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 Coding Corner May 2003

Daniel Nagle, MD

By Daniel J. Nagle, MD
Chair, ASSH CPT/RUC Committee

This year, hand surgeons have seen a reduction in the reimbursement received from the federal government (CMS) and other payers that follow the Medicare fee schedule. This reduction in reimbursement has provoked significant consternation within the ASSH membership.

I have prepared an explanation of what has happened to the relative value units (RVUs) for Hand Surgery codes during the past ten years (and since last year), to place these short-term RVU changes in perspective. Also look at Hand Surgery Payment Trends.pdf.

The lightning rod code for this discussion, 26123, has actually increased in value over the past ten years, even though the 2003 payment for 26123 decreased when compared to the payment in 2002. This one-year change occurred because its practice expense component was "corrected" to reflect its "relative" value as compared to other practice expense reviewed codes.

It should be noted that many of our codes (and those of other specialties) have not yet been put through the practice expense relativity process, and as you can see, their 2003 payments are in many cases over 100% greater than their 1992 payments. This will change during the next two years as all codes are brought into compliance with the law and reflect relative values for practice expense. So be prepared to see the practice expense RVUs fluctuate up and down for our procedures during the next two years. The process will be complete in 2005.  It should be kept in mind however, because we are playing in a "zero sum" game, that the money in the hand surgery specialty "pool" will 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 has done relatively well. Since the inception of the Medicare fee schedule in 1992, reimbursement for total hip and total knee arthroplasty have decreased about 20%; cataract surgery has decreased 29%; and many thoracic surgery procedures have seen decreases of 20-30%. This is because CMS primarily attacked the "top" codes for each specialty, coming up with ways to reduce their payment.  Our top code (64721) shows a 22% increase since 1992, including the minor reduction from last year's review of its practice expense.

All of this explanation is to say that ASSH has been aware of the mandated review of practice expense RVUs since the review began in 1997, and we have been active participants with other surgical specialties to do as much "damage control" as possible.  Initially, we won concessions for huge planned increases in E&Ms that would have sucked RVUs from all procedures. Second, we won acceptance of the idea to "phase in" RVU decreases over four years for those codes that would take the biggest hits. Finally, we delayed review of code details until the end of the four year transition to delay reductions as long as possible.

What you are seeing as a big decrease in payment between 2002 and 2003 could have been bigger and more drawn out, with reductions occurring much earlier than this year. Again, I have to point out that overall, since 1992, we are doing well relative to most other specialties. While what precedes explains the recent decrease in payment for some codes, we can't help but feel that current Medicare (and third party) payment is woefully inadequate. While we have continued to be paid more over the past ten years, if you look at the CPI for each year, you will note that the increases have been eroded by inflation. As many of you point out, the cost of running a practice continues to climb. Labor expenses, rent, and health insurance premiums continue to climb much faster than the CPI. The Federal Government continues to burden us with its bureaucratic demands, not the least of which is the implementation of HIPPA. (How many billions of dollars will be spent to comply with the HIPPA regulations?)

What has happened to our reimbursement this year is the result of changes put into motion by  Section 121 of the Social Security Act Amendments of 1994 (Public Law 103-432), enacted on October 31, 1994, but delayed until 1999 by section 4505 of the Balance Budget Act of 1997. These are not the result of serendipity. Health policy and socioeconomic committees from major national societies have reviewed the methodology used by CMS to arrive at the current practice expense values. We concur with their findings that, while all relative value systems are by nature imprecise, the current "top down" methodology is an improvement over the original "bottom up" methodology envisioned by CMS. However, because of budgetary constraints, Medicare is unable to reimburse the true and full practice expense cost.

The only way to resolve this conundrum is to increase the Medicare budget.  In the current economic and political environment this is unlikely to occur. Some members have suggested taking this 2002-2003 decrease issue to Congress.  Certainly the erosion of physician reimbursement is an important national issue which we must continue to address. The malpractice crisis has spurred some to recommend an increase in the PLI (Physician Liability Insurance) component of Practice Expense. However, at the April 2003 AMA RUC meeting Tom Scully, the current Director of CMS indicated that while malpractice insurance expense is increasing at an alarming rate, its contribution to the overall Medicare budget (3%) is so minimal that even if Practice Expense is increased to reflect these changes, the overall impact on reimbursement for individual codes would be minimal.

Perhaps our energy would be better spent supporting current efforts to move money from Medicare Part A to Medicare Part B. Currently the funds available for Medicare Part A (facility / hospital) and Medicare Part B (non-facility / ambulatory surgery centers (ASC) and offices), is fixed by law. The current distribution of Part A and Part B funds does not reflect the shift of procedures away from hospitals (facility) to the ASCs and offices (non-facility). This disparity has lead to an under-reimbursement for those procedures done outside hospitals. An act of Congress is needed to correct this inequity. Fred Kessler, our representative to the AMA, has thrown the support of the ASSH behind an AMA initiative to achieve this goal. One positive development is the inclusion of endoscopic carpal tunnel release on the CMS list of approved ASC procedures. Dawn Daly and Andy Palmer deserve credit for prodding CMS to include this code on the ASC list.


The following government web site discusses - in detail - practice expense RVU calculations and their review process.  Scroll down the web page to "Health Care Financing Administration; PROPOSED RULES; Medicare: Physician fee schedule (1999 CY); payment policies and relative value unit adjustments, 30818-31012 [FR Doc. 98-14650]" and download the text or pdf file to read.

The AAOS web site for orthopaedic payment trend tables is:

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