CY12 Medicare Physician Fee Schedule Final Rule Fact Sheet

CMS has issued a final rule regarding revisions to payment policies under the Medicare Physician Fee Schedule (MPFS) for calendar year (CY) 2012. The rule discusses the clinical laboratory fee schedule; physician quality reporting system; the Electronic Prescribing (eRx) Incentive Program; productivity adjustment for ambulatory surgical center payment system and the ambulance, clinical laboratory, and durable medical equipment prosthetics orthotics and supplies (DMEPOS) fee schedules; and other Part B related issues.

CMS currently estimates that the statutory formula used to determine the physician update will result in a CY12 conversion factor of $24.6712, which represents a PFS update of minus 27.4 percent, somewhat smaller than the negative amount in the proposed rule of 29.5 percent. The current conversion factor is $33.9764. None of the regulatory impact analyses reflect the negative update. They only reflect impacts from changes in the relative values for the various CPT codes and other related items and changes. Many are still hopeful Congress will find a way to prevent the massive reductions mandated under current law. Considering the current political climate, the troubling debt ceiling issues, and other factors, it is difficult to predict an outcome and much less the timing of such legislative actions. The MPFS Addenda, along with other supporting documents and tables referenced in the rule are available on the CMS web site. 

Provisions of the Final Rule for the Physician Fee Schedule Practice Expense Methodology

CY12 Practice Expense (PE) Relative Value Units (RVUs) are a 25 percent/75 percent blend of the previous PE RVUs based on SMS and supplemental survey data and new PE RVUs developed using the PPIS data. Section 3134(a) of the Affordable Care Act (ACA) requires the Secretary to periodically identify potentially misvalued services using certain criteria, and to review and make appropriate adjustments to the relative values for those services. For CY12 and forward, CMS proposed to consolidate the formal five-year review of work and PE RVUs with the annual review of potentially misvalued codes. CMS is finalizing its proposal without modification to consolidate periodic reviews of work and PE RVUs under section 1848(c)(2)(B) of the Social Security Act (the Act) and of potentially misvalued codes under section 1848(c)(2)(K) of the Act into one annual process.
 

Expanding the Multiple Procedure Payment Reduction Policy

Effective July 1, 2010, ACA section 3135(b) amended the Act to increase the multiple procedure payment reduction (MPPR) on the technical component (TC) of imaging services under the policy established in the CY06 PFS final rule with comment period from 25 to 50 percent. Section 3 of the Physician Payment and Therapy Relief Act of 2010 revised the payment reduction percentage from 25 percent to 20 percent for therapy services furnished in office settings. The payment reduction percentage remains at 25 percent for services furnished in institutional settings. The complete list of codes subject to the CY12 MPPR policy for diagnostic imaging services is included in Addendum F of the rule. The complete list of codes subject to the MPPR policy for therapy services is included in Addendum H.
 

CY12 Expansion of the MPPR Policy to the Professional Component of Advanced Imaging Services

CMS is adopting its CY12 proposal to apply an MPPR to the professional component (PC) of advanced imaging services, with a modification to apply a 25 percent reduction for CY12 rather than a 50 percent reduction. Specifically, beginning in CY12, CMS will apply a MPPR 25 percent reduction to the PC of second and subsequent advanced imaging services furnished by the same physician to the same patient, in the same session, on the same day. CMS is adding CPT 74174 (Computed tomographic angiography, abdomen and pelvis; with contrast material(s), including noncontrast images, if performed, and image postprocessing), which is a new code for CY12, to the imaging MPPR list. This code is being added on an interim final basis.
 

Geographic Practice Cost Indices Revisions for CY12

CMS is finalizing revisions to the 6th geographic practice cost indices (GPCI) update using the most current data, with modifications. CMS is finalizing the proposal to change the GPCI cost share weights for CY12. As a result, the cost share weight for the physician work GPCI (as a percentage of the total) will be 48.266 percent, the cost share weight for the PE GPCI will be 47.439 percent, and the malpractice GCPI weight will be 4.295 percent.  The 1.0 PE GPCI floor for frontier states was applied to the budget neutralized GPCIs. The frontier states are Montana, Wyoming, North Dakota, Nevada, and South Dakota. The CY12 updated GAFs and GPCIs may be found in Addenda D and E of the rule.

