Psychiatr News December 15, 2006
Volume 41, Number 24, page 1
© 2006 American Psychiatric Association
Medicare Physician Fee Cuts Pack Huge Wallop for 2007
Mark Moran
For psychiatrists, the net result of the formula used to determine Medicare
physician fees is an average overall reduction of 7 percent. Many other
physicians will experience even greater cuts.
Without Congressional action, psychiatrists will on average face cuts in
Medicare reimbursement of 7 percent on January 1, 2007, as a result of a final
rule issued by the Centers for Medicare and Medicaid Services (CMS) last
month.
The impending cuts are the result of two separate adjustments in the
formula by which physicians are paid under Medicare: a 5 percent overall
payment reduction for all physicians, as part of an annual update issued by
CMS, stemming from a change to the "conversion factor" that is
adjusted from year to year to maintain budget neutrality; and a separate
adjustment to work and practice expense relative-value units (RVUs).
(The work and practice expense RVUs are components of the Resource-Based
Relative Value Scale, the elaborate formula used to calculate physician
payment under the Medicare program; another component is the malpractice
insurance expense RVU. To calculate a payment for each CPT code, the
three components, adjusted for geographical differences, are added together
and multiplied by the conversion factor.)
On average, psychiatrists will face a 3 percent decrease due to the change
in work RVUs, in addition to the across-the-board 5 percent cut resulting from
the change to the conversion factor; they will receive an increase of 1
percent due to recalculation of the practice expense RVU.
The cuts also apply to other providers of Medicare services (see
table on page 28), and some
will be hit harder than psychiatrists.
The impending cuts riled doctors at the AMA meeting last month (see article
at right) and have added urgency to physician groups' demand that Congress
replace the payment formula, especially the much derided sustainable growth
rate component. That component pegs fee changes to Congressionally designated
spending targets that do not reflect year-to-year changes in practice
expenses. The AMA has been trying to get Congress to intervene legislatively
to reverse the payment reductions.
"If Congress does not act, we fear that physicians will be forced to
make a difficult decision," said AMA Board Chair Cecil Wilson, M.D., in
a statement released after last month's AMA meeting in Las Vegas.
"Nearly half of physicians say Medicare cuts will force them to decrease
or stop taking new Medicare patients. Current Medicare payments in 2006 are
about the same as they were in 2001, and nine years of cuts to physicians
totaling about 40 percent will have a severe impact on seniors' ability to get
health care.
"Eighty senators and 265 representatives have called on Congress to
take action in this session of Congress to stop the cuts, and Congress' own
advisory committee on Medicare has recommended tying Medicare payments to
practice costs," said Wilson.
Tom Leibfried, deputy director for congressional affairs in APA's
Department of Government Relations, told Psychiatric News that
members of Congress from both parties have been saying that some action to
preserve Medicare payments is a priority. At press time, the Senate Finance
Committee was expected to propose by December 5 a small percentage increase in
overall physician payment.
But Leibfried said Congress must act before its session concludes before
Christmas. And he said the recent election that turned majority control of
both houses of Congress back to the Democrats has added to the potential
political variables, making prognostication more complicated.
One certainty, Leibfried said, is that congressional intervention to
preserve or increase physician payments will be tied to participation in
quality-reporting programs such as the CMS program for pay for performance,
which is itself the subject of much opposition among physicians (see box on
page 6). Some
Democrats, however, have "indicated an interest in putting pay for
performance on a slower track, to give physician groups and CMS more time to
test them before trying them out."
The five-year review of work RVUs, which was completed this past summer, is
designed to allow for a reassessment of the intensity of work required of
physicians for each procedure they perform. For example, some procedures may
have become easier or harder to perform over time because of the introduction
of technology.
The government's recommendations for changes to the work RVUs are based on
those submitted by the AMA's Relative Value Scale Update Committee, a
29-member body including representatives from all major medical specialties.
However, changes to the payment formula are required by law to be
"budget neutral"—in this case, it meant that changes in work
RVUs that resulted in an increase or decrease in overall outlays of more than
$20 million had to be compensated for by adjustments in other areas.
CMS has said that the changes in payment for evaluation and management
codes—which was significantly increased this year—and increases in
the valuation of other codes were expected to increase overall expenditures by
$4 billion. Because of the budget-neutrality requirement, CMS created a
separate "work adjuster" that it applied to the work RVUs, which
reduced those values by 10 percent. The work adjuster will likely vary from
year to year depending on Medicare spending.
"Nearly half of physicians say Medicare cuts will force them to
decrease or stop taking new Medicare patients."
APA and the AMA had urged CMS to adjust for budget neutrality by shifting
the cut to the conversion factor—that factor that is multiplied by the
sum of the RVUs. This would have the effect of spreading out the negative
impact across all the RVUs—work, practice expense, and
malpractice—and would mitigate the negative impact on psychiatrists
since most of their RVUs are part of the work component (Psychiatric
News, September 15). However, that recommendation has not been heeded,
and CMS is proceeding with its original plan. This has resulted in average
payment reductions for 2007 of more than 10 percent for physicians overall and
approximately 7 percent for psychiatrists.
Information on the Medicare physician fee schedule for 2007 and
background documents can be accessed at
<www.cms.hhs.gov/SustainableGRatesConFact/>.
Related Article:
-
Escalating Health Care Costs Threaten Nation's Future
- Mark Moran
Psychiatr News 2006 41: 6.
[Full Text]
Get information about faster international access.
Privacy Policy
Copyright © 2006
American Psychiatric Association.
All rights reserved.
Home
| Search
| Current Issue
| Past Issues
| Subscribe
| All APPI Journals
| Help
| Contact Us
| 
