July 15, 2008

Legislative Victory: Medicare Bill Enacted by Congress

Congress enacted a law that replaces a 10.6 percent Medicare fee cut for physicians with a 0.5% update for the remainder of 2008; replaces an over 5% cut with a positive 1.1 percent payment update for all of 2009; and extends the therapy caps’ exceptions process through December 31, 2009.

On July 15th, President Bush vetoed H.R. 6331- the "Medicare Improvements for Patients and Providers Act (MIPPA)”. However, both chambers of Congress voted overwhelmingly to override the veto--the House by a vote of 383-41 and the Senate by a vote of 70-26.

The new law includes many Medicare provisions of importance to physiatrists including:

• Stops Medicare payment cuts for 18 months through December 31, 2009 and provides a 1.1% positive Medicare payment update for 2009, allowing time for Congress to develop an alternative update mechanism to address the additional Medicare payment cuts still projected for 2010 and beyond.

• Extends the therapy caps exceptions process for 18 months through December 31, 2009.

• Delays implementation of Round 1 of the the competitive bidding program for durable medical equipment for 18 months.

• Exempts complex rehabilitation wheelchairs from the competitive bidding program to protect access to and quality of such individualized devices.

• Increases the PQRI bonus to 2.0% for 2009 and 2010 for physicians who choose to participate in the program.

The Academy is grateful to all members of Congress who supported the bill.

Thanks also to member physiatrists for your valuable participation in Academy Calls-to-Action through the Advocacy Action Center on this historic legislation.

Additional Information on Major Provisions of the Medicare Law

Outpatient Therapy Cap: Extension of Therapy Cap Exceptions

The MIPPA extends the effective date of the exceptions process to the therapy caps to December 31, 2009. Outpatient therapy service providers may now resume submitting claims with the KX modifier for therapy services that exceed the cap furnished on or after July 1, 2008.

For physical therapy and speech language pathology services combined, the limit on incurred expenses is $1810 for calendar year 2008. For occupational therapy services, the limit is $1810. Deductible and coinsurance amounts applied to therapy services count toward the amount accrued before a cap is reached. Services that meet the exceptions criteria and report the KX modifier will be paid beyond this limit.

Before this legislation was enacted, outpatient therapy service providers were previously instructed to not submit the KX modifier on claims for services furnished on or after July 1, 2008. The extension of the therapy cap exceptions is retroactive to July 1, 2008. As a result, providers may have already submitted some claims without the KX modifier that would qualify for an exception.

Providers submitting these claims using the 837 institutional electronic claim format or the UB-04 paper claim format would have had these claims rejected for exceeding the cap. These providers should resubmit these claims appending the KX modifier so they may now be processed and paid. Providers submitting these claims using the 837 professional electronic claim format or the CMS-1500 paper claim format would have had these claims denied for exceeding the cap. These providers should request to have their claims adjusted in order to have the contractor pay the claim.

In all cases, if the beneficiary was notified of their liability and the beneficiary made payment for services that now qualify for exceptions, any such payments should be refunded to the beneficiary.

The Academy will continue to advocate for the elimination of the therapy cap and thus ensure access to care for the elderly and those who are disabled.

Medicare Physician Payment Cut:

New 2008 Medicare Physician Fee Schedule Payment Rates Effective for Dates of Service July 1, 2008 through December 31, 2008

The Medicare Improvements for Patients and Providers Act of 2008 was enacted on July 15, 2008. As a result, the mid-year 2008 Medicare Physician Fee Schedule (MPFS) rate of -10.6 percent has been replaced with a 0.5 percent update, retroactive to July 1, 2008.

Physicians, non-physician practitioners and other providers of services paid under the MPFS should begin to receive payment at the 0.5 % update rates in approximately 10 business days, or less. Medicare contractors are currently working to update their payment system with the new rates.

In the meantime, to avoid a disruption to the payment of claims for physicians, non-physician practitioners and other providers of services paid under the MPFS, Medicare contractors will continue to process the claims that have been on hold on a rolling basis (first in/first out) for payment at the -10.6% update level. After your local contractor begins to pay claims at the new 0.5% rate, to the extent possible, the contractor will begin to automatically reprocess any claims paid at the lower rates.

Under the Medicare statute, Medicare pays the lower of submitted charges or the Medicare fee schedule amount. Claims with dates of service July 1 and later billed with a submitted charge at least at the level of the January 1 – June 30, 2008, fee schedule amount will be automatically reprocessed. Any lesser amount will require providers to contact their local contractor for direction on obtaining adjustments. Non-participating physicians who submitted unassigned claims at the reduced nonparticipation amount also will need to request an adjustment.

Contractor websites are being updated with the new rates and these should be available shortly.

Be aware that any CMS published MLN Matters articles affected by the new law will be revised or rescinded as appropriate and made available on the CMS web site.

Finally, be on the alert for more information about other provisions of the new law that may affect your practice.

For more information, log on to http://www.cms.hhs.gov/center/physician.asp or visit this Web site for updates on this issue.

Competitive Bidding Program

The law also delays Round 2 of the Competitive Bidding Program until 2011 to allow stakeholders to assess the impact of Round 1; exempts complex rehabilitation wheelchairs from the competitive bidding program to protect access to and quality of these individualized devices; establishes a competitive bidding ombudsman at CMS to respond to beneficiary and supplier issues and concerns; and spares power wheelchairs and oxygen equipment from deep cuts.

The DME Competitive Bidding Program affects Medicare beneficiaries only in the following geographical areas: (1) Charlotte-Gastonia-Concord, NC-SC, (2) Cincinnati-Middletown, OH-KY-IN, (3) Cleveland-Elyria-Mentor, OH, (4) Dallas-Fort Worth-Arlington, TX, (5) Kansas City, MO-KS, (6) Miami-Fort Lauderdale-Miami Beach, FL, (7) Orlando-Kissimmee, FL, (8) Pittsburgh, PA, (9) Riverside-San Bernardino-Ontario, CA, and (10) San Juan, PR.

For more information on payment rates and claims processing, watch for updates at: http://www.cms.hhs.gov/DMEPOSCompetitiveBid/

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