Medicare's announcement of the 2007 Medicare Physician Payment Schedule final rule in a Nov. 1 press release provides a bright spot for family physicians in that the new relative value units, or RVUs, will encourage increased physician/patient communication.
"The rule we are announcing today will pay physicians more for the time they spend talking with their patients about their health care," said CMS Acting Administrator Leslie Norwalk. According to the press release, "The final rule increases significantly the work component for the RVUs for the face-to-face visits (evaluation and management, or E/M, services) during which the physician and patient discuss the patient's health status and the steps that can be taken to maintain or improve the patient's health."
The final rule is scheduled for publication in the Federal Register on Dec. 1.
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E/M Increases Offer Bright Spot in CMS Final Rule
By Sheri Porter
Financial Impact on FPs Uncertain
Although happy with the changes in the relative value of E/M services, AAFP President Rick Kellerman, M.D., of Wichita, Kan., said he found other aspects of the physician payment issue disturbing. "Congress is failing all of medicine by not acting on the sustainable growth rate (SGR) formula and by failing to override the 5 percent cut in the Medicare conversion factor planned for the 2007 fee schedule," he said.
Further, because by law CMS is required to keep RVU changes budget-neutral, the agency decided to implement a budget-neutrality provision, which will result in a nearly 10 percent reduction to work RVUs when calculating Medicare allowances. "CMS scored a huge touchdown for family medicine by accepting the updated RVUs for E/M services," but it's disappointing that CMS is applying an across-the-board adjustment to work RVUs, said Kellerman.
The Academy has repeatedly asked CMS to achieve budget neutrality through changes in the conversion factor, not through artificial adjustments to the RVUs, said Kellerman. "Applying an adjustment to the work value distorts the RVU system and could cause collateral damage since many insurance companies peg their payments to Medicare's RVU system," he added.
Despite the looming 5 percent reduction in payments in 2007 that results from basing the conversion factor on the SGR, the impact on family physicians is mitigated by the increase in RVUs for many of the services they most often provide. For example, 99213, a mid-level established patient office visit, will experience a 37 percent increase in its work RVUs.
Congress holds the key, said Kevin Burke, director of the AAFP Division of Government Relations. If federal legislators take no action, the reduction in the conversion factor would take effect; however, the lawmakers have a couple of options during the lame-duck session that begins the week of Nov. 13:
Further, because by law CMS is required to keep RVU changes budget-neutral, the agency decided to implement a budget-neutrality provision, which will result in a nearly 10 percent reduction to work RVUs when calculating Medicare allowances. "CMS scored a huge touchdown for family medicine by accepting the updated RVUs for E/M services," but it's disappointing that CMS is applying an across-the-board adjustment to work RVUs, said Kellerman.
The Academy has repeatedly asked CMS to achieve budget neutrality through changes in the conversion factor, not through artificial adjustments to the RVUs, said Kellerman. "Applying an adjustment to the work value distorts the RVU system and could cause collateral damage since many insurance companies peg their payments to Medicare's RVU system," he added.
Despite the looming 5 percent reduction in payments in 2007 that results from basing the conversion factor on the SGR, the impact on family physicians is mitigated by the increase in RVUs for many of the services they most often provide. For example, 99213, a mid-level established patient office visit, will experience a 37 percent increase in its work RVUs.
Congress holds the key, said Kevin Burke, director of the AAFP Division of Government Relations. If federal legislators take no action, the reduction in the conversion factor would take effect; however, the lawmakers have a couple of options during the lame-duck session that begins the week of Nov. 13:
- Congress could pass a yearlong spending bill that might include a positive update for 2007. In this scenario, FPs could see an increased payment rate overall, in addition to an increase in their payments for most office visits.
- Legislators could pass a short-term spending bill that would maintain the current payment rate until February or March. If the lame-duck session concludes with a short-term spending bill that freezes the overall payment rate at current levels, FPs would see no change in their overall Medicare payments in January, said Burke. Most other physician specialties would see negative updates ranging from -2 percent to -14 percent.
Push from the Private Sector
The Academy recently learned that it got some outside help in its effort to push CMS for 2007 physician payment changes. In August, a coalition of 27 organizations threw their support behind primary care when they signed onto a comment letter (PDF file: 2 pages / 98 KB. More about PDFs.) to (then) CMS Administrator Mark McClellan, M.D., Ph.D., regarding Medicare physician payments.
"We applaud and support the proposed rules because they correct the dramatic erosion of the relative weight accorded to E/M services over the past 14 years," said the letter, which was engineered by a consumer-purchaser group called The Consumer-Purchaser Disclosure Project.
