On October 30, 2008, the Centers for Medicare and Medicaid Services (CMS) issued a final rule for the Medicare Physician Fee Schedule (MPFS) for CY 2009 (MPFS Final Rule). The revised policies and payment rates set forth in this rule generally become effective January 1, 2009. CMS is accepting comments on particular provisions of the MPFS Final Rule through December 29, 2008.

Payment

In the CY 2009 MPFS proposed rule released on June 30, 2008, CMS proposed a 5.4 percent reduction update to the Physician Fee Schedule (PFS) conversion factor for 2009. As a result of Congress passing the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) this summer, the MPFS Final Rule replaces the proposed reduction with a positive 1.1 percent conversion factor update. However, other formula changes mandated by MIPPA actually result in a lower final conversion factor for CY 2009 ($38.0870 for CY 2008 compared to $36.0666 for CY 2009). While many physicians will still realize an overall increase in Medicare reimbursement for 2009, it is yet to be seen how MIPPA-mandated formula changes will impact physician reimbursement going forward.

As promised in the CY 2009 proposed rule, CMS partnered with the American Medical Association Relative Value Update Committee (AMA RUC) to identify potentially misvalued services. Particular focus was given to the fastest growing procedure codes, the Harvard-valued codes, and the direct inputs for the Practice Expense (PE) Relative Value Units. In its MPFS Final Rule for CY 2009, CMS states that it has, at least tentatively, adopted the resulting recommendations of the AMA RUC and adjusted assigned relative values accordingly. It is clear, however, that CMS has far from concluded its review and will continue to look at potentially misvalued codes in the coming year.

Self-Referral and Anti-Markup

Shared Savings and Incentive Plans

In the MPFS Final Rule for CY 2009, CMS declines to finalize a proposed exception to the Stark Law for certain hospital-sponsored pay for performance, shared savings and incentive plans. Instead, CMS extends the comment period and specifically solicits comments on 55 numbered issues relating to the proposed exception.

New Stark DHS

MIPPA amended the Stark Law to deem "outpatient speech-language pathology services" as designated health services thereunder, effective July 1, 2009. In its CY 2009 MPFS Final Rule, CMS amends the Stark regulations to reflect this addition.

Self-Referral and Anti-Markup

Effective January 1, 2009, the "anti-markup" rule will apply to both the professional components (PC) and technical components (TC) of diagnostic tests performed within a physician's practice. Under the anti-markup rule, if a physician bills for a diagnostic test performed by an outside supplier, payment to the billing physician is limited to the lesser of the supplier's net charge to the physician, the physician's actual charge, or the Medicare fee schedule amount for the test. CMS provides two alternatives for determining if the anti-markup provisions apply to particular diagnostic testing services, a "substantially all" professional services test (Alternative 1), or a "site-of service" test (Alternative 2). Under Alternative 1, if the physician who performs or supervises either or both the TC or PC of a diagnostic test, performs "substantially all" (defined as at least 75 percent) of his or her professional services for the billing physician or other supplier, the services furnished by that physician on behalf of the billing physician or other suppler will not be subject to the anti-markup payment restrictions. If the performing physician does not meet the "substantially all" test of Alternative 1, then the arrangement may be analyzed on a case-by-case basis, under Alternative 2. Under Alternative 2, only TCs conducted and supervised and PCs performed in the office of the billing physician supervising the TC or PC will avoid the anti-markup payment restrictions.

PQRI

Regarding Physician Quality Reporting Initiative (PQRI) in CY 2009, CMS finalizes provisions concerning additional quality reporting measures, methods for reporting PQRI data, the time period for reporting PQRI data, and the reimbursement bonus paid to participating physicians.

Of the 56 new quality reporting measures proposed in the CY 2009 proposed rule, CMS finalizes 52, 18 of which are reported exclusively through registries. The new reporting measures cover issues such as osteoarthritis, rheumatoid arthritis, back pain, coronary artery bypass graft, coronary artery disease, chronic kidney disease, melanoma, oncology, hepatitis, and HIV/AIDS. CMS also eliminates the #125 e-prescribing quality measure for PQRI, as a result of its adoption of a separate e-prescribing incentive program described in more detail below.

