Jan 1999 Table of Contents

Getting Paid

Three New Year's Resolutions From Medicare

When it comes to updates from HCFA, two pieces of good news out of three isn't bad.

Fam Pract Manag. 1999 Jan;6(1):14.

The new year means it's time for resolutions. Medicare published a few of its own in the Nov. 2, 1998, Federal Register. Here's a summary and an explanation of how the changes will affect your practice:

1. Implementing resource-based practice expenses

For the first time since the Medicare Fee Schedule took effect, this year the practice-expense portion of the reimbursement amount for each service will begin to reflect the actual resources associated with providing the service, rather than historical charges. The change will shift Medicare reimbursement dollars from facility-based procedural services to office-based E/M services, so look for your Medicare revenues to increase gradually as Medicare implements this change over the next four years.

However, be aware that a group of medical specialty societies whose members would lose under this plan have already filed suit in federal court to block its implementation. We'll keep you posted.

2. Payment changes for drugs and biologicals

This year, Medicare will change the way it defines the average wholesale price (AWP) of a drug or biological, which will affect calculations that determine Medicare's reimbursement for these products. Historically, for a drug that has multiple brand-name sources, Medicare has set the AWP equal to the median AWP of the drug's generic forms — the presumption being that generic prices were lower and, therefore, that this approach would save Medicare money.

Medicare will now consider the AWP to be either the median AWP of the drug's generic forms or the lowest AWP among the drug's brand-name products, whichever is lower. Here's the bottom line: Since Medicare intends to save money through this definition change, you should expect lower Medicare reimbursement for some of your drugs and biologicals.

3. Pay for teleconsultations in rural areas

Under a provision of the 1997 Balanced Budget Act, Medicare will begin to reimburse teleconsultations provided to beneficiaries in rural health-professional shortage areas. Medicare defines teleconsultation as a consultation by means of “interactive telecommunications systems” that include, at a minimum, audio-video equipment permitting two-way, real-time consultation among the patient, consultant and referring physician “as appropriate to the medical needs of the patient, and as needed to provide information to and at the direction of the consultant.”

The “as appropriate” qualification means that you don't necessarily have to be directly involved in the teleconsultation. For example, you could delegate that responsibility to a nurse practitioner or physician assistant you employ.

The reimbursement procedure requires that the consultant file the claim and receive the payment. He or she can keep 75 percent of Medicare's allowed amount and must send the remaining 25 percent to the referring physician. So if you refer a patient for a covered teleconsultation service, you should receive 25 percent of the Medicare allowance for the service, without having to file a claim.

Looking ahead

Unlike most new year's resolutions, HCFA's should last a while (despite the lawsuit about resource-based practice expenses), and two of the resolutions should benefit family physicians. It may be a happy new year after all!

Kent Moore is the AAFP's manager for reimbursement issues and a contributing editor to Family Practice Management.

Copyright © 1999 by the American Academy of Family Physicians.
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