Medicare Unveils Physician Payment Rule

HDM Breaking News, July 1, 2009

Medicare is proposing simplified reporting requirements for the Electronic Prescribing Incentive Program and the Physician Quality Reporting Initiative in a proposed rule setting the Medicare Physician Fee Schedule for calendar year 2010.

In addition, the proposal would add more measures for physicians to report under the PQRI pay-for-performance program, enable data submission from an electronic health records system, and create a process to ease group practice reporting of quality measures.

The Centers for Medicare and Medicaid Services issued the proposed rule today and will publish it July 13 in the Federal Register. CMS will accept public comment though Aug. 31 and publish a final rule by Nov. 1. The revised physician payment system would be effective on Jan. 1, 2010. The proposed rule is available at federalregister.gov/inspection.aspx#special.

Based on current data, CMS is projecting an overall Medicare rate reduction for physicians of 21.5% in 2010. The agency and Congress annually take a number of actions to prevent or minimize reductions.

In the proposed rule, CMS takes several steps to increase certain payments, in part, with a carrot-and-stick approach. For instance, CMS is proposing to stop paying for "consultation" codes typically billed by specialists at a higher rate than equivalent "evaluation and management" services. "Practitioners will use existing E/M service codes when providing these services instead," according to the agency. "Resulting savings would be redistributed to increase payments for the existing E/M services."

CMS also is proposing to remove physician-administered drugs from the definition of "physician services," an action the American Medical Association applauds. "The AMA has been calling for this action since 2002 so that Congress can afford to repeal the flawed Medicare physician payment formula," according to the Chicago-based association. "We are very pleased that the Obama administration agrees with the AMA that drugs do not belong in the physician payment formula. President Obama, HHS Secretary Sebelius and White House Health Reform Director DeParle clearly understand that fixing the Medicare payment formula once and for all is fundamental to comprehensive health reform."

--Joseph Goedert

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