 through December 31st, 2010 the conversion factor will be $28.3868 which was the original CY 2010 conversion factor prior to updates through the various relief acts.
• The fee schedule provides a national payment of $153 for the new 2011 CPT code 93462 Left heart catheterization by transseptal puncture through intact septum or by transapical puncture which is an add-on code to be used in conjunction with transcatheter ablation codes 93651, 93652. For Medicare National Payment Rates for Electrophysiology related CPT codes, click here.
• The fee schedule also provides new Category III CPT codes for acoustic cardiography 0223T – 0225T. These codes describe the evaluation and optimization of physiologic data including systolic and diastolic heart sounds and their temporal relationships to electrocardiogram (ECG). Codes 0223T – 0225T include interrogation and limited reprogramming of a cardiac pacing device to ensure hemodynamic optimization (heart rate parameter and/or automated timing modes, including explicit changes of AV/VV intervals) and facilitate device parameter optimization. As these codes are carrier priced by Medicare, the respective carrier will establish RVUs and payment amounts for these services, generally on an individual case basis following review of documentation such as an operative report.
• CY 2011 is the second year of the four year transition of the Practice Expense (PE) RVUs, using a 50/50 blend of the AMA Physician Practice Information Survey (PPIS) data implemented in CY2010 and previous PE RVUs from the Socioeconomic Monitoring System (SMS) and supplemental survey data. CMS continues to closely monitor the Medicare fee schedule utilization data to detect any emerging issues that may be of concern during this transition period, such as access problems for Medicare beneficiaries. The PPIS is a multispecialty, nationally representative, PE survey of both physicians and nonphysician practitioners (NPPs) using a survey instrument and methods highly consistent with those of the SMS and the supplemental surveys used prior to CY 2010.
• CMS projects the combined impact on the specialty of Cardiology will reflect a negative two percent decrease during the four-year transition period for PE RVUs. These impact estimates include factors from the total allowable charge estimates for RVU, Multiple Procedure Payment Reduction (MPPR), and Medicare Economic Index (MEI) changes.  These impacts do not include the effect of the December 2010 and January 2011 conversion factor changes under current law.    

Specialty: Cardiology

Allowed Charges (mil$)	Impact of Work\ and MP RVU Changes	Impact of PE RVU and MPPR Changes		Impact of MEI Rebasing	Combined Impact
		Full	Tran		Full	Tran
$6,951	0%	-5%	-2%	0%	-5%	-2%

