As expected, the Centers for Medicare and Medicaid Services proposed that physician fees for 2012 would be reduced by 29.5%. The proposed rule was released in the Federal Register July 1.

The reduction is required by the Sustainable Growth Rate (SGR) formula that was part of the Balanced Budget Act of 1997. But Dr. Donald M. Berwick, CMS administrator, said in a statement that the agency is hoping to find a way to avoid the statutory decrease.

“This payment cut would have serious consequences and we cannot and will not allow it to happen,” Dr. Berwick said. “We need a permanent SGR fix to solve this problem once and for all. That's why the president's budget and his fiscal framework call for averting these cuts and why we are determined to pass and implement a permanent and sustainable fix.”

Dr. Peter W. Carmel, president of the American Medical Association, said that the reductions called for by the SGR formula are a constant threat to physicians' stability. “We are pleased that there is support from the administration and bipartisan members of congress for permanent reform of this broken system, but agreement is not enough,” Dr. Carmel said in a statement.

The AMA has been seeking a review and revision of the Medicare Economic Index (MEI), a measure of cost increases that affect physician practices. Dr. Carmel said that such a review was promised in the 2011 Medicare Physician Fee Schedule final rule, but the newly released proposed rule for 2012 shows it has not yet begun. Revisions in the MEI could significantly reduce the legislative cost of permanent reform of the Medicare physician payment formula,” said Dr. Carmel, noting that cost is an estimated &dollar;300 billion over the next 10 years, and is on its way to hit half a trillion dollars in a few years.

The reductions could be deeper for some specialties – especially for radiation oncology and diagnostic imaging – based on the impact of the Physician Practice Information Survey. The changes would reflect the third year of a 4-year transition to new practice expense relative value units.

And more payment changes may be looming. The CMS said in a statement that it is proposing to continue its efforts to identify what it calls “potentially misvalued codes.” As part of those efforts, it will be taking a look at all evaluation and management (E/M) codes to determine if they are undervalued. The agency also proposes to examine the highest non–E/M expenditure codes for each specialty to see if they are overvalued.

The agency said that the reviews will improve payment accuracy, in particular ensuring that primary care services are appropriately reimbursed. It's the first time the agency has looked across all specialties, according to the CMS.

“We believe strong efforts are needed to evaluate Medicare's fee schedule to ensure that it is paying accurately and ensuring that Medicare beneficiaries continue to have access to vital services, such as primary care services,” Jonathan Blum, director of the Center for Medicare, said in a statement.

Diagnostic imaging has been a target for Medicare, and it is again in this proposal. The agency wants to extend the multiple procedure payment reduction (MPPR) policy to the professional component of advanced imaging services, which includes computed tomography (CT) scans, MRI, and ultrasound.

The agency said the reduction would affect about 100 types of services. It is also the first time that the CMS has taken aim at the professional component of these services. That component would be reduced by 50% for subsequent procedures furnished to the same patient, on the same day, in the same session, resulting in an estimated &dollar;200 million in savings, according to the CMS.

For the first time, the agency is proposing quality and cost measures to be used in setting incentive payments for physicians who provide higher quality and more efficient care. That lays the groundwork for 2015, when the Affordable Care Act requires the CMS to begin making payment adjustments for certain physicians and physician groups. The requirement goes into effect for all physicians in 2017. The agency is proposing to use 2013 as the initial performance year.

In other issues addressed by the proposed rule, CMS seeks to add smoking cessation to the list of services that can be provided through telehealth. In the future, new services would be examined according to the clinical benefit they provide rather than on whether they are equivalent to a corresponding in-person service.

Finally, the CMS proposed some changes to the Physician Quality Reporting System, the ePrescribing Incentive Program, and the Electronic Health Records Incentive Program. The agency, for instance, is expanding the ways physicians can qualify for incentive payments under the meaningful use criteria.

Comments to the proposed rule can be submitted until Aug. 30 at http://www.regulations.gov

CMS Proposes 30% Physician Pay Cut for 2012 : Quality, cost measures may be used to set incentive payments.