By Daniel J. Nagle, MD
Chair, ASSH CPT/RUC Committee
2004 Medicare Fee Schedule
The Medicare fee schedule (MFS) and conversion factor (CF) for 2004 have recently been published (Federal Register, Jan. 7, 2004). Through last minute legislation related to revising payments for administration and procurement of drugs and biologicals (primarily chemotherapy agents), the conversion factor has been increased from $36.7856 to $37.3374 (+1.5%), instead of the proposed 4.5% decrease. Although this is good news, the CMS impact tables shown in the Federal Register indicate that Hand Surgeons will see a 1% overall reduction in the reimbursement received from Medicare.
Herein, I will attempt to provide an explanation of what has happened to the relative value units (RVUs) for Hand Surgery codes during the period 1992-2004 (and since last year), to place these RVU changes in perspective. Click here for hand surgery reimbursement trends.
History of Medicare Reimbursement for Hand Surgery
In 1994, Congress enacted an Amendment to the Social Security Act, requiring CMS to develop resource-based relative practice expense RVUs (PE-RVUs). Please note that the system is termed "relative" because CMS acknowledges that they cannot pay $1 in PE-RVUs for $1 of your practice expense. To make a long story short, it took four years and several failed contracts to create a database of clinical staff time, medical supplies, and equipment necessary to perform every procedure in the MFS. The final database details were the result of physician Clinical Practice Expense Panels (CPEPs) assigning these details ad hoc to family "anchor" or base codes, and then CMS extrapolating those details. For example, if a CPEP assigned 35 minutes per visit, along with supplies and equipment per office visit for anchor code 12345 in Family A, then this data was multiplied by the number of office visits the CPEP determined for each of the codes assigned to Family A. The Achilles' heal of this process was that there was little discussion concerning the appropriateness of the details, especially the clinical staff times and office visits, that were assigned to the anchor codes.
The first step to implementation of resource-based relative PE-RVUs came in 1998, when CMS reduced the PE-RVUs for any code with a ratio of PE-RVUs to Work-RVUs that was greater than 128% down to the 128% level. Next, over the years 1999-2001, there was a phase-in of the CPEP based PE-RVUs, so that there would be no big adjustment in values over one year.
The Amendment to the SSA that required CMS to develop relative resource-based PE-RVUs also included a mandate for a review at least every five years. So, just when the final PE-RVU phase-in was occurring in 2001, CMS was already reviewing the details under the five year review mandate. Only this time, CMS did not review all of the codes and calculate all changes before implementation. Instead they undertook a piece-meal review and implementation of whatever codes were reviewed annually. In the first few years, only the evaluation and management (E&M) codes were reviewed and changes implemented. Surgery struggled hard to delay reviewing details for global surgical procedures until the office visit details were finalized. The implementation of changes (ie, reductions) to the E&M PE-RVUs resulted in a shift of billions of dollars into the surgery pool of RVUs.
In the next year, CMS took two actions: 1) Final review of the "top" few codes in every specialty (along with their family codes); and 2) Implementation of an across-the-board change to a blended clinical staff type of RN/LPN/MA (at a rate of 37 cents per minute). This review and implementation of changes resulted in a decrease in payment between 2002 and 2003 for some Hand Surgery codes, but not for others because the staff type previously assigned by the CPEPs to Hand Surgery codes was RN (at a rate of 51 cents per minute) and because only a limited number of codes were reviewed.
In the most recent year, CMS has again taken two major actions: 1) Final review of almost all of the 000-day and 010-day global codes for both in-office and in-facility practice expense details; and 2) Implementation of an across-the-board change to clinical staff minutes and staff type for postop visits for all codes with a global period that were not reviewed during the "top" code review the previous year. The first action has generally resulted in an increase for codes that are performed a majority of time in the office setting. The second action has resulted in reductions for those codes that had a large number of minutes with a RN staff type assigned in the CPEP database. It is primarily this second action that has caused the overall expected payment decrease of 1% for Hand Surgery as published in the Federal Register.
