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Monthly e-Newsletter July 2011


Email Alert
July 25, 2011

Physician Organizations' Monthly e-Newsletter - July 2011
Sidney Welch, Jessica Grozine, and Julie Kass, Editors*

CMS Releases its Calendar Year 2012 Physician Fee Schedule Proposed Rule
By Mark Stanley*

The Centers for Medicare & Medicaid Services (CMS) has released its Calendar Year (CY) 2012 Proposed Rule for practitioners who are paid under the Physician Fee Schedule (PFS). The proposed rule would impact a variety of methodologies used to calculate physician payment, including the adjustment for geographic differences in practice expenses and the payment rates for the professional component of multiple advanced diagnostic imaging procedures.

CMS anticipates that the Sustainable Growth Rate (SGR) adjustment to physician reimbursement will result in a 29.5% percent cut in payment rates for 2012. This adjustment has historically been reversed through congressional intervention, but clashes over deficit spending in Washington add extra drama this year. As a result, there is a very real possibility that a substantial reduction in physician reimbursement will occur with the CY 2012 PFS.

Among other changes, the proposed rule would:

Expand the potentially misvalued code initiative. Section 3134(a) of the Affordable Care Act (ACA) mandates that CMS must identify and adjust payment for potentially misvalued codes. Beginning in CY 2012, the proposed rule would consolidate existing five-year reviews of the work and practice expense relative value units (RVUs) into the annual review of potentially misvalued codes established pursuant to ACA. ACA Section 3134(a) also requires CMS to establish a methodology that utilizes consistent criteria for identifying potentially misvalued codes. In its CY 2011 PFS final rule with comment period, CMS requested input from stakeholders regarding the features of such a methodology. CMS has again requested input regarding the data sources and possible methodologies for developing a validation process for reviewing code values. In particular, CMS would like comments on the sources of data that may be used in validating estimates of the physician time and intensity that can be factored into the work RVUs. Finally, CMS has proposed a public nomination process for the identification of potentially misvalued codes for annual review, including specific documentation requirements for proposed codes.

Change the methodology and data applied when determining the adjustment of geographic practice cost indices (GPCIs). The new methodology would maintain the current data sources for the physician work costs. However, CMS anticipates that physician work GPCIs will be adjusted to account for the expiration of the 1.0 work GPCI floor on December 31, 2011. The GPCI floors established for Alaska (1.5) and frontier states (1.0) survive the expiration of the GPCI floor later this year. CMS is proposing to replace certain data sources used to establish practice expenses. For instance, the proposed rule would replace U.S. Department of Housing and Urban Development rental data, which is currently used as a proxy for the office rent component of practice expenses, in favor of data from the American Community Survey.

Apply the multiple procedure payment reduction (MPPR) to include the professional component of advanced imaging services. Prior to CY 2011, CMS only applied the MPPR to multiple codes within the same family and only reduced the technical component of advanced imaging services. The CY 2011 PFS final rule with comment period expanded the MPPR to apply to the technical component of advanced imaging services across (rather than within) families of codes. The CY 2012 rule would take the change one step further by reducing reimbursement for the professional component of advanced diagnostic imaging services when multiple procedures are furnished in the same session.

Expand the application of the three-day payment window to hospital-owned practices. The rule would effectively reduce physician payment for physician practices that are wholly owned or operated by a hospital where hospital admission occurs within three days of physician service.

Create new criteria for the health risk assessments (HRAs), which are to be utilized in tandem with the annual wellness visits. HRAs are a required component of patients' "personalized prevention plans," as established by the Medicare statute. The Centers for Disease Control and Prevention have issued interim guidance for the HRAs.

Expand the list of services eligible for coverage as telehealth services. The proposed rule would add smoking cessation treat to the list of services eligible for telehealth coverage and would adjust the way additional services are added to the list of telehealth-eligible services.

Update physician incentive programs, including the Physician Quality Reporting System (PQRS) and the ePrescribing (eRx) Incentive Program. The proposed rule would establish a self-nomination process for group practices that seek to participate in the PQRS or eRx Incentive Programs. Group practices that wish to self-nominate would need to do so by January 31 of the year in which they wish to participate in the Incentive Program. Groups that have previously participated would be automatically eligible for participation in CY 2012 and in future years.

Update the Electronic Health Records (EHR) Incentive Program. The proposed rule would establish a pilot program, which would allow physicians to meet the clinical quality measure (CQM) reporting requirements of the EHR Incentive Program via electronic submission. CMS has proposed two alternate methods for participants in the pilot program to submit their CQMs. The proposed methods for electronic submission of CQM data are based on existing platforms of the PQRS.

Establish new quality and cost measures that would ultimately lead to the establishment of a value-based modifier to physician payment. CMS anticipates that it will establish the value-based modifier in CY 2013, using quality measures from the PQRS reports and Physician Feedback reports this year.

Continue the transition to the new practice expense relative value units, which began transitioning to data from the Physician Practice Information Survey With the CY 2010 PFS final rule.

Comments on the Proposed Rule must be received by CMS no later than 5:00 pm Eastern on August 30, 2011.