Medicare Telehealth Services for the Physician Fee Schedule

CMS notes that it received requests in CY10 to add the following services as Medicare telehealth services effective for CY12: (1) smoking cessation services; (2) critical care services; (3) domiciliary or rest home evaluation and management services; (4) genetic counseling services; (5) online evaluation and management services; (6) data collection services; and (7) audiology services.
 

Smoking Cessation Services

CMS will add CPT codes 99406 and 99407 to the list of telehealth services for CY12 on a category 1 basis. Additionally, CMS will add HCPCS codes G0436 (Smoking and tobacco cessation counseling visit for the asymptomatic patient; intermediate, greater than 3 minutes, up to 10 minutes) and G0437 (Smoking and tobacco cessation counseling visit for the asymptomatic patient; intensive, greater than 10 minutes) to the list of telehealth services for CY12 and to revise the regulations at §410.78(b) and §414.65(a)(1) to include smoking cessation services as Medicare telehealth services.

CMS will not add Critical Care Services (as described by CPT codes 99291 and 99292) Domiciliary or Rest Home Evaluation and Management Services, Genetic Counseling Services, Online Evaluation and Management Services, Data Collection Services, or Audiology Services that are primarily provided by audiologists to the list of Medicare telehealth services for CY12.

 

The Process for Adding HCPCS Codes as Medicare Telehealth Services

CMS will revise the criteria used to review category 2 requests to add services to the list of Medicare telehealth services beginning in CY13. CMS is modifying the current requirement to demonstrate similar diagnostic findings or therapeutic interventions with respect to a candidate service delivered through telehealth compared to in person delivery of the service (the comparability standard). Instead, CMS will assess category 2 requests to add services to the telehealth list using a standard of demonstrated clinical benefit (the clinical benefit standard) when the service is furnished via telehealth. To support review using this revised standard, CMS asks requestors to specify in their request how the candidate telehealth service is still accurately described by the corresponding HCPCS or CPT code when delivered via telehealth as opposed to in person.
 

Addressing Interim Final RVUs from CY11, Proposed RVUs from CY12, and Establishing Interim RVUs for CY12

• Finalizing CY11 Interim and CY12 Proposed Values for CY12
  

  CMS addresses the interim final values published in Appendix C of the CY11 PFS final rule, as subsequently corrected in the January 11, 2011 correction notice; the proposed values published in the Fourth Five-Year Review of Work; and the proposed values published in the CY12 PFS proposed rule. CMS also discusses the results of the CY11 multi-specialty refinement panel, responds to public comments received on specific interim final and proposed values (including direct PE inputs), and addresses other new, revised, or potentially misvalued codes with interim final or proposed values. CMS’s analysis spans more than 200 pages. The rule’s table 15 provides a comprehensive list of all final values.
   

• Finalizing CY11 Interim Direct PE RVUs for CY12
  In this section, CMS addresses interim final direct PE inputs as presented in the CY11 PFS final rule and displayed in the final CY11 direct PE database (as subsequently corrected on December 30, 2010), which is available here and listed under Downloads as “CY 2011 Direct PE (DPEI) (Correction Notice as displayed Dec. 30, 2010). The rule’s table 16 reflects these time refinements.
   
• Finalizing CY12 Proposed Malpractice RVUs, Including Malpractice RVUs for Certain Cardiothoracic Surgery Services
  CMS is finalizing the five-year review malpractice crosswalks without modification for CY12. In addition to the scaling of malpractice RVUs to account for the proportionate difference between current and proposed work RVUs, there were 19 cardiothoracic surgery codes for which CMS proposed to scale the malpractice RVUs to account for the proportionate difference between the current and proposed revised specialty risk factor. For CY12, CMS is finalizing without modification the proposed crosswalks, as well as the proposed revisions to the malpractice risk factors for the cardiothoracic surgery services.
   
