June 22, 2006
On June 21, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would make significant changes to the Medicare Physician Fee Schedule. The proposal, open for comment from June 29 to August 21, would go into effect January 1, 2007; it addresses physician work relative value units (RVUs) and the methodology for calculating physician practice expenses.
Primary care physicians, who have suffered declining reimbursement in recent years, will likely benefit, as the rule would revise reimbursement standards for “evaluation and management,” and alter RVUs for more than 400 different medical services.” The work component for RVUs associated with an intermediate office visit, for instance, will increase by 37%. The proposed changes in RVU evaluation could increase Medicare costs by $4 billion, according to some estimates.
Because the Medicare pool cannot be increased, the increased expenditure means cuts somewhere else, and many of the physician societies are currently analyzing the entire proposal, which would also address the current method of calculating the practice expense section of Physician Fee Schedule payments. The new CMS system would be based on “bottom-up” accounting, meaning procedure-level data for clinical staff times, supplies, and equipment would be used. Indirect expenses would be calculated using practice expense survey data from eight different medical specialties, including radiology, radiation oncology, and independent diagnostic testing facilities, all of which are currently reimbursed out of the Nonphysician Work Pool, which the proposal would eliminate.
CMS proposes that all practice expense RVUs for services without physician work be priced using the standard practice expense methodology.
The CMS notes in the proposed rule that “these revisions reflect changes in medical practice, coding changes, new data on relative value components, and the addition of new procedures that affect the relative amount of physician work required to perform each service as required by the statute.”
CMS Administrator Mark McClellan said the rule will “result in better outcomes because physicians will get financial support for giving patients the help they need to manage illnesses more effectively.”