CMS Releases Proposed Medicare Physician Payment Fee Schedule

Update: Read the comments AAPM&R submitted to CMS on the proposed rule. (PDF Download)

The Centers for Medicare and Medicaid Services (CMS) published its proposed Medicare Physician Fee Schedule in the Federal Register on July 7. It will become final later this year and implemented on January 1, 2009. The proposed rule was released prior to final passage of the Medicare Improve­ments for Patients and Providers Act (MIPPA) on July 15, and does not reflect the 1.1% increase for physicians in 2009. The proposed rule indicates a 5.4% reduction to the Sustainable Growth Rate (SGR), but MIPPA will override it and the 1.1% increase will prevail.

Additionally, MIPPA also contains a provision that will require CMS to apply the budget neutrality adjustor (required under current law to keep Medicare expenditures from increasing in excess of $20 million in one year) to the conversion factor. Since 2006, the budget neutrality adjustor had been applied to all work relative value units (RVUs), resulting in at least an additional 10% decrease in reimbursement. The exact impact of this change is still unknown, but the Academy will continue to update its members on this matter as more information becomes available.

In addition to these changes, the proposed Physician Fee Schedule also includes provisions regarding anti-markup and Independent Diagnostic Testing Facilities (IDTFs) rules.

Anti-markup provisions

Currently, if a physician purchases the technical component (TC) of a diagnostic test from an outside supplier and bills for that service, the physician’s charge to Medicare may not be “marked up.” This means that the charge to Medicare has to be identical to what the physician pays the outside supplier, a rule has been in effect for several years.

The final 2008 Medicare Physician Fee Schedule finalized regulations that would have applied the anti-markup rule to both the TC and the professional component (PC), or interpretation, of diagnostic tests that were either purchased from an outside supplier or performed outside of the “office of the billing physician or other supplier.” After AAPM&R and the physician community took action against the new provisions, CMS delayed implementation of the rule until January 1, 2009. The previous rules regarding anti-markup rules for the TC of diagnostic tests remain in effect.

In the proposed 2009 Physician Fee Schedule, CMS has proposed two new alternatives to the anti-markup rule. These proposed changes could affect arrangements between physiatrists and other practices to perform EMGs or nerve conduction studies (NCS) on a part-time basis.

The first alternative would apply the anti-markup rules if both the PC and the TC of a diagnostic test are performed or supervised by a physician who does not share a practice with the billing physician. The proposal defines “shares a practice” very narrowly and would only include physicians who have an “exclusive” relationship with a practice, either through employment or by contract. This would mean that for any physician who works part-time for more than one practice, that physician would not be considered as “sharing a practice” with any group; thus all diagnostic tests performed would be subject to the anti-markup rule.

The second alternative is essentially the same proposal that was adopted in the 2008 fee schedule, then delayed until 2009. This alternative would apply the anti-markup rule to both the TC and PC of diagnostic tests that are performed outside of “the office of the billing physician or other supplier.” Such a proposal may have less impact on physiatry practices, as EMGs and nerve conduction studies (NCS) are mainly performed in the office, which would therefore not be subject to the anti-markup rules. Practices that supply tests in multiple locations or in a location outside of their offices would be affected in this instance.

IDTF rules applied to physician practices

The proposed Physician Fee Schedule includes a provision that would require physician offices that perform diagnostic tests, including ultrasound, to enroll in Medicare as IDTFs and meet the standards that apply to these entities. This proposal would require physician offices to ensure that the supervising physician and technician performing the test meet Medicare proficiency or credentialing standards, as determined by local Medicare carriers.

In the past, some local Medicare carriers have issued local coverage determinations that require IDTFs that perform certain imaging services to use board-certified radiologists as the supervising physician. If this rule were to be made final, physiatrists who perform ultrasound, or other imaging services, in their offices, may be required to contract with a radiologist to serve as the “supervising physician.” If the particular test being performed is one that requires “direct” or “personal” supervision, the radiologist would be required to be on-site when the test is performed.

Medicare carriers may also be required to develop proficiency standards for technicians and physicians who provide supervision for EMGs and NCS. In this instance, if a technician performs the TC of an EMG or NCS rather than the physiatrist, that technician may be required to meet proficiency standards established by Medicare.

At press time, AAPM&R was drafting comments on the proposed rule, due to CMS by August 29. Once the final rule is published, additional information will be posted to this Web site.

Read the comments AAPM&R submitted to CMS on the proposed rule. (PDF Download)

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