• Establishing Interim Final Direct PE RVUs for CY12
  CMS has accepted for CY12, as interim final and without refinement, the direct PE inputs based on the recommendations submitted by the AMA RUC for the codes listed in the rule’s Table 20. For the remainder of the AMA RUC’s direct PE recommendations, CMS has accepted the PE recommendations submitted by the AMA RUC as interim final, but with refinements. These codes and the refinements to their direct PE inputs are listed in the rule’s table 21.

Allowed Expenditures for Physicians’ Services and the Sustainable Growth Rate

The sustainable growth rate (SGR) is an annual growth rate that applies to physicians’ services paid by Medicare. The use of the SGR is intended to control growth in aggregate Medicare expenditures for physicians’ services. Section 1848(f)(2) of the Act specifies that the SGR for a year (beginning with CY01) is equal to the product of the following four factors:

• The estimated change in fees for physicians’ services
• The estimated change in the average number of Medicare fee-for-service beneficiaries
• The estimated projected growth in real GDP per capita
• The estimated change in expenditures due to changes in statute or regulations

The total reduction in MPFS rates between CY11 and CY12 under the SGR system will be 27.4 percent. By law, CMS notes that it is required to make these reductions in accordance with section 1848(d) and (f) of the Act, and these reductions can only be averted by an act of Congress.

The Temporary Payroll Tax Cut Continuation Act of 2011, signed by President Obama on December 23, 2011, contains provisions to delay SGR cuts to Medicare physician reimbursement payments until March 1, 2012, instead of January 1, 2012.
 

Bundling of Payments for Services Provided to Outpatients Who Later Are Admitted as Inpatients: 3-Day Payment Window Policy and the Impact on Wholly Owned or Wholly Operated Physician Practices

Under the 3-day payment window, a hospital (or an entity that is wholly owned or wholly operated by the hospital) must include on the claim for a Medicare beneficiary’s inpatient stay the technical portion of any outpatient diagnostic services and nondiagnostic services related to the admission provided during the payment window. The 3-day payment window policy applies to nondiagnostic services that are clinically related to an inpatient admission when preadmission services are furnished in a wholly owned or wholly operated entity and the patient is later admitted as an inpatient within the payment window. In such cases, Medicare will make payment for the preadmission services under the physician fee schedule at the facility rate.

Specifically, a new Medicare HCPCS modifier PD will be available to wholly owned or wholly operated entities beginning January 1, 2012, and may be appended to Part B claims lines to identify preadmission services that are subject to the three-day window policy. However, CMS will not formally implement the PD modifier for use by wholly hospital owned or wholly operated entities until July 1, 2012, in order to provide these entities sufficient time to coordinate their billing practices for clinically related nondiagnostic preadmission services. The PD modifier will signal claims processing systems to provide payment only for the PC for CPT/HCPCS codes with a TC/PC split and to pay services without a PC/TC split at the facility rate when they are provided in the three-day (or, in the case of non-IPPS hospitals, one-day) payment window. The facility rate will be paid for codes without a TC/PC split to avoid duplicate payment for the technical resources required to provide the services.
 

Therapy Services-Outpatient Therapy Caps for CY12

Section 1833(g) of the Act (as amended by section 4541 of the Balanced Budget Act of 1997) applies an annual, per beneficiary combined cap on expenses incurred for outpatient physical therapy and speech-language pathology services under Medicare Part B. A separate but identical cap also applies for outpatient occupational therapy services under Medicare Part B. The therapy cap amount for CY12 is $1,880. CMS’s authority to provide for exceptions to therapy caps (independent of the statutory exclusion for outpatient hospital therapy services) will expire on December 31, 2011, unless Congress acts to extend it.
 

Other Provisions of the Final Rule

Clinical Laboratory Fee Schedule: Signature on Requisition

CMS is retracting the policy that was finalized in the CY11 PFS final rule with comment period, which required a physician’s or NPP’s signature on a requisition for clinical diagnostic laboratory tests paid under the clinical laboratory fee schedule (CLFS) and to reinstate the prior policy that the signature of the physician or NPP is not required on a requisition for a clinical diagnostic laboratory test paid under the CLFS for Medicare purposes.
 

