Medicare RVU proposals: Two out of three ain't bad

On June 6, the Centers for Medicare & Medicaid Services (CMS) published a proposed notice in the Federal Register, in which it laid out its initial decisions related to the Five-Year Review of work relative value units (RVUs) under the Medicare physician fee schedule. Family physicians looking for good news in the proposed notice should find some, except when it comes the valuation of observation care in a hospital.

First, the good news.  CMS stated that it intends to increase the work RVUs for nursing facility discharge services, represented by codes 99315 and 99316. The proposed new values will put these codes on par with the corresponding codes for hospital discharge day services (99238 and 99239).

CMS also proposed to publish increased values for preventive medicine services codes (99381-99397). Although Medicare does not cover these services, many other payers do. The proposed RVUs represent an increase over the current RVUs in each case, reflecting a more appropriate recognition of the value of preventive medicine services. Publication of the new values will provide a basis for other payers to use those values in setting their own fee schedules.

Now for the bad news. In the proposed notice, CMS indicated its intent to maintain the current work RVUs for initial observation care (codes 99218-99220) and to decrease the work RVUs for codes 99234-99236, which include observation admission and discharge on the same date.

CMS’s rationale, as stated in the proposed notice is that “we [CMS] do not believe the work RVUs of the initial observation care codes (99218, 99219, and 99220) should be equivalent (or close) to the initial hospital care codes (99221, 99222, and 99223).” Instead, CMS believes that “the acuity level of the typical patient receiving outpatient observation services would generally be lower than that of the inpatient level" and that "if the patient’s acuity level is determined to be at the level of the inpatient, the patient should be admitted to the hospital as an inpatient.” The CMS recommended values for 99234-99236 are subsequently affected by CMS’s recommendations for 99218-99220.

CMS’s belief that the acuity level of the typical patient receiving outpatient observation services would generally be lower than that of the inpatient level is an assumption, not a documented statement of fact. In reality, hospital inpatient and outpatient status is often as much a function of payment policy as it is patient acuity. That is, hospitals not infrequently declare a patient’s status as “inpatient” or “outpatient” based on what they calculate will be most financially advantageous (e.g., based on a comparison of what Medicare will pay under the outpatient versus inpatient prospective payment systems), which does not necessarily equate to patient acuity.

CMS will not finalize its proposals until this fall, when it publishes the final rule on the 2012 Medicare physician fee schedule, so CMS may yet change its mind with respect to any or all of the above. Whatever CMS finally decides will be reflected in Medicare's payment for the services in 2012.