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


2007 Medicare payments: A step in the right direction

From the January-February ACP Observer, copyright © 2007 by the American College of Physicians.

By Robert B. Doherty

At the start of 2006, the College called on Congress and the CMS to make fundamental reforms in how physicians are paid under the Medicare program. As I wrote in this space last January, preventing another round of cuts is not the solution to Medicare's payment problems. ACP will continue to challenge policymakers by proposing fundamental and comprehensive reforms, not piecemeal approaches.

Through a series of position papers, letters to Congress and testimony presented over the past 12 months, the College proposed major changes in the way Medicare assigns values to physician services. Those efforts included:

  • Spearheading a multi-specialty effort to persuade CMS to substantially increase the relative value units (RVUs) for office visits and other undervalued evaluation and management services as part of the five-year review of the resource-based relative value scale (RBRVS).
  • Urging Congress to avert a 5% across-the-board cut in Medicare payments caused by the flawed sustainable growth rate (SGR) formula, and to provide stable, positive and predictable payment increases.
  • Advocating for a new way of organizing and financing care, called the patient-centered (or advanced) medical home, to reimburse internists for the work associated with managing and coordinating care for patients with chronic diseases.
  • Lobbying Congress to assure that any program for physician reporting of performance measures be voluntary, phased in gradually, use valid measures, and be adequately funded with additional and non-punitive bonus payments.

The College didn't get everything it wanted as a result of these advocacy efforts. But we were able to persuade Congress and CMS to go forward with several major improvements in Medicare payment policies that will result in higher payments to internists in 2007. Even more importantly, Congress took steps toward creating the building blocks for a comprehensive revamping of Medicare payment policies to support the value of care managed by a patient's personal internist.

E/M payments increase

Largely because of our efforts, CMS published a final rule in November that will implement all of the major improvements in payments for E/M services supported by the College. As a result, payments for five of the 10 new and established office visit codes have been increased. The largest increase is for a mid-level office visit (99213), which will rise by almost 13% from $52.68 to $59.40 (national payment). A level-four office visit code for an established patient (99214) will go up by 9%. Because RVU increases must be budget neutral, by law, codes that were not recommended for increases during the five-year review, including some lower level visit codes, will generally experience "budget neutrality" fee reductions of 4% to 5%. Because internists bill more of the mid- to- upper level visit codes that gain the most from the five-year review, CMS projects that most internists will still see major increases in Medicare payments, despite the budget neutrality adjustment.

Stopping the SGR cut

If the 5% SGR cut had gone into effect this year, the benefit to internists from the five year review effectively would have been cancelled out.

As part of a broad-based effort organized by the American Medical Association, the College lobbied Congress to stop the cut and replace it with stable and positive updates. Once again, Congress waited until the last minute to act. At 4 a.m. on Saturday, Dec. 9, Congress enacted legislation to extend current payment rates and halt the SGR cut as part of a huge package of popular "tax relief extenders." For internists, continuation of the current payment rates, when combined with the five-year review, will result in an average net gain of 5% in Medicare payments, according to CMS. The College estimates that this will translate into a typical gain of $5,000 to $10,000 per internist, depending on the mix of services billed and the number of Medicare patients seen in the practice.

Patient-centered medical home pilot

Congress also directed CMS to implement a pilot of the patient-centered medical home. Based on a proposal from the College, the pilot program will be rolled out in eight states, although no timeline has been set. Internists who participate will qualify for a "care coordination" fee, to support the work that falls outside of the usual office visit associated with managing patients with multiple chronic diseases. It will also allow them to qualify for a portion of "shared savings" from reducing hospital admissions that can be prevented by physician-directed care coordination in the office setting.

This pilot is a critically important first step towards revamping Medicare payment policies. For the first time, CMS is acknowledging that physician work falling outside of the traditional office visit has intrinsic and higher value that should be reflected in reimbursements. It begins to break down the barriers between Medicare Part A (hospital) dollars and Part B (physician) dollars, by establishing the idea that physicians should be able to earn more for helping to keep people healthy and out of the hospital.

Finally, the legislation establishes a voluntary pay-for-reporting program that will begin on July 1, 2007 and continue through Dec. 31, 2007. Internists who decide to report on as few as three quality measures, taken from over 60 measures included in CMS' Physicians Voluntary Reporting Program, will be eligible to receive an additional bonus payment of up to 1.5%. ACP will be working with CMS to assure that only valid and relevant measures are used and the process of reporting is as simple as possible.

Continuing the fight

There is much left to be done. Instead of continuing current rates for another year, Congress should have eliminated the SGR and guaranteed stable, predicable and positive updates. The RVU increases for E/M services are an important step toward paying internists for the time they spend with patients, but the improvements will not result in true parity with the higher reimbursement levels allowed for many procedures. The patient-centered medical home pilot will lay the groundwork for reforms to support patient-centered primary and principal care, but it may be years before it will generate the results needed to transform the way Medicare pays for services. And Congress and CMS should have put more money on the table to cover the costs associated with voluntary reporting on performance measures.

The growing support among lawmakers for patient-centered primary and principal care is heartening, and the improvements made this year by Congress and CMS are important steps forward. But we will not rest until a new and better payment system is created, one that recognizes that the best value in medicine is found in the trusting relationships forged between patients and their internists, not in paying for more procedures.


Highlights of Congress' action:

  • ACP members will see a substantial gain in total Medicare payments next year, not a freeze.
  • A transitional pay for reporting program beginning on July 1, 2007 will be voluntary. Internists will only have to report on three measures to qualify for an additional bonus of up to 1.5% for measures reported from July 1, 2007 through Dec. 31, 2007.
  • The framework for a 2008 pay-for-reporting program uses consensus-based measures endorsed by the National Quality Forum and the AQA.
  • An ACP proposal for a medical home demonstration has been adopted. It provides internists who participate in the pilot with a "care coordination fee" for managing the care of patients with multiple chronic conditions and the ability to share in savings from reductions in hospital admissions.
  • The new legislation maintains the floor on geographic adjustments. This means that internists in states that would have lost income if the floor expired will not see cuts.


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