Proposed Changes to the E-Prescribing Incentive Program
By Elena Martinez and Ken Briggs*

On June 1, 2011, CMS published a proposed rule that would modify the electronic prescribing incentive program (e-Rx Incentive Program) created by the Medicare Improvements for Patients and Providers Act of 2008 (MIPAA). The proposed rule would extend the deadline for compliance to October 1, 2011, and would recognize certified electronic health record (EHR) technology that meets the requirements set forth under the Health Information Technology for Economic and Clinical Health Act (HITECH Act) as a qualified e-Rx system. The proposed rule would also expand the number of hardship exemption categories that would allow physicians and other eligible professionals to avoid a payment adjustment in 2012.

Currently, there are two federal government programs that provide incentive payments to healthcare providers who adopt EHR and e-Rx systems. Under the e-Rx Prescribing Program, certain healthcare providers with prescribing authority can receive a 1% adjustment to Medicare payments for 2011 and 2012, and a 0.5% adjustment for 2013 if they adopt an e-Rx system. Those who fail to qualify will receive a 1% decrease in Medicare payments in 2012, a 1.5% decrease in 2013, and a 2% decrease in 2014. Under the EHR Incentive Program established under the HITECH Act, physicians who meet certain qualitative and quantitative standards for the "meaningful use" of certified EHR technology, beginning in 2011, are eligible to receive up to $44,000 in Medicare incentive payments over a five-year period, beginning in 2011 through 2016. Those who fail to qualify for federal funding by 2015 will be subject to a 5% reduction in Medicare reimbursement in that year and in subsequent years. The EHR technology must include an e-Rx functionality that establishes a connection with payors and pharmacies.

While the providers cannot collect incentive payments from both EHR and the e-Rx Incentive Programs, they can be penalized for noncompliance with both. Therefore, the proposed rule would allow more flexibility by extending the deadline to claim an exemption under the e Rx Incentive Program to October 1, 2011, changing the description statement to permit the eligible professionals to indicate either that they have an e-Rx system that meets the required functionalities or that they have adopted a certified EHR system, and expanding the hardship exemption categories.

The first exemption category provides a hardship exemption to those eligible professionals who choose to adopt a more rigorous certified EHR system that could not have been integrated into the professionals' practices in time to meet the deadlines set forth in the e-Rx Incentive Program. The second exemption category applies to those providers who are unable to meet certain measures due to local, state, or federal law. A third exemption would apply to those eligible professionals who otherwise could be subject to a negative payment adjustment but do not prescribe frequently enough to become successful e-prescribers, or whose patients are not eligible to participate under Medicare. The fourth category provides a hardship exemption to those professionals who have sufficient denominator—eligible visits but do not normally write prescriptions of the type included in the denominator of the e-Rx measure. The third and fourth categories will be reviewed on a case-by-case basis.

The comment period on the proposed rule ends on July 25, 2011.

CMS Issues Proposed Payment and Quality Reporting Changes for Hospital Outpatient Departments and Ambulatory Surgery Centers
By Christy Jordan*

CMS released a proposed rule on July 1, 2011, that would, beginning January 1, 2012, increase payments to hospital outpatient departments (HOPDs) and ambulatory surgery centers (ASCs) and implement the reporting of certain quality measures. The proposed rule purportedly seeks to promote higher-quality and more efficient services for Medicare beneficiaries.

For HOPDs, the proposed rule would increase payments by 1.5% for 2012. CMS projects that it will pay more than 4,000 hospitals approximately $41.9 billion in 2012 for HOPD services. Cancer hospitals would receive the highest adjustment, approximately a 9% increase, with the projected increase in payments for non-cancer hospitals estimated to be 1.1% after all adjustments are taken into account. For ASCs, the proposed rule would increase payment rates by 0.9% for 2012. CMS projects that its payments to the approximately 4,000 Medicare-certified ASCs will be approximately $3.61 billion in 2012. The difference in the percentage increase between HOPDs and ASCs is related, in part, to the methodology utilized to calculate the increases—for HOPDs, CMS uses the market basket update; for ASCs, CMS uses the consumer price index for all urban consumers.

Currently, HOPDs are required to report certain quality data under the Hospital Outpatient Quality Reporting Program. The proposed rule would add nine (ninety quality measures to the current list of twenty-three (measures to be reported by HOPDs, resulting in a total of thirty-two (measures for reporting. For the first time, CMS is proposing to implement a quality reporting program for ASCs. Beginning in January 2012, ASCs would report certain quality information that will be utilized by CMS to set payment rates beginning in 2014. For the 2012 reporting period, the quality measures would include seven (seventy outcome and surgical infection control measures and one healthcare-associated infection measure).1 CMS proposes to expand the quality measures in subsequent years.

CMS will accept comments on the proposed rule until August 30, 2011. A final rule is expected to be issued in November.

*We would like to thank Ken Briggs, Esquire (Milligan Lawless Taylor Murphy & Bailey PC, Phoenix, AZ), Christy D. Jordan, Esquire (Arnall Golden Gregory LLP, Atlanta, GA), Elena S. Martinez, Esquire (Greenebaum Doll & McDonald PLLC, Louisville, KY), and Mark A. Stanley, Esquire (Ober|Kaler, Baltimore, MD), for contributing to this edition of the Physician Organizations Practice Group e-Newsletter. We would also like to thank Sidney Welch, Esquire, and Jessica Grozine, Esquire (Arnall Golden Gregory LLP, Atlanta, GA), and Julie Kass, Esquire (Ober|Kaler, Baltimore, MD), for editing this edition of the Physician Organizations Practice Group e-Newsletter.

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