"Protecting Access to Medicare" Bill Gives CMS More Authority to Adjust Payments

 CMS logoOn April 1, 2014, President Obama signed legislation that delays the scheduled Sustainable Growth Rate (SGR) cut to physician payments for one year (and delay ICD-10 implemetation!).  The legislation contains a number of other provisions, including provisions under Section 220 (Ensuring Accurate Valuation of Services Under the Physician Fee Schedule) that establish alternative approaches for collecting and using information in the determination of relative values, and that instruct the Secretary of Health and Human Services (Secretary) to examine categories of codes and families of codes that potentially may be "misvalued" (read: over-reimbursed).

Sections 220 (a) and (b) establish alternative approaches for collecting and using information in the determination of relative values.  Under the alternative approaches, information may be collected from any of the following:

  • Surveys of physicians, other suppliers, providers of services, manufacturers and vendors
  • Surgical logs, billing systems, or other practice or facility records
  • Electronic health records
  • Any other mechanism deemed appropriate by the Secretary

The legislation also grants authority to CMS to establish or adjust practice expense relative values using cost, charge or other data from suppliers or providers of services.  As an incentive to participate, CMS may provide payment for such information.

Prior to this legislation, CMS examined codes and families of codes based on any of the following criteria:

  • Codes that have experienced the fastest growth
  • Codes that have experienced substantial changes in practice expenses
  • Codes that describe new technologies or services within an appropriate time period (such as three years) after the relative values are initially established for such codes
  • Codes that are multiple codes that are frequently billed in conjunction with furnishing a single service
  • Codes with low relative values, particularly those that are often billed multiple times for a single treatment
  • Codes that have not been subject to review since implementation of the fee schedule
  • Codes as determined appropriate by the Secretary

The Affordable Care Act originally established these seven criteria and required CMS to identify, review and adjust values for potentially misvalued codes that met such criteria.  Since 2009, CMS has reviewed more than 1,000 potentially misvalued codes to refine work relative value units and direct practice expense inputs.  The recently passed legislation adds new criteria for codes that CMS shall examine:

  • Codes that account for the majority of spending under the physician fee schedule
  • Codes for services that have experienced a substantial change in the hospital length of stay or procedure time
  • Codes for which there may be a change in the typical site of service since the code was last valued
  • Codes for which there is a significant difference in payment for the same service between different sites of service
  • Codes for which there may be anomalies in relative values within a family of codes
  • Codes for services where there may be efficiencies when a service is furnished at the same time as other services
  • Codes with high intra-service work per unit of time
  • Codes with high practice expense relative value units
  • Codes with high cost supplies

The bill establishes a phase-in if relative value unit reductions is deemed "significant."  Effective for fee schedules beginning in 2017, for services that are not new or revised codes, if the total relative value units for a service for a year would otherwise be decreased by an estimated amount equal to or greater than 20 percent as compared to the total relative value units for the previous year, the applicable adjustments in work, practice expense and malpractice relative value units shall be phased in over a two-year period.

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