Signers of the letter included the AFL-CIO, Cisco Systems, Employers' Coalition on Health, General Motors, HR Policy Association, National Business Coalition on Health, National Partnership for Women and Families, Xerox, and Pacific Business Group on Health.
Peter Lee, CEO of Pacific Business Group on Health and co-chair of The Disclosure Project, said in an interview that the organization got involved because "employers and consumers recognize that the current health care payment system is not only dysfunctional, but all too often, harmful."
Lee said that improving payment for primary care is just one step toward a broad overhaul "that will reward care coordination and better performance instead of rewarding high intensity and volume."
"We applaud and support the proposed rules because they correct the dramatic erosion of the relative weight accorded to E/M services over the past 14 years," said the letter, which was engineered by a consumer-purchaser group called The Consumer-Purchaser Disclosure Project.
Signers of the letter included the AFL-CIO, Cisco Systems, Employers' Coalition on Health, General Motors, HR Policy Association, National Business Coalition on Health, National Partnership for Women and Families, Xerox, and Pacific Business Group on Health.
Peter Lee, CEO of Pacific Business Group on Health and co-chair of The Disclosure Project, said in an interview that the organization got involved because "employers and consumers recognize that the current health care payment system is not only dysfunctional, but all too often, harmful."
Lee said that improving payment for primary care is just one step toward a broad overhaul "that will reward care coordination and better performance instead of rewarding high intensity and volume."
AAFP Sends Message to Private Insurers
In anticipation of the final rule, the Academy drafted a letter (Microsoft Word file: 2 pages / 42 KB. More information on downloading files.), mailing it to approximately 50 private health insurance plans immediately after the final rule was made public.
In it, the Academy asked insurers including Aetna, CIGNA, Humana, UnitedHealthcare and Wellpoint to adopt the RVU changes outlined in the final rule.
"In agreeing to these increases, CMS has acknowledged what we and other specialties have known for a long time -- many E/M services have been historically undervalued," said AAFP Board Chair Larry Fields, M.D., of Flatwoods, Ky., in the letter. "The increases to the E/M codes are not a fix, but a step in the right direction to support more appropriate payment for the added value provided to patients who have a family physician."
Fields asked insurers to not make the E/M changes budget-neutral by adjusting the conversion factor for E/M services. To do so would "defeat the intent of re-valuing these services" and show a "lack of support" for family medicine and other primary users of E/M services, he said.
Instead, he suggested budget-neutrality adjustments be made in conversion factors for other health care services to the extent that private payers, unlike Medicare, use multiple conversion factors in their fee schedules.
In it, the Academy asked insurers including Aetna, CIGNA, Humana, UnitedHealthcare and Wellpoint to adopt the RVU changes outlined in the final rule.
"In agreeing to these increases, CMS has acknowledged what we and other specialties have known for a long time -- many E/M services have been historically undervalued," said AAFP Board Chair Larry Fields, M.D., of Flatwoods, Ky., in the letter. "The increases to the E/M codes are not a fix, but a step in the right direction to support more appropriate payment for the added value provided to patients who have a family physician."
Fields asked insurers to not make the E/M changes budget-neutral by adjusting the conversion factor for E/M services. To do so would "defeat the intent of re-valuing these services" and show a "lack of support" for family medicine and other primary users of E/M services, he said.
Instead, he suggested budget-neutrality adjustments be made in conversion factors for other health care services to the extent that private payers, unlike Medicare, use multiple conversion factors in their fee schedules.
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"Medicare Program: Revisions to Payment Policies Under the Physician Fee Schedule for Calendar Year 2007 and Other Changes to Payment Under Part B," (PDF file: 8 pages / 55 KB. More about PDFs.)
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Medicare Pay Cut in 2007 Still Could Be Avoided
(8/16/2006)
Lawmakers Look to Fix Physician Payment Formula
(8/8/2006)
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CMS Targets Many E/M Services for Increases
(6/28/2006)
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(1/11/2006)
More From AAFP
"Medicare Program: Revisions to Payment Policies Under the Physician Fee Schedule for Calendar Year 2007 and Other Changes to Payment Under Part B," (PDF file: 8 pages / 55 KB. More about PDFs.)
"Medicare Program: Five Year Review of Work Relative Value Units Under the Physician Fee Schedule and Proposed Changes to the Practice Expense Methodology," (PDF file: 10 pages / 63 KB. More about PDFs.)
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