Physician Pay Rule Contains Good and Bad News


Medicare’s physician fee schedule for 2013 contains both a 26.5% pay cut based on the Sustainable Growth Rate formula and pay increases for care coordination and for primary care provided under Medicaid.

Under current law, the Sustainable Growth Rate (SGR) formula will kick in Jan. 1 and lop one-fourth off doctors’ pay under Medicare, unless Congress steps in to halt the cut.

Dr. Ardis D. Hoven

In issuing the fee schedule final regulation on Nov. 1, the Obama administration noted that Congress has reversed the mandated cut every year since 2003.

The administration "is committed to fixing the SGR update methodology and ensuring these payment cuts do not take effect," according to a statement. "Predictable, fiscally responsible physician payments are essential for Medicare to sustain quality and lower health care costs over the long term."

The American Medical Association decried the SGR cut.

"Eliminating this failed formula will allow us to enter a period when physicians can begin transitioning to new payment and delivery models to help meet the overall goal of improving patient care and moving to a higher performing Medicare program," Dr. Ardis D. Hoven, AMA president-elect, said in a statement.*

The fee schedule final rule also includes changes to the value-based modifier program, designed to pay physicians based on the quality of care they deliver.

In a proposed rule issued earlier this year, physicians in groups of 25 or larger would have been subject to the new pay plan in 2015. The final rule increases the size of the group to 100 initially.

In addition, the final rule creates a new set of codes to pay physicians for care coordination in the 30 days after a patient is discharged from a hospital or nursing home. Those codes were initially proposed as G codes, but now will be full-fledged codes in the AMA Current Procedural Terminology (CPT). Physicians will be rewarded for patient interactions that are not face to face, such as phone consults, chart reviews, and email communications.

In another final rule issued Nov. 1, the CMS announced that, as expected, it will pay certain providers the Medicare pay rate for certain primary care services provided under Medicaid in 2013 and 2014.

As called for under the Affordable Care Act, the CMS will pay Medicare rates for evaluation and management codes between 99201 and 99499 when they are used by physicians who are board certified by the American Board of Medical Specialties, the American Osteopathic Association, and the American Board of Physician Specialties.

The codes cover not just primary care, but also hospital observation and consultation for inpatient services provided by nonadmitting physicians, emergency department services, and critical care services.

The final rule does not, however, allow emergency physicians or obstetricians to be compensated at the Medicare level for services under Medicaid, according to the consulting firm Washington Analysis.

The CMS estimated that increasing the Medicaid pay will cost $5.6 billion in 2013 and $5.7 billion in 2014.

Dr. Thomas K. McInerny, president of the American Academy of Pediatrics, said that pay parity between Medicaid and Medicare was "a monumental victory for children’s access to quality health care." He noted that children make up more than half of all recipients of Medicaid services, and that pediatricians provide almost two-thirds of the office visits for those children.

The American Academy of Family Physicians also praised the rule. Dr. Jeffrey Cain, AAFP president, agreed that pay parity would increase access to care.

"More than 6 in 10 (64%) family physicians accept new Medicaid patients, and these beneficiaries comprise 15% of the average family physician’s patient panel," he said in a statement. "However, increasingly inadequate Medicaid payment has forced nearly 2 in 10 family physicians to stop accepting new Medicaid patients."

The rules will be published in the Federal Register on Nov. 16 and comments will close on Dec. 31. Both rules take effect Jan. 1, 2013.

*Correction, 11/6/2012: An earlier version of this story mischaracterized Dr. Hoven's position within the AMA.

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