CMS Proposes Policy, Payment Rate Changes for 2012 Physician Fee Schedule

Earlier this month, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would update payment policies and rates for physicians and nonphysician practitioners (NPPs) for services paid under the Medicare Physician Fee Schedule (MPFS) in calendar year (CY) 2012. More than 1 million providers of vital health services to Medicare beneficiaries – including medical and osteopathic physicians, limited license practitioners such as podiatrists, and NPPs such as nurse practitioners and physical therapists – are paid under the MPFS. CMS projects that total payments under the MPFS in CY 2012 will be $80 billion.

CMS is required to issue a proposed rule that reflects current law. Under current law, providers would face steep across-the-board reduction in payment rates, based on a formula– the Sustainable Growth Rate (SGR) – that was adopted in the Balanced Budget Act of 1997. If it goes into effect, Medicare payment rates are projected to be reduced by 29.5 percent for services in 2012. This is the eleventh time the SGR formula resulted in a payment cut, although the cuts have been averted through legislation in all but CY 2002. In 2010, three separate pieces of legislation were necessary to avert the payment cuts, followed by two additional enactments that authorized increases in the physician update, resulting in higher payment rates for physicians’ services performed between June 1, 2010 through December 31.

In the 2012 proposed rule, CMS is significantly expanding the potentially misvalued code initiative, an effort to ensure Medicare is paying accurately for physician services and more closely managing the payment system. This year, CMS is focusing on the highest volume and dollar codes billed by physicians to determine whether these codes are overvalued and if evaluation and management codes are undervalued. In the past, CMS has targeted specific codes for review that may have affected a few procedural specialties like cardiology, radiology or nuclear medicine but not taken a look at the highest expenditure codes across all specialties.

CMS will accept comments on the proposed rule until August 30, and will review and respond to all comments in a final rule to be issued by November 1.

Read more, including details on other changes in the proposed rule.