Medical Practices Now Face 10.1 Percent Payment Cut

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MGMA Washington Connexion, November 2007


Medical practices now face 10.1 percent payment cut


In the final 2008 Medicare physician fee schedule, the Centers for Medicare & Medicaid Services (CMS) announced that the cut to physician payment for Medicare services has increased from 9.9 percent to 10.1 percent. Unless Congress takes action prior to Jan. 1, 2008, the conversion factor will drop to $34.0682 from $37.8975. The anesthesia conversion factor will decline to $16.3307 from 17.7594.


The Medical Group Management Association (MGMA) will post specialty-specific information on the impact of the final Medicare physician fee schedule on mgma.com early next week. Look for a special MGMA Washington Connexion in your e-mail on Monday, with instructions on what you can do to help prevent the 10.1 percent cut from becoming reality.


Anesthesia providers, one of the few specialties not to see change as a result of the five-year review of work relative value units (RVUs) that occurred in the 2007 Medicare physician fee schedule, are rewarded in the 2008 fee schedule with a 32 percent increase in their work value. However, this boost is offset by a decrease in the budget neutrality adjustor, which affects all provider types. The budget neutrality adjustor for 2008 will be 0.8806.


Antimarkup requirement for both technical and professional componentsof diagnostic tests
At MGMA's recommendation, CMS reversed a proposal that would have applied the antimarkup provision to part-time physicians and technical employees. The antimarkup provisions limit payment to the lowest of:


The performing supplier's net charge to the billing physician or other supplier;


The billing physician or other supplier's actual charge; or


The fee schedule amount for the test that would be allowed if the performing supplier billed directly.


Under new language in the regulation, the antimarkup requirement will apply to both the technical component and the professional component of diagnostic tests ordered by the billing physician or other supplier (or a related party) when such services are purchased outright or are performed at a site other than the billing physician's office. The proposed physician fee schedule did not contain this new site-of-service-test, which appears to subject diagnostic tests to the antimarkup rule even if they are not purchased. MGMA has serious concerns about this provision is seeking clarification from CMS.


No changes to Stark law


As a result of numerous recommendations from MGMA and others in the provider community regarding changes to the physician self-referral (Stark) law, CMS decided not to finalize any of its Stark law proposals at this time.


Final rule covers wide ground


Other highlights in the final rule include:
An expansion of the number of imaging procedures subject to the payment limitation imposed by the Deficit Reduction Act.


An increase in restrictions on independent diagnostic testing facilities (IDTFs), including limiting an IDTF's ability to share space with other Medicare-enrolled individuals or organizations and establishing a later date of enrollment for IDTFs than under the previous policy.


A decision, based on recommendations by MGMA and others, not to increase the equipment utilization rate assumption. A change in this assumption would have decreased the practice expense RVU, given that the cost of the equipment would have been spread across more services.


Further study of potential changes to payment localities. While CMS proposed three possible methods for adjusting the boundaries of payment localities, it opted not to select one based on the number of comments and suggestions it received.


A cap of $1,810 on reimbursement for outpatient physical therapy and speech language pathology services, and a separate cap of the same amount on outpatient occupational therapy services. CMS is required by law to cap payment for outpatient therapy services.


An additional payment for practices that administer intravenous infusion of immunoglobulin (IVIG). In its comments on the proposed rule, MGMA supported continued payment for this service, given the difficulties faced by medical practices in obtaining IVIG.


The acceptance of all measures adopted by the National Quality Forum and AQA by Oct. 31, 2007, based on the recommendations of provider organizations. CMS also confirmed the creation of two structural measures for the 2008 Physician Quality Reporting Initiative.



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