2011 MPFS Final Rule Reduces Pay Rates

The Centers for Medicare & Medicaid Services (CMS) issued a final rule with comment period Nov. 2,  implementing a number of provisions in the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively referred to as the Affordable Care Act). The 2011 Medicare Physician Fee Schedule (MPFS) final rule also updates payment policies and rates for physicians’ services furnished in 2011, with a significant drop in rates.

2011 Payment Policies and Rates

Barring Congressional intervention, the final rule reduces payment rates for physicians’ services under the Sustainable Growth Rate (SGR) formula. These payment rates are currently scheduled to be reduced under the SGR system on Dec. 1, 2010, and then again on Jan. 1, 2011. The total reduction in MPFS rates between November 2010 and January 2011 under the SGR system is 24.9 percent.
“While Congress has provided temporary relief from these reductions every year since 2003, a long-term solution is critical,” CMS states in the final rule. “We are committed to permanently reforming the Medicare payment formula.”

Meanwhile, for 2011, the MPFS conversion factor is $25.5217; and the national average anesthesia conversion factor is $15.8085.

CMS also is rebasing and revising the Medicare Economic Index (MEI) to use a 2006 base year in place of a 2000 base year.

Specifically, CMS is not making an adjustment directly to the work relative value units (RVUs), but is instead increasing the PE RVUs by an adjustment factor of 1.181 and the malpractice RVUs by an adjustment factor of 1.358 (see Addendum B to the final rule).
Additionally, the final rule discusses CMS’ analysis of practice expense geographic practice cost index (PE GPCI) data and methods, and incorporates new data as part of the sixth GPCI update, while keeping the GPCI cost share weights the same. As a result, the cost share weight for the physician work GPCI (as a percentage of the total) will be 52.5 percent rather than 48.3 percent (as proposed), and the cost share weight for the PE GPCI will be 43.7 percent rather than 47.4 percent (as proposed), with only a slight difference in the employee compensation component (18.7 percent rather than 19.2 percent, as proposed). However, the cost share weight for the office rent component of the PE GPCI will be 12.2 percent rather than 8.4 percent (as proposed), and the medical equipment, supplies, and other miscellaneous expenses component will be 12.8 percent rather than 19.9 percent (as proposed). Moreover, the cost share weight for the malpractice GPCI will be 3.9 percent rather than 4.3 percent (as proposed).

Affordable Care Act Provisions

The 2011 MPFS final rule also implements several highly-publicized Affordable Care Act provisions, such as:
Access to Primary Care and Prevention: The 2011 MPFS final rule implements the Affordable Care Act provision which eliminates the deductible and coinsurance for most preventive services, effective Jan. 1, 2011.
Coverage of Annual Wellness Visits: The law states that annual wellness visits may include at least the following six elements:

• Establish or update the individual’s medical and family history.
• List the individual’s current medical providers and suppliers and all prescribed medications.
• Record measurements of height, weight, body mass index, blood pressure and other routine measurements.
• Detect any cognitive impairment.
• Establish or update a screening schedule for the next 5 to 10 years including screenings appropriate for the general population, and any additional screenings that may be appropriate because of the individual patient’s risk factors.
• Furnish personalized health advice and appropriate referrals to health education or preventive services.

