Medicare Compliance & Reimbursement

The proposed rule makes for the highest increase of any specialty.

With the 2014 Medicare Physician Fee Schedule Proposed Rule, CMS estimates that emergency medicine will see a positive cumulative impact on total allowed charges of three percent.

Background: There are several factors involved with this calculation, says Mike Granovsky, MD, FACEP, CPC, President of Logix Health in Bedford, MA. Foremost is the assumption that the scheduled formula-driven SGR cuts of 24.4 percent will be delayed again, as in every year since 2003.

Look for E/M Practice Expense RVUs Decrease

Next year’s relative value unit changes are driven by three factors:

1.  A statutory change that requires CMS to use a 90 percent equipment utilization rate rather than the previously used 75 percent rate for expensive diagnostic imaging equipment. This impacts other specialties significantly but not emergency medicine.

2.  The CMS proposal to cap the payments for certain non-facility services. Similarly, since all ED services are in the facility, emergency departments will not be impacted by this factor.

3.  CMS’s proposal to revise the Medicare Economic Index (MEI) and adjust the RVUs to match the new weights for Work, PE, and Professional Liability Insurance (PLI).

ED benefit: The Proposed Rule makes it clear that it is the MEI reweighting that is responsible for the estimated three percent increase in the ED relevant E/M codes. The positive impact is the effect of reconsidering non-physician clinical staff, like a NP or PA, that can bill independently from being considered a practice expense to being considered as physician work. This proposed change would increase the physician work cost share by 2.600 percentage points and reduces non-physician compensation costs by the same amount.

Here’s How Decreased RVUs Generate Payment Increases

An actual comparison of the 2013 RVUs for physician work, practice expense and PLI with those proposed for 2014 shows decreases for every ED E/M code and critical care. Typically, that would mean a decrease in payments for these codes when multiplied by the conversion factor.

Rationale: The reason CMS estimates a three percent increase is because of the weighting changes mentioned earlier. Emergency medicine as a specialty tends to have the highest proportion of Work RVUs to Total RVUS because of the low practice expense associated with all ED services being provided in the facility setting.

In other words, because the practice expense components of non-physician clinical labor, equipment and supplies are attributed to, and paid to the hospital, those RVUs are less for any code reported in the ED setting. The proposed MEI weighting changes for 2014 raises the impact for Work RVUs and lowers the impact of practice expense RVUs. Consequently, emergency medicine fares better under that scenario.

Additionally, the CMS estimates are based on the assumption that the 2013 conversion factor of 34.0230 will be adjusted to 35.6653 to include the budget neutrality adjustment. That would be an increase in the conversion factor of 4.8 percent, which would provide an increase in payments even with lower total RVUs, Granovsky explains.

Brace for the Bottom to Drop Out of the GPCI Floor

Along with “fixing” the SGR cuts over the past few years, Congress has also directed CMS to maintain the national geographic practice cost indices (GPCIs) for Work RVUs at a minimum threshold of 1.0. That artificial floor is scheduled to expire in 2014, unless Congress acts again to extend the threshold.

Wild west: The “frontier states,” defined as those in which at least 50 percent of the counties are “frontier counties,” that have a population per square mile of less than six, are excepted from this change as established in 2011 going forward. Those states are Montana, Nevada, North Dakota, South Dakota and Wyoming. They will continue to enjoy the minimum work GPCI of 1.0. Alaska is also exempted with a permanent work GPCI of 1.5.

If you are operating in any other state, you could see a decrease in payments, depending on your assigned work GPCI Interested parties have until September 6, 2013 to comment on these proposals. CMS will consider all comments before releasing the final rule for 2014 around November first, says Granovsky.

Resource: Work GPCIs for 2014 can be found in Addendum E of the proposed rule found at this link: www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices-Items. Open the zipped file labeled “CY 2014 PFS Proposed Rule Addenda” to view Addendum E.