Fixing Reimbursement for Physicians - MACRA Part Two

Doctor with MoneyIn our last blog post, we began a deeper dive into the MACRA legislation - the legislation recently passed by the House to fix the Sustainable Growth Rate (SGR) system that creates such uncertainty in physician reimbursement every year.  As is usually the case, legislation meant to address one issue generally morphs into a larger bill as members drop in other pending items or pet projects. MACRA is no different. In addition to replacing the SGR methodology, there are many other Medicare programs and categories of reimbursement affected.  This post covers additional changes to physician reimbursement including the Geographic Practice Cost Index and Global Periods. We also cover proposed changes to Therapy Services. Our next post on this topic will cover changes to various programs effecting hospital reimbursement.

We note with interest that the new legislation DOES NOT include a delay to the October 2015 implementation of ICD-10.

Geographic Practice Cost Index

Medicare payments to physicians are geographically adjusted to reflect the varying cost of delivering physician services across parts of the United States. The adjustments are made by indices, known as the Geographic Practice Cost Indices (GPCI), that reflect how each geographic area compares to the national average.

In 2003, Congress established that for three years there would be a “floor” of 1.0 on the “work” component of the formula used to determine physician payments, which meant that physician payments would not be reduced in a geographic area just because the relative cost of physician work in that area fell below the national average. Congress has extended the work GPCI floor several times. MACRA provides yet another extension through 2017.

Global Periods

Under the Medicare Physician Fee Schedule, payment for certain surgical procedures is intended to include, in addition to the surgical procedure itself, pre- and post-operative care, including follow-up visits within a specified duration of time: 10-day global periods include follow-up visits within 10 days of surgery, while 90-day global periods include follow-up visits within 90-days of surgery. While updating the Fee Schedule for CY 2015, CMS expressed concern about the pricing of some of these procedures, and whether surgeons were providing the follow- up care presumed to be included and on which the payment amount was based. After receiving comments from industry participants, CMS determined to eliminate 10- and 90-day global periods beginning in CY 2017 and CY 2018, respectively.

MACRA prohibits CMS from implementing this change to Global Periods but does not prohibit the agency from revaluing individual procedures that it believes may be mis-valued. MACRA further requires CMS to gather information necessary to determine whether surgical procedures with global periods are indeed mis-valued.

Therapy Services

Legislation passed in 1997 created an annual per-Medicare-beneficiary cap of $1,500 for certain outpatient therapy services. The annual cap applied to physical and speech therapy combined, and separately to occupational therapy. From 1997 through the end of 2005, the caps were not imposed, as Congress passed a series of laws temporarily suspending the caps.

In 2005, Congress passed legislation allowing the caps to go into effect in 2006, but also establishing an exceptions process whereby Medicare beneficiaries can request and be granted an exception to the caps. Medicare beneficiaries could then receive an unlimited amount of therapy services to the extent deemed medically necessary by Medicare. The 2005 law authorized the exceptions process for only one year, but Congress has repeatedly extended the this "exceptions" process.

MACRA extends this exceptions process and directs CMS to utilize manual medical review of exceptions requests on suppliers of therapy services who, among other things, have high denial rates, have a history of aberrant billing or are new enrollees.

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