CMS Targets Many E/M Services for Increases

Two years of hard work and collaborative effort by the AAFP and other medical specialty societies bore fruit with CMS' recent announcement of proposed changes to the Medicare Physician Fee Schedule. The changes, which would take effect beginning in 2007, would significantly increase payments for evaluation and management services, the bedrock of family physician practices.

"This is potentially the most important development for family medicine since the implementation of the Medicare program," said AAFP President Larry Fields, M.D., of Ashland, Ky. "There will be a significant increase in the value of payment for the two codes that family physicians use most for Medicare. And, significantly, private insurance companies, who often peg their fee schedules to Medicare, could follow suit."

Under the proposed rule, payment for CPT codes 99213 and 99214 would increase by $6.83, or 13 percent, and $7.58, or 9 percent, respectively, after adjustment for budget neutrality. When accounting for all the proposed changes in work components of relative value units, or RVUs, (both increases in E/M services and decreases in other services done by FPs) as well as the budget neutrality adjustment referenced below, CMS estimates the impact on Medicare-allowed charges to family medicine will be a 5 percent increase in 2007. Only three other specialties did better.

According to a June 21 CMS press release, the revisions are the largest ever proposed for services related to patient evaluation and management. The revisions involve increasing the work RVUs, as well as changes in the methodology for calculating practice expenses. The practice expense changes give another 1 percent to family physicians after the changes are fully implemented in 2010.

"It's time to increase Medicare's payment rates for physicians to spend time with their patients," said CMS Administrator Mark McClellan, M.D., Ph.D., in the press release. "We expect that improved payments for evaluation and management services will result in better outcomes because physicians will get financial support for giving patients the help they need to manage illnesses more effectively."

CMS acknowledged that the proposed changes reflect recommendations made by the Relative Value Scale Update Committee, or RUC, a group composed of individuals representing major physician organizations, including the AAFP, and chaired by the AMA.

Tom Felger, M.D., of South Bend, Ind., the Academy's RUC representative, commended the Academy for the resources it had committed to the update effort throughout the two-year process. He said the Academy's input had been critical. "If you're not at the table, you cannot effect changes." Felger said family physicians "have a broad view of the whole health care system, so as RUC makes decisions, a family physician viewpoint is important."

Two other AAFP members contributed to RUC's success as well. Walt Larimore, M.D., of Monument, Colo., served as the RUC alternate representative; and Lee Mills, M.D., of Newton, Kan., served as RUC advisor.

The proposed RVU changes would increase Medicare expenditures by nearly $4 billion, thereby requiring CMS to impose a budget neutrality adjustment.

"Essentially, this is going to shift money from procedural skills to cognitive skills," said Fields. "However, I'm cautiously optimistic until it's clear how CMS will tweak the conversion factor. The Academy will certainly be commenting on the rule once all of its ramifications are clear," he said.

The proposed rule will be published in the June 29 Federal Register. Comments will be accepted from all interested parties -- including individual physicians -- until Aug. 21. If adopted as part of the final rule in the fall, the RVU revisions will be implemented on or after Jan. 1, 2007; the practice expense revisions would be phased in over a four-year period.

"The Academy will work very hard to keep these increases in place," said Fields.