Healthcare Law Briefs

Meeting the Challenge of Health Law

	What's Inside
	Physician payments from CMS to increase 4 percent in 2005

	Focus on preventative benefits and access to care
	Medicare payment for Part-B covered drugs
	ESRD payments

Healthcare Law Briefs

November 12, 2004

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Physician Fee Schedule Final Rule

Physician payments from CMS to increase 4 percent in 2005

Medicare spending for more than 875,000 physicians and other health care professionals will increase by 4 percent from $53.1 billion in 2004 to $55.3 billion in 2005, under the physician fee schedule update for 2005 to be published on November 15. The payment increases reflect a provision in the Medicare and Modernization Act of 2003 (MMA) PubLNo 108-173) that substitutes a set payment update of 1.5 percent in 2004 and 2005, effectively avoiding a projected update of minus 3.3 percent for 2005 under previous law. The conversion factor for CY 2005 is $37.8975.

The Final rule refines the resource-based practice expense relative value units (RVUs) and make other changes to Medicare Part B policy. In addition to the proposals discussed below, the policy changes concern: (1) supplemental survey data for practice expense; (2) updated geographic practice cost indices for physician work and practice expense; (3) updated malpractice RVUs; (4) updated codes subject to the physician self-referral prohibition; (5) payment for set-up of portable x-ray equipment; (6) the third five-year refinement of work RVUs; and (7) comments on potentially misvalued work RVUs.

Focus on preventative benefits and access to care. The Final rule implements the new preventative benefits that were authorized by the MMA. The new preventative benefits are central to the initiative to make Medicare a modern prevention-focused program, and include: (1) the �Welcome to Medicare Physical,� which gives physicians the opportunity to make an overall assessment of a patient's health; (2) coverage for screening for cardiovascular disease or related abnormalities; and (3) coverage for diabetes screening tests.

CMS has also increased payments for vaccinations and other types of injections. Currently, Medicare does not allow for payment for injections provided on the same day as other Medicare services, under the Final rule physicians may be paid for injections and vaccinations even when performed on the same day as other Medicare-covered services. It also permits physicians to bill and be paid separately for screening electrogram, in addition to the payment for the physical and lets the physician bill for a more extensive office visit performed at the same time, so long as the services are medically necessary.

The Final rule provides for improved access to high-quality care, including: (1) incentive payment improvements to physicians in physician shortage areas; (2) new telehealth billing for most monthly management services furnished to beneficiaries on dialysis; (3) expanded beneficiary access to a broader array of health care professionals; (4) a clarification that Medicare will pay for care plan oversight for beneficiaries receiving home health care when this oversight is provided by non-physician processionals, if authorized by state law to provide these services; (5) combined changes related to ambulatory oncology practices; and (6) new coverage for one-time evaluation and counseling from a physician employed by a hospice to determine appropriate end-of-life services for terminally ill beneficiaries.

Medicare payment for Part-B covered drugs. Under the MMA, the standard payment rate for most Part B drugs will be set at 106 percent of the average sales price (ASP). Drug payment rates will be updated on a quarterly basis. CMS has implemented changes to improve the accuracy of Medicare's payment for Part B-covered drugs and the administration services these drugs require. The Final rule also implements MMA changes that affect payment rates for drugs that are used to treat respiratory disorders such as chronic obstructive pulmonary disease.

Health care costs for beneficiaries. CMS projects a reduction in health care costs for beneficiaries. Changes in drug and drug administration payments, designed to make sure Medicare pays appropriately for new drugs and their administration would reduce beneficiary spending. The Part B deductible will be increased to $110 in CY 2005, up from $100 in 2004.

ESRD payments. CMS has changed how Medicare pays for services to beneficiaries with end-stage renal disease (ESRD), including: (1) the elimination of the cross-subsidy in payments for drug treatments used for beneficiaries with ESRD; (2) an adjustment of proposed payment rates to reflect the higher costs of treating certain types of patients such as those with extremely low body mass indices; (3) payment rates will be adjusted for factors such as age and body surface area; and (4) a 1.6 percent payment increase for ESRD facilities for services in 2005.

The physician fee schedule Final rule will be published in the Federal Register November 15, 2005, and becomes effective January 1, 2005.

SOURCE: CCH Chicago Bureau, November 3, 2004.