American College of Physicians: Internal Medicine — Doctors for Adults ®

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HCFA proposes increase for E/M services for 1997

From the June 1996 ACP Observer, copyright 1996 by the American College of Physicians.

Work values used to determine Medicare payments for internal medicine would increase 4.2% over 1995 values, according to a recent Health Care Financing Administration (HCFA) proposal. The recommendation, published in the Federal Register last month, came after the agency completed a mandatory five-year review of the Medicare fee schedule.

ACP and other physicians' organizations have contended that the Medicare fee schedule undervalues evaluation and management (E/M) services and payment should be increased.

The proposed rule will undergo a 60-day comment period. The final rule will be published in November 1996, and the new work values will take effect Jan. 1, 1997.

HCFA's proposal would increase work values for the following families of E/M codes:

  • New and established patient office visits, about 17%.
  • Initial and subsequent hospital visits, about 20%.
  • Nursing home and home visits, nine of 12 codes increase.
  • Prolonged services codes, a slight increase.

The proposed increase for internal medicine work values is the second highest of all specialties and reflects internists' mix of E/M and procedural services. The work values for some procedures done by internists have proposed reductions. As a specialty, family practitioners would receive the highest increase—4.6%—because they perform fewer procedures. Specialties with increases greater than 2% include hematology/oncology, general practice, neurology, pulmonology and rheumatology.

Working through AMA's Relative Value Scale Update Committee (RUC), ACP argued that the existing fee schedule shortchanged E/M services when measuring work intensity. HCFA cited ACP in the Federal Register: "An analysis of intraservice work per unit time (intensity) by one commenter [ACP] found that the intensity of 96% of the services paid under the physician fee schedule exceeded the existing intensity of evaluation and management services." HCFA also agreed that pre- and post-service E/M work (for example, reviewing the patient's chart and documenting care, respectively) has increased over the past few years.

HCFA also recommended that work values for preventive medicine and care plan oversight codes remain the same as 1995 and that work values for only about 10 potentially overvalued codes be reduced. Initially, HCFA suggested that the RUC review about 300 codes where values were either too high or too low; RUC reviewed an additional 33 potentially overvalued codes and recommended devaluing a third of these. HCFA did not increase E/M values as much as RUC recommended, contending that doing so would significantly distort the relationship among E/M code families.

The 1997 increases in conversion factors for E/M services will offset adjustments for budget neutrality—a 7.63% reduction in all work values. Fees are derived, partly, by multiplying a standard conversion factor by the total relative values for a particular service. Total relative values equals the sum of physician work, malpractice and practice expense relative values.

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