Practice Management Alert

If the proposed 2008 physician fee schedule that CMS released in July goes through as planned, the reimbursement for services your physician provides to Medicare patients will face a 9.9 percent cut next year.

Bad news: The biggest losers, according to the proposal for 2008, would be cardiologists, emergency physicians, hand surgeons, interventional radiologists, nephrologists, neurosurgeons, rheumatologists, thoracic surgeons and vascular surgeons. The biggest winners from the new rule would be anesthesiologists, audiologists, optometrists, nuclear medicine physicians, geriatricians and dermatologists.

What should you do: -The best a practice can do now is to build up cash reserves; billers/collectors should collect every dollar allowed,- says Gail Lorenzen, CHBC, senior consultant with The Sage Group in Phoenix.

Get up and running with the Physician Quality Reporting Initiative (PQRI) program as well, says Denae M. Merrill, CPC-E/M, coder for Covenant MSO in Saginaw, Mich. -At the least, you get ready for what could become mandatory in the future, and at best, you get a little extra money for your efforts.-

There is some hope: Congress may step in to save you from such a steep cut just as it has done for the past few years. Congress acted at the very last minute to prevent a reduction to your reimbursement in January 2007 by approving and passing a freeze that keeps the conversion factor (CF) at the current 2006 rate of 37.8975 instead of decreasing it to the scheduled 2007 rate of 35.9848.

-I don't get worked up about the -proposed- cuts until well into that year because, for the past couple of years, they seem to do something to help keep payments from going down,- Merrill says.

No one can guess yet whether Congress will step in again for next year, experts say. -However, even if Congress steps forward and reduces the 9.9 percent cut, there are other subtle areas that will be cut regardless of Congress,- Lorenzen says.

Example: The budget neutrality work adjustor will be reduced to 0.8816 from 0.8994 next year. This means your physician's work payments will drop another 1.7 percent in 2008, mainly affecting your E/M reimbursement, Lorenzen says. One of the most frequently billed services, 99213 (Office or other outpatient visit for the evaluation and management of an established patient ...), will be reduced from $59.50 to $58.73 even without any change in the conversion factor.

-A practice's payments are calculated from a formula based on three components: physician work, practice expense, and malpractice, all adjusted for geographic variations,- Lorenzen says. -Changes to any of these elements impact your payments.-

In addition: Your geographic price cost index (GPCI) may change and mean further cuts in your 2008 payments. Your reimbursement is set to face an additional drop if you live in 56 of the 89 payment localities where the work GPCI is typically less than 1.0, CMS said in the proposed fee schedule. Of note is that the provision passed by Congress to set a minimum 1.0 GPCI nationwide for work relative value units (RVUs) expires at the end of 2007.

If you-re in North Dakota or Montana, for example, your work GPCI would fall by about 3 percent due to removal of the work GPCI floor and would be further impacted by proposed geographic adjustment factor (GAF) revisions that would create an additional 0.82 percent and 0.45 percent decrease.

The bright side: CMS decided to accept a number of recommendations from the AMA's Relative Value Update Committee (RUC) that it ignored last year. That means the value of the work RVUs for anesthesia services will go up by 32 percent. Anesthesiologists are the only specialty that stands to see an increase in payments, instead of a decrease, in 2008.

More money: And CMS will adjust the work RVUs for more than 50 procedures, in line with the RUC's recommendations. Work RVUs will go up for 33 codes and decrease for 10 codes. One of the big winners is 19301 (Mastectomy, partial), which goes up from 6.03 work RVUs to 10 work RVUs. Some audiology and cochlear implant codes will go from zero work RVUs to low work RVUs.

Most nursing facility care codes (99304-99310) will see RVU increases. But home visits (99341-99350) will stay the same, instead of increasing as some physicians had requested.

Good news: CMS is also revising the way it calculates payments for Part B drugs. Medicare will force drug manufacturers to allocate their -bundled price concessions- when they report the costs of drugs. That may mean you won't lose as much money on drugs because large organizations are getting bulk discounts and driving the average prices down.

Tip: Visit the AMA's Web site at www.ama-assn.org/ama/pub/category/14332.html for information that will -help everyone from providers to billers to patients understand what is happening and their proposed changes to help,- Merrill says.