• Medicare payment systems are programmed to ensure that the PE RVUs for global only codes equal the sum of the PE RVUs for the professional and technical components.  However, for 14 CPT codes the direct PE database reflected incorrect inputs overridden by the system. Of the 14 codes proposed for correction, included are six of the 24-hour Holter and 30 day event monitoring device codes (93224, 93225, 93226, 93268, 93270 and 93271). The direct PE inputs for these codes will be corrected in CY 2011 to reflect the appropriate summing of the PE inputs for the associated professional component only and technical component only codes.
• CMS proposed to correct the database monitor equipment time for Holter codes 93225, 93226 and 93224.  However, after several commenter's pointed out the prior assignment of the equipment time stemmed from discussions between CMS and provider groups that resulted in PE policies initially implemented in CY 2007. Therefore, CMS decided not to adopt the equipment time changes proposed for CPT codes 93225 and 93226 but rather maintain the inputs as stands in CY 2010.  However, CMS is finalizing the direct PE inputs for CPT code 93224, a global only code, to include the total equipment time for the holter monitor that is incorporated in component CPT codes 93225 and 93226.
• CMS continued to have concerns about developing PE RVUs for remote monitoring services 93012, 93229, 93268 and 93271 that are utilized 24 hours a day, 7 days a week. While the agency is not finalizing any methodological or direct cost input changes for CPT codes 93012, 93268, and 93271, CMS will continue dialogue with stakeholders to ensure that the fee schedule pays appropriately for those 24/7 services that are covered and paid under the Medicare program. Regarding the CPT code 93299 telemetry monitoring service, CMS proposed to continue contractor-pricing for CPT 93229 for CY 2011. However, in the final rule CMS publishes a national price rather than the contractor's price for CY 2011. CMS notes that the CY 2011 payment is close to the current typical contractor's price for the service in CY 2010. 
• For CY 2010 CMS adopted the use of the new PPIS data conducted by the AMA to develop the specialty-specific PE/HR used for PE RVUs. Although CMS received comments that the effects of using PPIS data would significantly reduce payment for certain services and procedures and cause undue hardship to certain specialties. CMS however has to date identified no specific problems that would warrant a change regarding development of PE RVUs based on the PPIS data. 
• For CY 2010 CMS eliminated the reporting of all consultation codes in order to allow for correct and consistent coding and appropriate payment for evaluation and management services under the PFS.  For the CY 2011 proposed rule, CMS received numerous comments regarding the elimination of consultation codes.  Specifically, the need for a revised definition of "new" patient to account for different subspecialty scenarios. For the CY 2011 final rule, CMS does not make any modifications to the consultation code elimination and will continue to monitor the impact of this policy change. With regard to the "new" patient definition, CMS notes that it considers requests on an ongoing basis for new Medicare physician specialty codes and encourages interested stakeholders to submit requests for different specialty or subspecialty designations.
• For CY 2011, CMS finalizes new Geographic Practice Cost Indices (GPCIs) for each Medicare locality. Section 3102(a) of the PPACA extends the 1.0 work GPCI five floor for services furnished through December 31, 2010. In addition, the PPACA establishes a 1.0 PE GPCI floor for services furnished in frontier states effective January 1, 2011. The 1.5 work GPCI floor in Alaska will remain in place for CY 2011. The updated GPCIs would be phased in over a two-year period.
• CMS is finalizing the rebasing (moving the base year for the structure of cost of an input price index) and revision (other types of changes such as changing data sources, cost categories, or price proxies used in the price index) of the Medicare Economic Index (MEI) and incorporating it into the CY 2011 PFS update by removing all costs related to drug expenses, and expenses associated with separately billable supplies. CMS also finalizes the revision of the cost categories in the MEI by expanding the Office Expense category into nine detailed categories with additional price proxies associated with these categories. The MEI is used in conjunction with the SGR formula to update the PFS and represents the price component of that update.
• In the proposed rule CMS solicited comments on high-cost supplies in the direct PE databases for CY 2011 and how to refine the process for regularly updating prices for high-cost supplies paid under the PFS. CMS published numerous public comments in the final rule and will continue to study the issue of how to update the prices for high-cost supplies over the upcoming months.
• CMS is finalizing administrative changes to simplify the Refinement Panel Process in an effort to continue to provide stakeholders with a meaningful opportunity for review and discussion of interim work RVUs. The changes would eliminate the use of the F-test and instead base revised RVUs on the median work value of the panel members' ratings. In addition, CMS would have the final authority to set the RVUs, and therefore, make adjustments to the work RVUs resulting from refinement if policy concerns warrant their modification.
• CMS is finalizing the policy for subsequent hospital care services, specifically CPT codes 99231, 99232, and 99233, addition to the list of telehealth services on a Category 1 basis for CY 2011, but with limitation of one subsequent hospital care service furnished through telehealth every three days. Consulting practitioners should continue to use the inpatient telehealth consultation HCPCS G-codes, specifically G0406, G0407, G0408, G0425, G0426, or G0427 when reporting consultations furnished to inpatients via telehealth.
• CMS is finalizing policy to simplify the current imaging Multiple Procedure Payment Reduction (MPPR) policy in a way that is consistent with the standard PFS MPPR policy for surgical procedures that does not group procedures by body region. The MPPR will apply a 50 percent reduction to all of the CT and CTA, MRI, MRA and ultrasound services to which the current contiguous body area and modality-specific policy applies, regardless of specific combinations of imaging services furnished to a single session.

Provisions of the Patient Protection and Affordable Care Act of 2010 (PPACA)

Potentially MisValued Services

Section 3134 of the PPACA directed the Secretary to specifically examine Potentially Misvalued Services in seven categories:

1. Codes and families of codes for which there has been the fastest growth
2. Codes or families of codes that have experienced substantial changes in practice expenses
3. Codes that are recently established for new technologies or services
4. Multiple codes that are frequently billed in conjunction with furnishing a single service
5. Codes with low relative values, particularly those that are often billed multiple times for a single treatment
6. Codes which have not been subject to review since the implementation of the RBRVS (the so-called 'Harvard-valued codes')
7. Other codes determined to be appropriate by the Secretary

