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How the new Medicare rates will affect your practice

From the April ACP Observer, copyright © 2003 by the American College of Physicians.

By Brett Baker

Now that the new Medicare rates for 2003 are in place, you're probably wondering exactly how your practice will be affected. Late last month, Medicare announced how its carriers will pay the new rates—and gave physicians more time to change their participation status in the program.

In February, Medicare announced that it would increase physician reimbursements 1.6% over 2002 rates, canceling a planned 4.4% cut. The new rates took effect March 1.

That change came as a result of new legislation that allows the Centers for Medicare and Medicaid Services (CMS) to fix past mistakes in how it calculates the annual update to the Medicare physician fee schedule. These errors inappropriately took tens of billions of dollars out of the pool of money available for physician payments.

Congressional budget experts estimate that once the CMS corrects the mistakes and restores these funds, Medicare will spend an additional $54 billion on physician services over the next decade.

How will the changes affect your practice? Here are some answers to frequently asked questions about the new physician fee schedule:

Q: Where can I find the new rates?

A: Because the new rates were implemented so quickly after they were changed, Medicare will not contact physicians by mail to announce the revised fees. Instead, Medicare carriers will post the 2003 fee schedule on their Web sites. (A list of Medicare carriers with a link to each carrier's Web site is online at www.cms.gov/medlearn/weblnks.asp.) Carriers will also direct physicians to their Web sites through information on claims remittance advice, an automated phone service or customer service representatives.

If you do not have Internet access, contact your carrier to request a hard copy of the revised rates.

Q: If the 2003 rates didn't go into effect until March 1, how will Medicare pay for claims filed in January and February?

A: Medicare will pay for January or February claims using the 2002 rates—as long as those claims were processed before the end of February. Any January or February claims processed after March 1 will be paid using the new, higher rates.

The hitch? On July 1, your carrier will adjust those claims to reflect the lower 2002 rates. Carriers will ask physicians to "refund" any amount they were "overpaid" for January and February claims paid at the higher rates.

Beginning July 1, Medicare will have adjusted its payment systems so carriers will be able to pay the correct amount based on when claims were filed. By that time, carriers will pay 2002 rates for January or February services and 2003 rates for services provided in March and thereafter with no additional refunds required.

Q: How will Medicare pay for services billed with new 2003 procedure codes?

A: If you bill Medicare for services using procedure codes that are new for 2003, you will receive the 2003 rates regardless of the date you file the claim. Medicare carriers will not have to adjust pay for these services later in the year.

Q: Can I change my 2003 Medicare participation status now that Medicare payments have increased?

A: Yes. The CMS announced that because it has revised Medicare rates, it is giving physicians another chance to change their participation status.

Before the increase was announced, Medicare had given physicians until Feb. 28 to change their status with the program. Now, the CMS has announced that physicians can change their provider status again as long as they act by April 14.

If you plan to change your participation status, inform your carrier. If you take no action, your status will remain unchanged.

Q: If I change my participation status before the April 14 deadline, when will my new status go into effect?

A: If you already changed your Medicare status earlier this year to meet the Feb. 28 deadline and change it again before the April 14 deadline, payments for claims filed in January and February will be processed based on your first change of status. Services performed from March 1 through the end of the year will be processed based on your second change of status.

Keep in mind that Medicare will not automatically adjust claims for services you provide between March 1 and April 14 that are processed before any changes in participation status take effect. Medicare will adjust these claims only if you notify your carrier that it paid you incorrectly because your participation status changed.

Brett Baker is a third-party payment specialist in the College's Washington office.

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In Medicare pay struggle, physician advocacy brought victory

How did physicians finally succeed in averting the 4.4% Medicare fee cuts slated for March 1? They never stopped voicing their concerns to lawmakers.

Thousands of ACP members, Governors and Regents, as well as patients, took the time to contact their legislators to explain the devastating impact cuts would have on American medicine. ACP members alone sent more than 5,500 letters, e-mails and faxes to congressional leaders.

This successful grassroots effort didn't happen spontaneously, however. In part, it was the result of a disciplined campaign by organized medicine—ACP, the AMA and state and specialty societies—to harness the power of 500,000 doctors to pressure Congress to act. These organizations met weekly to develop and implement an unprecedented advocacy campaign to persuade Congress to halt the cuts.

Replacing the March 1 cut with a positive update and fixing calculation mistakes that could have led to further deep cuts are steps in the right direction. However, they still may not be enough to ensure Medicare payments keep pace with practice expenses, including the runaway costs of medical liability insurance.

The College will continue to work with the CMS and Congress to fight for needed changes to Medicare payment policies. We are committed to ensuring that College members are adequately and fairly paid for their services.

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