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Fam Pract Manag. 2006;13(2):24-28

Medicare payment cut likely to be restored

The 4.4 percent cut in physicians' Medicare payments that went into effect Jan. 1 may only be temporary. At press time, the U.S. House of Representatives was expected to vote on the Deficit Reduction Act of 2006 (S 1932), which would reverse the payment cut and restore physician payment to 2005 levels.

The Centers for Medicare & Medicaid Services has said that, if the legislation is passed, Medicare will retroactively adjust physicians' payments for all 2006 claims filed prior to the new legislation.

In a recent statement, AAFP President Larry Fields, MD, expressed disappointment over the likely pay freeze and said the AAFP and its more than 94,000 members “expect Congress to pass Medicare reimbursement reform by eliminating the sustainable growth formula in favor of a more reasonable measure that will lead to positive Medicare payment updates.”

Fields noted that the AAFP would “redouble its pressure for a permanent solution to inequitable Medicare payments.”


To address physicians' billing questions in light of the pending changes to the Medicare payment rates, the AMA has created a Q&A document (available at, which offers the following information:

  • Physicians will not need to resubmit any 2006 claims filed prior to the new legislation. Carriers will adjust these claims automatically. (Most Medigap plans and some secondary insurers will also make automatic adjustments.)

  • Physicians will receive the adjustments as a lump sum, although the process could take months depending on the volume of claims involved.

  • Physicians who opted out of Medicare in 2006 will have 45 days after the legislation is enacted to change their participation status, which will be retroactive to Jan. 1, with claims adjusted accordingly.

Medicare Part D formulary help

To find out whether a specific drug is covered by a Medicare Part D prescription drug plan, log on to the Centers for Medicare & Medicaid Services' Formulary Finder ( The site also provides contact information for each drug plan, including a link to its home page for a complete formulary.

Billing, insurance tasks account for 20 percent of spending

Administrative tasks related to billing and insurance consume a significant portion of health care revenues, according to a study in the November/December 2005 issue of Health Affairs. Researchers estimated that such tasks consume 20 percent to 22 percent of total spending on physician and hospital services in California that are paid through private insurance.

The study also found that physician offices spend 27 percent of revenue on administrative tasks in general, with 14 percent of revenue spent on billing and insurance-related functions. Nonphysician clinical staff contribute 7.5 percent of their time to billing and insurance-related tasks, while physicians contribute an estimated 4.9 percent of their time for these tasks.

Health plans clash with physicians over payment issues

The recent settlement of a number of class-action lawsuits against the nation's major health insurers has not put an end to unfair payment practices, but physicians are continuing their fight.

Two E/M codes. Recently, AAFP Board Chair Mary Frank, MD, sent a letter to more than 40 insurers across the country asking them to start following CPT guidelines and stop bundling evaluation and management services provided on the same date. In her letter to CIGNA, Frank addressed the insurer's practice of bundling a preventive medicine service and a problem-oriented E/M service provided on the same date of service. “There is no question what the intent of CPT is in the appropriate use of modifier −25 when treating a patient for a problem-oriented E/M and a preventive service on the same date. … Inaction on this issue is unacceptable. … This issue has existed unnecessarily for far too long, to the disadvantage of both physicians and patients,” she wrote.

Effective this month, Aetna will begin paying for two E/M codes on the same date of service. No word yet whether CIGNA or other insurers will follow suit.

Blended rates. Wellpoint/Anthem Blue Cross Blue Shield of Ohio has begun paying physicians the same rate for level-III and level-IV visits, a move called “blended rates.” The rate for level-III visits was raised and the rate the level-IV visits was lowered to arrive at the new rate for both codes. The insurer said the rate switch was necessary because of a significant increase in the use of the 99214 code by some groups, which it found were not coding fraudulently but had improved their documentation through the use of electronic health records. Interestingly, as part of its pay-for-performance program, the insurer pays doctors a bonus for using electronic health records.

The Ohio Academy of Family Physicians, the Ohio State Medical Association, the AAFP and the AMA oppose the blended rate scheme and believe it violates CPT guidelines. It may also violate the insurer's recent class-action settlement with physicians.

Health care spending still growing

National health care spending grew 7.9 percent in 2004, the slowest rate of increase since 2000, thanks in part to increased use of generic and over-the-counter drugs. Nevertheless, health care costs have nearly doubled over the last decade.

Total dollars spent on health care:
2004$1.87 trillion
1993$917 billion
1980$255 billion
Health care spending per person:
Health care as a percentage of gross domestic product:
200416 percent
199313.8 percent
19809.1 percent

Board offers 10-year recertification option

The American Board of Family Medicine (ABFM) recently announced that diplomates now have the option of extending their original seven-year certificate by three years if they meet certain requirements under the Maintenance of Certification for Family Physicians (MC-FP) program. Currently, diplomates are required to complete six Self-Assessment Modules (SAMs) and one quality improvement (QI) module per seven-year cycle. To quality for the 10-year certification option, diplomates would need to complete two SAMs and one QI module (either the ABFM's Performance in Practice Module or the AAFP's Metric module) every three years during the first nine years of their recertification cycle. (Note the following exception: Physicians who certified or recertified in 2003 and 2004 may elect to complete three SAMs – instead of two SAMs and one QI module – in the first three-year period.) Those who fail to complete the requirements on time will fall back into a seven-year cycle.

In addition, the Performance in Practice module soon will include options for physicians in nontraditional practice settings who would not be able to submit clinical performance data. The first such module, on information management, will be available in 2007, with a module on patient safety by 2008.

Since its implementation in 2004, the MC-FP process has been criticized by some family physicians who have found it cumbersome. The ABFM says it has made 24 major improvements to the process in the last year. All diplomates will enter the program by 2010, after their next recertification exam.

Medicare revises physician voluntary reporting program

The Centers for Medicare & Medicaid Services has agreed to make several changes to its Physician Voluntary Reporting Program, which was launched last month. Under the program, physicians can voluntarily report performance data to Medicare and receive feedback on where they stand relative to their peers. It is considered to be the first step toward a Medicare pay-for-performance program and offers physicians an opportunity to experiment with capturing and reporting performance data.

The AAFP objected to the program's initial performance measures because there were too many (36 in all) and because they had not been reviewed or approved by a national body with broad physician input. The AAFP also noted that the program's reporting process was too complicated, as it involved submitting new G codes in addition to CPT and ICD-9 codes when billing Medicare. The G codes indicate whether the performance measure was met, not met, appropriate to the patient or not applicable because the patient was not under the physician's immediate care for the previous six months.

The revised program uses just 16 measures. Only seven apply to office-based family physicians, and six of these were developed by the Ambulatory Care Quality Alliance, which includes the AAFP.

The program will continue to rely on G codes, at least temporarily, until the AMA can implement CPT-II codes for reporting performance.

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Copyright © 2006 by the American Academy of Family Physicians.

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