Medicare Physician Fee Schedule Announcement

What’s new in the annual reimbursement tug of war

By Christina Claussner

Every November, the Centers for Medicare and Medicaid Services (CMS) updates reimbursement for the next calendar year and provides a combined impact summary by major physician specialties in what is known as Table 93. This highly anticipated document is essentially a list of winners and losers in the annual tug of war for a fixed amount of federal funds. In essence, it is a zero sum game where there are “winners”—physicians whose reimbursement will be increased—and there are “losers”—physicians whose reimbursement is decreased to offset the gains of winners.

Three basic components impact Medicare reimbursement: relative work value (RVUs), practice expenses, and malpractice insurance costs. The correlation between these components cannot be ignored, especially with the historical rise in practice expenses and malpractice costs. Any type of work value change, even minor, can swing the long-term viability pendulum for a physician practice.

Analysis of the combined impact data from Table 93 of previous years as well as the anticipated impact for 2015, shows that in the last four years alone there have been significant cumulative changes in reimbursement to various specialties. For example, while specialties such as psychiatry (8%), geriatrics (8%) and primary care (10% by 2016) have seen significant cumulative increases in reimbursement, other specialties have not fared as well. Diagnostic testing providers have seen their reimbursement decrease by 23%, independent labs, by 20%, and radiology providers, by 17%, to name a few.

The steady reimbursement bump in psychiatry, geriatrics and primary care reflects the government’s preparation for an increased volume of dual eligibles entering the program and the corresponding behavioral health and preventative care they will require. While primary care physicians are enjoying a steady increase year over year, the increase in pay does come with an increase in responsibility. Under Medicare Advantage programs, primary care physicians are required to meet expectations for increased care management, which can be time consuming. To further incentivize the additional workload, starting in January 2015, CMS began to reimburse PCPs an additional monthly amount of $42.60 per patient with two or more co-morbid conditions provided the physician meets certain criteria for non-face to-face interactions.

Each year, the combined impact column reflects the anticipated overall impact on the next year by specialty, with the understanding this impact may fluctuate if there are corresponding conversion factor (CF) adjustments allowed by the regulation. The current statute allows for the implementation of a negative CF reduction effective April 1, 2015.

The Affordable Care Act Value Based Payment Modifier reimbursement (VM), scheduled to begin Jan. 1, 2015, applies to a select number of specialties and codes and will be fully implemented by Jan. 1, 2017. This implementation could create a swing in reimbursement anywhere from a negative 4% to an increase of 4%.

The debate surrounding fee schedule changes and reimbursement methodology changes continues and CMS is facing strong opposition from the American Medical Association and other medical societies. Expect 2015 to be another challenging year in health care!

Christina Claussner is a senior health care consultant with PBC Advisors, LLC, in Oak Brook. PBC Advisors provides business and management consulting and accounting services to physician practices and hospital systems. For more information, visit www.pbcgroup.com.