Impact on your practice
The impact estimates are based on the relative frequency of all codes submitted by a specialty the previous year. Unless your practice is exactly the same as the frequency distribution in the Medicare files, your practice will not experience this same impact. You will need to look at your own practice pattern and billing contracts to determine what impact the new fee schedule will have on your income.
Example of impact of clinical staff time on PE.
In the following example I will try to explain how the change in clinical staff time has impacted Hand Surgery by comparing codes 26951 amputation of finger and 29848 wrist endoscopy.
In the CPEP database, code 26951 included 6 office visits and 217 minutes of RN staff time and code 29848 had 5 office visits and 165 minutes of RN staff time to assist the surgeon during postop follow up office care (or approximately 33-36 minutes per visit). On the other hand, the CMS time database (from the Harvard Study) indicated that code 26951 has 3.5 visits at a 99212 E&M level and code 29848 has 3 visits at a 99213 E&M level. Based on the CMS standardization of staff time for all E&M services (i.e., 99215=63 min; 99214=54 min; 99213=36 min; 99212=27 min; and 99211=16 min), the minutes for clinical staff office visit time for code 26951 were reduced from 217 to 95 and the minutes for code 29848 were reduced from 165 to 108.
In 2002, code 29848 was reviewed as one of the "top" codes, resulting in an 18% decrease in payment for 2003. Code 26951 was not reviewed in 2002, so it's payment was increased relative to the increase in the conversion factor and the shift of RVUs for codes that decreased that year, such as 29848 (remember that the "pool" of RVUs is fixed so that decreases are balanced with increases).
In 2003, the across the board standardization of time reduced the minutes for code 26951, resulting in an 11% decrease in payment for 2004. Code 29848 was already reviewed the previous year, so it saw a modest increase in the "balancing" of RVUs.
Zero Sum Game
As I indicated in the May 2003 Coding Corner, you should be prepared to see the practice expense RVUs fluctuate up and down for our procedures until the process is complete in 2005. Also, it should be kept in mind that, because we are playing in a "zero sum" game, the money in the Hand Surgery specialty "pool" should remain relatively constant, so as RVUs are taken from some codes they are added back to all of the codes that Hand Surgeons utilize, including E&Ms.
Compared to many specialties, Hand Surgery still has done relatively well since 1992. Our top procedure code (64721) shows a 17% increase and 29848 shows an increase of 58% since 1992. While this is not in line with the annual rate of inflation or CPI, I note that reimbursement for total hip and total knee arthroplasty have decreased about 19%; cataract surgery has decreased 27%; and many thoracic surgery procedures have seen decreases of 20-30% since 1992.
The ASSH CPT/RUC Committee has worked diligently with other surgical specialties to do as much "damage control" as possible over the years. We have attempted to get the best physician work and practice expense RVUs that we can, "relative" to all of the other codes in the Medicare fee schedule. But we are working within a "locked" system.
The Politics of Health Care
The Congressional Budget Office has stated that Medicare increases are due to increased enrollment, development and diffusion of new medical technology, and legislative and administrative program expansions. For example, Congress has expanded Medicare coverage to include several new screening tests that frequently trigger additional physician services that may or may not be related to the condition being screened for. CMS has added coverage for a variety of new technologies, such as PET scans and cryosurgery; and within one year there was a 5% increase in the use of mammograms and a 15% increase in lipid testing for targeted groups of beneficiaries. All this is to show that physicians should not be penalized for volume growth that is driven by government policy and the development of new drugs and technology that improve and extend the lives of Medicare patients.
I ask that you "don't shoot the messenger." The ASSH CPT/RUC Committee believes that the Medicare fee schedule is a reasonably relative measure for each code on an arbitrary scale. Although it isn't perfect, it allows us to attempt to stay on par with the rest of medicine. Your verbal guns should be aimed at the legislators and CMS, who continue to add benefits without adding additional money to the Medicare funds, and who continue to watch the movement of performing procedures from the facility setting (Part A) to the office setting (Part B) without legislating the movement of funds from Part A to Part B.