Medicare Coverage and Payment of the Annual Wellness Visit Providing a Personalized Prevention Plan Covered Under Medicare Part B

ACA section 4103 expanded Medicare coverage under Part B to include an annual wellness visit providing personalized prevention plan services (hereinafter referred to as the annual wellness visit or AWV). CMS proposed to amend 42 CFR 410.15 by:

• Adding the term “health risk assessment” (HRA).
• Revising the definitions of “first annual wellness visit providing personalized prevention plan services” and “subsequent annual wellness visit providing personalized prevention plan services.”
• Incorporating the use and results of an HRA into the provision of personalized prevention plan services during the AWV.

CMS is finalizing the provisions of the proposed rule, with the following modifications:

• CMS is modifying sub-paragraph (v)(C) of the definition of the term “health risk assessment” to read, “Psychosocial risks, including but not limited to, depression/life satisfaction, stress, anger, loneliness/social isolation, pain, and fatigue” to correct a typographical error in the proposed rule.
• CMS is modifying paragraph (v)(D) of the definition of the term “health risk assessment” to read, “Behavioral risks, including but not limited to, tobacco use, physical activity, nutrition and oral health, alcohol consumption, sexual health, motor vehicle safety (seat belt use), and home safety.”
• CMS is modifying the introductory text of the definition of the term “subsequent annual wellness visit providing personalized prevention plan services” to read as follows: “subsequent annual wellness visit providing personalized prevention plan services means the following services furnished to an eligible beneficiary by a health professional that include, and take into account the results of an updated health risk assessment, as those terms are defined:”
• CMS is modifying newly designated paragraph (i) of the definition of “subsequent annual wellness visit providing personalized prevention plan services” to read as follows: “(i) Review (and administration, if needed) of an updated health risk assessment (as defined in this section).”

Quality Reporting Initiatives Comment

As in the proposed rule, CMS devotes considerable effort explaining physician quality, electronic health reporting (EHR) and e-prescribing reporting issues. One section addresses eligible participants, another on registering to participate, and a third on the measures to be reported in CY12. The material is detailed, some 300 pages, and should be reviewed in its entirety to insure understanding and compliance.
 

Definition of Group Practice

CMS will change the definition of “group practice” under 42 CFR 414.90(b). Specifically, CMS will define that under the Physician Quality Reporting System, a “group practice” would consist of a physician group practice, as defined by a Tax Identification Number (TIN), with 25 or more individual eligible professionals (or, as identified by NPIs) that have reassigned their billing rights to the TIN. This definition of group practice is different from the definition of group practice that was applicable for the 2011 Physician Quality Reporting System, which defined a group practice as two or more eligible professionals.
 

Incentive Payments for the 2012 Physician Quality Reporting System

In accordance with 42 CFR 414.90(c)(3), eligible professionals that satisfactorily report 2012 Physician Quality Reporting System measures can qualify for an incentive equal to 0.5 percent of the total estimated Part B allowed charges for all covered professional services furnished by the eligible professional (or, in the case of a group practice participating in the GPRO, the group practice) during the applicable reporting period.
 

2012 Physician Quality Reporting System Measures

CMS describes the individual quality measures being finalizing for the 2012 Physician Quality Reporting System as follows: (The measures specifications for all finalized 2012 Physician Quality Reporting System measures will be available here.)

• 2012 Physician Quality Reporting System Core Measures Available for Claims, Registry, and/or EHR-based Reporting
• 2012 Physician Quality Reporting System Individual Measures for Claims and Registry Reporting

The 2012 Physician Quality Reporting System individual measures for either claims-based reporting or registry-based reporting are listed by their Physician Quality Reporting System Measure Number (to the extent the measure is part of the 2011 Physician Quality Reporting System measure set) and Title, along with the name of the measure’s developer/owner and NQF measure number, if applicable. The Physician Quality Reporting System Measure Number is a unique identifier assigned by CMS to all measures in the Physician Quality Reporting System measure set. Once a Physician Quality Reporting System Measure Number is assigned to a measure, it will not be used again to identify a different measure, even if the original measure to which the number was assigned is subsequently retired from the Physician Quality Reporting System measure set. The 2012 Physician Quality Reporting System Individual Quality Measures Available for Either Claims-based Reporting and/or Registry-based Reporting can be found in Table 47 of the final rule.
 