• The PPACA specifies that the Secretary may use existing processes to receive recommendations on the review and appropriate adjustment of potentially misvalued services. In addition, the Secretary may conduct surveys, other data collection activities, studies, or other analyses as the Secretary determines to be appropriate to facilitate the review and appropriate adjustment of potentially misvalued services.
• This section also authorizes the use of analytic contractors to identify and analyze potentially misvalued codes, conduct surveys or collect data, and make recommendations on the review and appropriate adjustment of potentially misvalued services.
• The Secretary may also make appropriate coding revisions (including using existing processes for consideration of coding changes) which may include consolidation of individual services into bundled codes for payment under the physician fee schedule.    
• The PPACA further specifies that the Secretary shall establish a formal process to validate relative value units under the PFS. The validation process may include validation of work elements (such as time, mental effort and professional judgment, technical skill and physical effort, and stress due to risk) involved with furnishing a service and may include validation of the pre, post, and intra-service components of work. The Secretary is directed to validate a sampling of the work RVUs of codes identified through any of the seven categories of potentially misvalued codes specified above.  
• Furthermore, the Secretary may conduct the validation using methods similar to those used to review potentially misvalued codes, including conducting surveys, other data collection activities, studies, or other analyses as the Secretary determines to be appropriate to facilitate the validation of RVUs of services. CMS plans to continue analyzing Medicare claims data over future years to identify additional services that exhibit rapid growth and high Medicare expenditures for referral to the AMA RUC for review as potentially misvalued codes.  
• For CY 2011, CMS has identified additional categories of Potentially Misvalued Services and are referring certain codes to the RUC for review.  Specifically, codes with low work RVUs but have high volume based on claims data, and codes used as reference services for valuing other services termed "multi-specialty points of comparison" services. 
• CMS will also continue to review RUC recommendations for revised work RVUs and/or direct PE inputs for codes that fall into these categories, and will establish a more extensive validation process of RVUs in the future in accordance with the requirements of the PPACA.
• CMS is soliciting public comments on possible approaches and methodologies for consideration in the validation process. The agency has expressed a particular interest in comments regarding use of time and motion studies to validate estimates of physician time and intensity that are factored into the work RVUs for services with rapid growth in Medicare expenditures. The validation process will be discussed in a future PFS rule after input from stakeholders has been considered.

Other Provisions

CMS made decisions on two provisions contained in the PPACA relevant to the Physician Resource Use Measurement & Reporting (RUR) Program:

• 1) Section 3003 which continues the confidential feedback program and requires the Secretary, beginning in 2012, to provide reports that compare patterns of resource use of individual physicians to other physicians.
• 2) Section 3007 requires the Secretary to apply a separate, budget-neutral payment modifier to the Fee-For-Service PFS payment formula. The payment modifier will be phased in beginning January 1, 2015 through January 1, 2017
• For Phase II of the RUR, CMS is discontinuing the use of commercially-available proprietary episode grouping software. Section 3003 of the PPACA requires that the Secretary develop a Medicare-specific episode grouper by January 1, 2012. Until a Medicare-specific episode grouping software is developed, CMS plans to produce reports for Phase II that contains per capita cost information.       

More specifically, instead of episode-specific cost information, CMS intends to provide overall per capita cost information, as well as per capita cost information for those beneficiaries with five common chronic diseases:  

1. diabetes
2. congestive heart failure
3. coronary artery disease
4. chronic obstructive pulmonary disease
5. prostate cancer

• CMS will not to include data from PQRI in the RUR reports. Instead, for Phase II, CMS will use of claims-based measures developed by CMS in the Generating Medicare Physician Quality Performance Measurement Results (GEM) project in future phases of the program. CMS intends to explore the possibility of linking this program to the HITECH incentive program for meaningful use of electronic health records, and the group practice reporting option in PQRI. CMS will also distribute reports electronically in Phase II.
• In addition to developing an episode grouper by January 1, 2012, CMS is required to publish the cost and quality measures the agency intends to use in determining the payment modifier to be effective on January 1, 2012.
• CMS is also required to begin implementing the program parameters through rulemaking in 2013. The payment modifier is effective on January 1, 2015, with a phased implementation so that all physicians paid under the PFS will be subject to the modifier by January 1, 2017.
• On or after January 1, 2017, CMS will have the authority to also apply the payment modifier to other eligible professionals.
• In anticipation of implementing sections 3003 and 3007 of the PPACA, CMS intends to seek stakeholder input in the areas of:
  • risk adjustment
  • attribution
  • benchmarking and peer groups
  • cost and quality measures compositing methods
• Other provisions of the PPACA would provide Medicare coverage, with no coinsurance or deductible, for an annual wellness visit, and would waive the deductible and coinsurance requirements for most preventive services and expand access to primary care services and general surgery.
• Section 6003 of the PPACA established a new disclosure requirement related to the in-office ancillary services exception to the physician self-referral prohibition. Specifically, the statute requires that, with respect to MRI, CT and PET the referring physician must inform the patient in writing at the time of the referral that the patient may obtain the same imaging services from another supplier.

In addition, the statute requires physicians to provide a written list of other suppliers who furnish the same imaging services in the area in which the patient resides. For CY2011, CMS finalizes policy that requires the written notice shall include a list of at least five other suppliers who provide the services for which the individual is being referred and removes the requirement that the supplier's distance from the physician's office be listed on the disclosure and removes the requirement that the physician obtain the patient's signature on the notice and retain a copy of the disclosure in the patient's medical record.         

• Under the new law, claims for services furnished on or after January 1, 2010, must be filed within one calendar year after the date of service. In addition, Section 6404 of the PPACA provides that claims for services furnished before January 1, 2010, must be filed no later than December 31, 2010. Exceptions to the rule can be found in Section 6404 of the final rule.