By Daniel J. Nagle, MD
Chair, ASSH CPT/RUC Committee
2003 Medicare Fee Schedule
The Federal Government has published the 2003 Medicare Fee Schedule. A 4.4% decrease in physician fees was incorporated into the new fee structure. This reduction is the result of a well recognized flaw in the methodology used by CMS to calculate the increase/decrease in Medicare payments.
"CMS recognizes that this will be the second year in a row in which physician fees will be affected by a negative update for the conversion factor," said Scully (administrator of CMS). "The reduction in physician fee schedule rates results from a formula specified in the Medicare law, and we believe that formula is flawed and must be fixed. Although Congress considered several options for fixing the fee schedule formula for 2003, and the House actually passed a bill to address these issues, no final action was taken before Congress adjourned… only Congress has the authority to fix the formula."
Medicare’s annual updates in physician payments are based on an inflation measure called the Medicare Economic Index (MEI) plus or minus an adjustment that reflects the degree to which actual expenditures on physician services come in under or over a targeted amount. Under this target or Sustainable Growth Rate (SGR), the utilization of services per beneficiary is allowed to increase by only as much as the gross domestic product (GDP) increases.
The use of the SGR, as discussed above, has been clearly shown to be inappropriate. Yet this methodology continues to be used. This is not news but the response of the medical community continues to make news and has the potential of nullifying the decrease for 2003. The following is an excerpt of the AAOS assessment of the current status of this debate.
On January 23, the full Senate approved House Joint Resolution 2, legislation that included provisions to freeze the Medicare physician payment for 2003 at the 2002 level until September 30, 2003. The AAOS, along with several medical societies that comprise the Alliance of Specialty Medicine, had been urging Senate Republican leadership to include a short-term physician payment fix as a part of any appropriate legislative vehicle, before reductions become effective on March 1, 2003. Working closely with Majority Leader Bill Frist (R-TN), Senate Finance Committee Chairman Charles Grassley (R-IA), Senate Labor-HHS-Education Appropriations Subcommittee Chairman Arlen Specter (R-PA), and Senate Appropriations Committee Chairman Ted Stevens (R-AK), the Alliance helped shape this short-term solution, and is now working not only to implement this fix, but also to seek a long-term solution to the flawed payment formula.
House Joint Resolution 2 became an unconventional tool for the Senate to complete the entire appropriations process for fiscal year 2003. The Senate attached to this House-approved resolution eleven appropriations bills for fiscal year 2003, along with other provisions such as the short-term physician payment fix.
This bill has been forwarded to a House-Senate Conference Committee, where Conferees face the onerous task of reaching agreement on all of these appropriations bills. While the House of Representatives to some degree had considered most of these appropriations bills in the last Congress, it is now up to the Conference, largely comprised of senior members (Chairs and Ranking Members) of the House and Senate
Appropriations Committees, to reach agreement on the funding for most government programs for 2003.
It is expected that this process may take at least a few weeks. Under these circumstances, the physician community is hopeful that the short-term payment fix will be included in the legislation sent back to the House and Senate for final approval. All of this needs to occur before the March 1 reductions become effective. As the clock is running, other legislative approaches may be attempted.
In the meantime, while Congress works to remedy the situation, because of the delay in the publication of the 2003 Medicare physician fee schedule, which will become effective on March 1, 2003, the Centers for Medicare and Medicaid Services (CMS) has modified its implementation plans. CMS has instructed its carriers to follow specific guidelines for processing and paying claims and enrollment procedures during the
first six months of 2003.
For services provided in January or February and processed prior to March 1, 2003, the 2002 rates will apply. For services provided in January or February, and not processed until after March 1, 2003, the 2003 rates will apply.
On July 1 there will be a mass adjustment by CMS to recalculate January and February process claims at the 2003 rate. Physicians can expect to receive a single reimbursement check covering all claims, and physicians will not have to re-submit claims for recalculation.
There is a possibility that physicians may receive overpayments for which they would be liable. There are two circumstances under which this could occur (1) if the 2003 rate for a particular service is higher than in 2002, or (2) if the physician changes status from participating to non-participating. If a physician decides to change status from participating physician to non-participating, any outstanding claims will be processed as assigned claims, thus allowing the physician to receive 100 percent of the Medicare fee schedule. Once the physician changes status to non-participating, there would be a 5 percent loss in reimbursement. If an overpayment occurs, the usual overpayment rules
apply.
CMS urges all physicians participating in the Medicare program to submit claims for January and February as soon as possible to ensure prompt and adequate payment. The enrollment period for fiscal year 2003 has been extended through February and will be retroactive through January 1, 2003.
The new rules can be found at http://cms.hhs.gov/physicians/pfs
If you have any influence in Congress, now would be good time to use it to urge the passage of House Joint Resolution 2.
Stay tuned!
Congress Approves $57 Billion Medicare Payment Fix for Physicians:
On February 13, 2003, the House of Representatives and the Senate approved a provision to allow the Centers for Medicare and Medicaid (CMS) to correct the physician payment formula. This language was included in the omnibus budget bill for fiscal year 2003, which contained funding for most Federal agencies for the remainder of the year. This legislation will now be sent to the President for his signature into Public Law. When CMS takes this corrective step, the results will have a very positive effect on physician payment. The Congressional Budget Office estimates that this correction would result in a 1.6 percent increase in the conversion factor in the Medicare physician payment formula for fiscal year 2003, instead of the negative 4.4 percent. In actual dollars, this correction will result in an $800 million increase in 2003; an estimated $22 billion increase over five years and an estimated $58 billion over a ten year period.