Fee schedule updates, penalties explained for 2012

The first of a two-part series outlines changes to the fee schedule update, values for observation services, electronic prescribing and annual wellness visits, including chart-by-chart breakdowns for relative value units.

As always, the Medicare program has some changes for the new year. For internal medicine physicians, the changes are incremental rather than the wholesale changes seen in recent years. This column and February's column will highlight the changes.

Fee schedule update

When this column was written, the 2012 update to the Medicare Physician Fee Schedule (PFS) was −27.3%, resulting in a conversion factor of $24.6712. For internal medicine, the overall effect on the Relative Value Unit (RVU) and Multiple Procedure Payment Reductions (MPPRs), without factoring in the update, is nearly flat, at 1% increase in allowable charges.


The effect of those particular changes on the subspecialties Table.

The College has long been concerned that inaccurate valuation of services is adversely impacting our health care system, including undervaluing office visits and other cognitive-oriented services and discouraging interest in primary care and other specialties. This cycle of rulemaking explicitly demonstrated that the Centers for Medicare and Medicaid Services (CMS) wants to address the changes in medical practice and remedy the shortage of primary care physicians through changes in the Medicare PFS.

CMS would otherwise force the College and other specialty societies to conduct Relative Value Scale Update Committee (RUC) surveys, which poll internists about their impressions of the complexity and intensity of performing medical services of all the evaluation and management codes. Instead, the agency will be working on innovative methods of properly valuing and reimbursing chronic disease care and primary care services. ACP suggested a number of ideas that could be implemented quickly, such as establishing Medicare payment for existing Current Procedural Terminology (CPT) codes that describe non-face-to-face evaluation and management services. CMS is not taking action on these suggestions immediately, but they may be under consideration for future implementation.

Values for observation services

Extensive RUC surveys of observation services had been conducted by ACP and other specialty societies in 2009 and 2010. Because ACP and other specialty societies believed CMS's initially proposed values for hospital observation services codes were too low, they submitted formal comments to CMS, and held several meetings with CMS officials. This extensive advocacy resulted in adoption of the higher relative values recommended to CMS by ACP, the collaborating specialty societies, and the RUC. CMS approved these values for Table 2 and Table 3 for payment beginning in January 2012.

Electronic prescribing

CMS revised its definition of a qualified electronic prescribing (eRx) system that includes certified EHR technology as follows: “... A qualified electronic prescribing system, which we further propose to define as either a system with functionalities identified in the electronic prescribing measure specifications, or Certified EHR Technology as defined at 42 CFR 495.4 and 45 CFR 170.102.”

CMS has also modified the definition of a group practice to be a single tax identification number (TIN) with at least 25 eligible professionals (EPs), as identified by their individual National Provider Identifiers (NPIs), who have reassigned their Medicare billing rights to the TIN.

For the electronic prescribing provision of the Physician Quality Reporting System (PQRS), CMS decided that it will:

  • simplify the reporting criteria for group practices using the eRx Group Practice Reporting Option (GPRO),
  • finalize its proposal for the 2012 and 2013 incentive payments and 2013 and 2014 payment adjustments,
  • require that a group practice (made up of 25 to 99 eligible professionals) using the eRx GPRO must successfully report the electronic prescribing measure's numerator for at least 625 unique visits and
  • require that a group practice (comprised of =100 eligible professionals) using the eRx GPRO must successfully report the electronic prescribing measure's numerator for at least 2,500 unique visits.

CMS finalized criteria for applying penalties in 2013 and 2014 for physicians and group practices who are eligible for eRx incentives but choose not to participate or do not successfully participate in the eRx program. Physicians who are eligible but choose not to participate in the 2013 or 2014 Medicare eRx incentive program and do not qualify for a hardship exemption will be subject to penalties of a 1.5% payment reduction based on the 2013 Medicare PFS amounts during the year and a 2% payment reduction in 2014. The penalty is applicable each year, regardless of whether or not the eligible professional or group fulfilled the criteria during the previous year.