CMS has developed two separate Level II HCPCS codes for the first annual wellness visit (G0438 Annual wellness visit, including personalized prevention plan services, first visit) to be paid at the rate of a level 4 office visit for a new patient, and for subsequent annual wellness visits (G0439 Annual wellness visit, including personalized prevention plan services, subsequent visit) to be paid at the rate of a level 4 office visit for an established patient.
Incentive Payments to Primary Care Practitioners: Physicians who have a primary specialty designation of family medicine, internal medicine, geriatric medicine, or pediatric medicine; as well as nurse practitioners, clinical nurse specialists, and physician assistants; and for whom primary care services accounted for at least 60 percent of the practitioner’s MPFS allowed charges for a prior period can earn incentive payments equal to 10 percent of their allowed charges for primary care services under Part B.
The law also defines primary care services as limited to new and established patient office or other outpatient visits (CPT® codes 99201 through 99215); nursing facility care visits, and domiciliary, rest home, or home care plan oversight services (CPT® codes 99304 through 99340); and patient home visits (CPT® codes 99341 through 99350).
The incentive payments will be made quarterly based on the primary care services furnished in 2011 by the primary care practitioner, in addition to any physician bonus payments for services furnished in Health Professional Shortage Areas (HPSAs).
CMS will determine a practitioner’s eligibility for 2011 incentive payments using 2009 claims data and the provider’s specialty designation. For newly enrolled practitioners, CMS will use 2010 claims data. CMS will revise the list of primary care practitioners on a yearly basis, based on updated data regarding an individual’s specialty designation and percentage of allowed charges for primary care services.
Incentive Payments for Major Surgical Procedures in HPSAs: The amount of the incentive payment is equal to 10 percent of the MPFS payment for the surgical services—defined as those with a 10- or 90-day global period—furnished between Jan. 1, 2011 and Dec. 31, 2016.
Permitting Physician Assistants To Order Post-Hospital Extended Care Services: The Affordable Care Act newly authorizes physician assistants to perform the level of care certification that is one of the requirements for coverage under Medicare’s skilled nursing facility (SNF) benefit.
Payment for Bone Density Tests: The payment for two dual-energy X-ray absorptiometry (DXA) CPT® codes for measuring bone density is increased for 2010 and 2011. This provision requires payments for these preventive services to be based on 70 percent of their 2006 RVUs and the 2006 conversion factor, as well as the current year geographic adjustment.
Payment for Certified Nurse-Midwife Services: For services on or after Jan. 1, 2011, the Medicare payment for certified nurse-midwife services increases from 65 percent of the MPFS amount for the same services furnished by a physician to 100 percent (or 80 percent of the actual charge, if that is less).
Medicare Reasonable Cost Payments for Certain Clinical Diagnostic Laboratory Tests Furnished to Hospital Patients in Certain Rural Areas: The reasonable cost payment is reinstituted for clinical diagnostic laboratory tests performed by hospitals with fewer than 50 beds that are located in qualified rural areas as part of their outpatient services for cost reporting periods beginning on or after July 1, 2010 through June 30, 2011.
Physician Self-Referral Disclosure for Certain Imaging Services: In 2011, CMS will require the referring physician to provide patients with a list of five alternative suppliers within a 25-mile radius of the physician’s office who provide the same imaging services ordered.
Adjustments to the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program: Round 2 of this program will be expanded in 2011 from 70 metropolitan statistical areas (MSAs) to 91 MSAs.
Misvalued Codes Under the Physician Fee Schedule: The MPFS final rule identifies additional categories of services that may be misvalued, including codes with low work RVUs commonly billed in multiple units per single encounter and codes with high volume and low work RVUs. The final rule also includes CMS’ response to recommendations from the American Medical Association (AMA) Relative Value Update Committee (RUC) for 2011 regarding the work or direct practice expense inputs for 325 CPT® codes.
Multiple Procedure Payment Reduction (MPPR) Policy for Therapy Services: Although not part of the Affordable Care Act, CMS is adopting a multiple procedure payment reduction policy for therapy services that will reduce by 25 percent the payment for the practice expense component of the second and subsequent “always therapy” services furnished by a single provider to a beneficiary on a single date of service. This policy will apply to all outpatient therapy services paid under Part B.
CMS notes that the MPPR would apply only when multiple therapy services are billed on the same date of service for one patient by the same practitioner or facility under the same National Provider Identifier (NPI). This policy does not apply to add-on, bundled, or contractor-priced “always therapy” codes.
The final list of 2011 CPT® codes for “always therapy” services subject to the therapy MPPR is shown in Table 21 (page 239).
Modification of Equipment Utilization Factor and Multiple Procedure Payment Policy for Advanced Imaging Services: Effective Jan. 1, 2011, CMS will assign a 75 percent equipment utilization rate assumption to expensive diagnostic imaging equipment used in diagnostic computed tomography (CT) and magnetic resonance imaging (MRI) services.
The final CPT® codes subject to the 75 percent equipment utilization rate assumption in 2011 are shown in Table 3 of the final rule.
Revision To Payment For Power-Driven Wheelchairs: CMS is adjusting the payment schedule for power-driven wheelchairs under the Medicare Part B fee schedule to pay 15 percent (instead of 10 percent) of the purchase price for the first three months of the 13-month rental period and 6 percent (instead of 7.5 percent) for the remaining months. Payment is based on the lower of the supplier’s actual charge and the fee schedule amount.
CMS also is revising the regulations to eliminate the lump sum (up-front) purchase payment option for standard power-driven wheelchairs and permit payment only on a monthly rental basis for standard power-driven wheelchairs effective for items furnished on or after Jan. 1, 2011. For complex rehabilitative power-driven wheelchairs, however, the regulations continue to permit payment to be made on either a lump sum purchase method or a monthly rental method.
Maximum Period For Submission of Medicare Claims Reduced to Not More Than 12 Months: The final rule revises the timely filing regulations to reflect the new requirements for providers and suppliers to file claims within a one year period. It also establishes three new exceptions to the timely filing requirements for retroactive entitlement situations, dual-eligible beneficiary situations, and retroactive disenrollment from Medicare Advantage plans or PACE provider organizations.

Therapy Caps

Section 1833(g)(5) of the Social Security Act (as amended by section 3103 of the Affordable Care Act) extended the exceptions process for therapy caps through Dec. 31, 2010. Since the MEI for 2011 is 0.4 percent, the therapy cap amount for 2011 is $1870.
The Medicare agency’s authority to provide for exceptions to therapy caps (independent of the outpatient hospital exception) will expire on Dec. 31, 2010, unless the Congress acts to extend it.

Telehealth Services for 2011

CMS is finalizing its 2011 proposal to add HCPCS Level II code G0420 Face-to-face educational services related to the care of chronic kidney disease; individual, per session, per one hour to the list of telehealth services for 2011 on a category 1 basis and to revise its regulations at §410.78(b) and §414.65(a)(1) to include individual kidney disease education (KDE) as a Medicare telehealth service.
Look for an in-depth analysis of this final rule in an upcoming issue of Coding Edge. The 2011 MPFS final rule with comment period will appear in the Nov. 29 Federal Register.

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