2012 Measures Available for EHR-based Reporting

For 2012, CMS proposed to accept Physician Quality Reporting System data from EHRs for a limited subset of 2012 Physician Quality Reporting System quality measures. CMS is finalizing the 70 measures identified in table 48 of the final rule for EHR-based reporting under the 2012 Physician Quality Reporting System. 
 

2012 Physician Quality Reporting System Measures Groups

CMS proposed to retain the following 2011 Physician Quality Reporting System measures groups for the 2012 Physician Quality Reporting System: (1) Diabetes Mellitus, (2) CKD, (3) Preventive Care, (4) CABG, (5) Rheumatoid Arthritis, (6) Perioperative Care, (7) Back Pain, (8) CAD, (9) Heart Failure, (10) IVD, (11) Hepatitis C, (12) HIV/AIDS, (13) CAP, and (14) Asthma. For 2012, CMS proposed that the CABG, CAD, Heart Failure, and HIV/AIDS measures groups would continue to be reportable through the registry-based reporting mechanism only, while the remaining measures groups would continue to be reportable through either claims-based reporting or registry-based reporting. 

Further, CMS proposed the following 10 new measures groups for 2012 to provide eligible professionals with more measures groups on which to report:

• Chronic Obstructive Pulmonary Disease (COPD)
• Inflammatory Bowel Disease 
• Sleep Apnea
• Epilepsy
• Dementia 
• Parkinson’s 
• Elevated Blood Pressure 
• Radiology 
• Cardiovascular Prevention, which contains individual measures from the Physician Quality Reporting System core measure set
• Cataracts

CMS says it is finalizing all of the proposed measures groups except for the epilepsy and radiology measures group. For 2012, only measures contained in the following measures groups will be available for reporting as individual measures: diabetes mellitus, adult kidney disease, preventive care, CABG, rheumatoid arthritis, perioperative care, CAD, heart failure, IVD, hepatitis C, HIV/AIDS, CAP, asthma, cardiovascular prevention, and COPD.

CMS has identified the measures groups in Tables 50 through 71, and will post the detailed specifications and specific instructions for reporting measures groups on the Physician Quality Reporting System section of the CMS website. 
 

Future Payment Adjustments for the Physician Quality Reporting System

ACA section 3002(b) mandates that beginning 2015 or any subsequent year, if an eligible professional does not satisfactorily submit data on quality measures, the fee schedule amount for services furnished by such professionals during the year shall be equal to the applicable percent of the fee schedule amount that would otherwise apply to such services.

The applicable percent is:

• 98.5 percent for 2015
• 98.0 percent for 2016 and each subsequent year

Incentives and Payment Adjustments for Electronic Prescribing (eRx) – The Electronic Prescribing Incentive Program

From 2009 through 2013, the Secretary is authorized to provide eligible professionals who are successful electronic prescribers an incentive payment equal to a percentage of the eligible professional’s total estimated Medicare Part B PFS allowed charges (based on claims submitted not later than two months after the end of the reporting period) for all covered professional services furnished by the eligible professional during the respective reporting period.

The applicable electronic prescribing percent for incentive payments under the eRx Incentive Program are as follows:

• 2.0 percent for 2009
• 2.0 percent for 2010
• 1.0 percent for 2011
• 1.0 percent for 2012
• 0.5 percent for 2013

If an eligible professional is not a successful electronic prescriber for the respective reporting period for the year, the PFS amount for covered professional services during the year shall be a percentage less than the PFS amount that would otherwise apply. The applicable electronic prescribing percent for payment adjustments under the eRx Incentive Program are as follows:

• 1.0 percent in 2012
• 1.5 percent in 2013
• 2.0 percent in 2014

More Information

Read the Medicare physician fee schedule final rule, published in the November 28, 2011, Federal Register .

 

Content for this fact sheet was extracted from Washington Perspectives, published by Larry Goldberg, Oakton, VA.