CMS finalized that physicians can avoid an eRx penalty in 2013 if they successfully participated in the 2011 eRx incentive program (submitted =25 e-prescriptions between Jan. 1, 2011 through Dec. 31, 2011) or e-prescribe and report at least 10 e-prescriptions during the first six months of CY 2012.

To avoid the 2014 eRx penalties, physicians must successfully participate in the 2012 eRx incentive program (submit =25 e-prescriptions between Jan. 1, 2012 through Dec. 31, 2012) or e-prescribe and report at least 10 e-prescriptions during the first six months of CY 2013. Submissions during this six-month period must be submitted by claims and can be submitted for any Medicare Part B PFS service.

The law states that the penalty will apply “with respect to covered professional services furnished by an EP during 2012, 2013, or 2014.”

CMS will allow several reporting mechanisms for eRx activity during the 12-month reporting option to qualify for the incentive or avoid a penalty; this is an expansion from the previous “claims-only” limitation. Thus, physicians may report Healthcare Common Procedure Coding System (HCPCS) code G8553 to CMS on their Medicare Part B claims, to a qualified registry, or to CMS via a qualified EHR product to avoid penalties. Physicians must select only one mechanism and cannot report the eRx measure by using more than one reporting mechanism.

CMS lists several categories for exempting eligible physicians from the eRx penalty:

  • physicians or group practices in rural areas without high-speed Internet access;
  • physicians or group practices in areas without a sufficient number of available pharmacies for eRx;
  • physicians who are unable to e-prescribe because of local, state, or federal law or regulation; and
  • physicians who write fewer than 100 prescriptions during the six-month reporting period required to avoid the eRx penalty.

Annual wellness visits

Medicare beneficiaries likely will need assistance from physician office staff in completing the health risk assessment envisioned in the Centers for Disease Control and Prevention's Interim Guidance on Health Risk. Therefore, CMS has increased the total RVUs for annual wellness visits.

CMS had originally proposed to maintain the current relative values for the annual wellness visits, based on cross-walked values from the HCPCS G0438 and G0439 codes. However, in light of the comments received from ACP and other organizations, CMS is adding Table 4 (and its associated Practice Expense [PE] RVUs) to the annual wellness visits. The College strongly recommended that the health risk assessment should receive additional RVUs because of the additional work and practice expense it will require.

The reimbursement for the health risk assessment will be included in the reimbursement for the annual wellness visit. The new values are based on the level 4 evaluation and management codes 99204 and 99214 with an additional 10 minutes of clinical staff time for G0438 and an additional 5 minutes of clinical staff time for G0439.

In “subsequent annual wellness visits providing personalized prevention plan services,” certain elements should be updated based on information developed during the first annual wellness visit (for example, lists of risk factors and screening schedules). Since all visits that follow the first one are considered subsequent annual wellness visits, the health professional should update elements that were developed during the previous visit if there have been changes.

The Agency for Healthcare Research and Quality describes the key features of health risk assessments, associates them with successful health risk assessments, and discusses their applicability to the Medicare population. ACP commends CMS for including this guidance on the content and conduct of health risk assessments.

By definition, a “health risk assessment” is an evaluation tool that collects self-reported information about the beneficiary; can be administered independently by the beneficiary or administered by a health professional before or as part of the annual wellness visit encounter; is appropriately tailored to and takes into account the communication needs of underserved populations, persons with limited English proficiency, and persons with health literacy needs; takes no more than 20 minutes to complete; and addresses (at a minimum) the following topics: demographic data, self-assessment of health status, frailty, physical functioning, psychosocial risks, behavioral risks, activities of daily living, and instrumental activities of daily living.

CMS notes that the standards outlined in this proposed definition represent a minimum set of topics that need to be addressed as part of a health risk assessment. It should allow the physician or provider the flexibility to evaluate additional topics as appropriate and to provide a foundation for development of a personalized prevention plan.