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The long path to 2007's Medicare payment increases: How ACP pushed the envelope

From the September ACP Observer, copyright 2006 by the American College of Physicians.

By Brett Baker

During a panel discussion of proper Medicare billing at ACP's 2004 Annual Session, a member stated that he was underpaid for his evaluation and management (E/M) services and asked what ACP was doing about it. I launched into an upbeat answer about the College's campaign to convince the Centers for Medicare and Medicaid Services (CMS) to pay more for E/M services when it next reviewed the accuracy with which it makes Medicare payments.

I quickly saw that the audience found it hard to get excited about an effort that—if successful—would increase their payments in the all-too-distant year of 2007. I realized that it was not important for members to watch the bridge being constructed; it was only important for them to experience relief from the traffic bottleneck once it was completed.

Now, two years later, I can state that the bottleneck over E/M payments is about to break open—to the tune of between $4,000 and $9,000 in Medicare payments per internist.

Beginning Jan. 1, 2007, if CMS implements the proposed work relative value units (RVUs), physicians will see Medicare payment increases for most of the common E/M services. For example, the national average Medicare payment will rise by 12.8% for current procedural terminology (CPT) code 99213 (intermediate office visit), 9% for code 99214 (moderately complex office visit) and 13.7% for code 99232 (moderately complex hospital visit).

Members should realize that this step forward—the first such increase in a decade—comes only after the College's intense long-term efforts to sustain a coalition effort and compile evidence and arguments to show the CMS why and to what degree E/M service increases are needed.

How ACP did it

The College's efforts began in June 2004—around the time of the 2004 Annual Session—when ACP convened a coalition of organizations representing internal medicine subspecialists and other cognitive-oriented physicians to identify codes that are undervalued compared to other Resource Based Relative Value Scale (RBRVS) services. The first official step in the long, deliberative, data-driven Medicare Five-Year Review process, which is required by law occurred in November 2004 when the CMS asked for comments on services incorrectly valued under the RBRVS.

In January 2005, ACP and 26 other organizations signed a letter stating that changes in patient characteristics and physician practice over the previous decade had resulted in increased work that would affect the relative value for the following E/M service code families:

  • New patient office visits
  • Established patient office visits
  • Initial hospital care services
  • Subsequent hospital care services
  • Hospital discharge services
  • Office consultations
  • Inpatient consultations
  • Emergency department services
  • Critical care services

As a result, the coalition argued, those code families should be included in the Five-Year Review.

Working with the RUC

In February 2005, CMS agreed to include these codes in the Five-Year Review. It then asked the relative-value scale update committee (RUC)—comprised of individuals appointed by physician specialty organizations, including ACP—to recommend a work RVU for each E/M service code.

From August 2005 to February 2006, the RUC deliberated the appropriate value for the E/M services using the standard process it established to determine work RVU recommendations for services and procedures in the CMS' Five-Year Review.

During this time, ACP led the coalition to convince the RUC to recommend significant increases in the work RVU for many E/M service codes, with some of the largest increases for services that internists provide most frequently.

To bolster confidence in its evidence, the coalition surveyed physician-members using the standard RUC survey to quantify the amount of physician work currently involved in providing each E/M service. It also used additional information—comparison to other RBRVS services, statistics, other national survey data and literature—to develop a work RVU recommendation for each E/M service.

The efforts paid off: The RUC ultimately decided that the evidence warranted the increases.

The CMS decision

The CMS paid attention. In June 2006, it proposed the RUC-recommended E/M service work RVUs. CMS will consider the comments it receives from the public on its proposal and publish a final decision on the 2007 work RVUs this November.

If implemented, those recommendations would lead to the largest revisions CMS has ever made to E/M services. However, there are two caveats related to how the work RVU changes translate into payments:

First, the Medicare payment will not increase by the same percentage of the work RVU increase because the work RVU, on average, accounts for only 55% of the total RVU. The RVU for practice expense and the cost of malpractice liability insurance account for the remaining 45%.

Second, the law requires CMS to make all changes to the RBRVS “budget neutral,” meaning that RVU changes cannot result in any new Medicare Part B spending. Consequently, the agency is proposing an approximately 5% reduction to the Medicare payment for each physician service to offset the $4 billion in increased spending that would result from the E/M changes. Internists will benefit despite this 5% offset since key E/M service payments will increase well above that amount. Not only will key Medicare payments increase, but the College also expects private users to use some form of the RBRVS that would increase their payments as well.

The proposed increases are an important part of the College's multi-faceted efforts to ensure appropriate recognition—and pay—for internists' services.

We believe that this component, assuming CMS implements it in 2007, will provide a bridge that will ease some of the proverbial traffic congestion and improve internists’ practice environment.

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How will it affect your revenue?

A tool that allows ACP members to project how the Centers for Medicare and Medicaid Services' changes to evaluation and management services will affect their Medicare revenue is available online.

Brett Baker is director of Regulatory and Insurer Affairs in ACP's Washington, D.C. office.

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