In its proposed rule for CY 2009, CMS proposed to allow reporting for either all of CY 2009 or only the second half of CY 2009. This proposal is deemed moot by MIPPA, which defines the PQRI reporting period as the full calendar year. Thus, the reporting period for CY 2009 data will begin January 1, 2009, and end December 31, 2009. Under MIPPA, the criteria for satisfactorily submitting data on individual quality measures through claims-based submission require the reporting of at least three applicable measures in at least 80 percent of the cases in which the measure is reportable. If fewer than three measures are applicable to a particular physician's services, the physician may meet the criteria by reporting on all applicable measures.

For physicians successfully meeting the reporting criteria, the PQRI Bonus for CY 2009 will be 2.0 percent of the estimated total allowed charges for all covered professional services furnished during the reporting period that are submitted within two months after the end of the reporting period.

 

Electronic Prescribing Incentive Program

As authorized by MIPPA, and in addition to the 2.0 percent PQRI Bonus, CMS finalizes a new incentive for physicians and other eligible professionals utilizing e-prescribing technology in CY 2009. E-prescribing is defined as "transmission, using electronic media, of prescription or prescription-related information between a prescriber, dispenser, pharmacy benefit manager (PBM), or health plan, either directly or through an intermediary, including an e-prescribing network." CMS lists the benefits of e-prescribing to include: improved patient safety and quality of care, including a reduction of medication errors by up to 86 percent; reduction of the time spent on pharmacy calls and faxing; automation of renewals and authorization; predicted improvement of formulary adherence from 14 percent to 88 percent; and improved drug surveillance and recall. Even given these benefits, it is estimated that only 5-18 percent of providers currently utilize e-prescribing technology.

To boost utilization, CMS will offer an additional 2.0 percent incentive to physicians deemed "successful electronic subscribers" in CY 2009. For CY 2009, a "successful electronic subscriber" is one who reports on at least 50 percent of all applicable cases for the e-prescribing quality measure. The quality measure for CY 2009 will be the former PQRI #125 quality reporting measure, "HIT: Adoption/Use of Medication E-Prescribing." As with PQRI, the reporting period will be the entire 2009 calendar year.

Laboratory/Pathology Reimbursement

Laboratory Fee Schedule

CMS pays for outpatient clinical laboratory services at the lesser of (1) the amount billed, (2) the local fee for a geographical area, or (3) a national limit established under the Clinical Laboratory Fee Schedule (CLFS). The CLFS limits are supposed to be adjusted annually based on the percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U). Beginning in 2004, however, Congress froze the CPI-U update at 0 percent for the period expiring January 1, 2009. With the freeze on CPI-U lifted, if fully applied, the CPI-U update for CY 2009 would amount to a 5 percent increase. However, MIPPA passed mandates this summer reducing the calculated CPI-U update by 0.5 percent for years 2009 through 2013. Thus, the CY 2009 CPI-U update will be 4.5 percent.

Prostate Saturation Biopsies

For CY 2009, CMS proposed changing how it pays for the pathologist services associated with prostate saturation biopsies. Historically, each biopsy sample viewed was separately billable. CMS proposed four new G codes, which base reimbursement on the aggregate number of specimens examined (e.g., one code covers 1-20 specimens examined, another covers 20-40 specimens examined). This proposal resulted from CMS's belief that paying individually for each core sample submitted was a gross overpayment for the service provided. In the CY 2009 MPFS Final Rule, CMS finalizes each of these new codes. However, CMS decided to simply specify payment for these codes in the MPFS Final Rule, rather than allowing the Medicare contractors to set pricing as initially proposed.

Telehealth

The CY 2009 MPFS Final Rule adopts the proposed addition of new Healthcare Common Procedures Coding Systems (HCPCS) codes specific to telehealth delivery of follow-up inpatient consultations. As proposed, these new codes are to be used by physicians and nonphysician practitioners (NPPs) when an inpatient consultation is requested from an appropriate source such as the patient's attending physician. The CY 2009 MPFS Final Rule defines follow-up inpatient telehealth consultations as "consultative visits furnished via telehealth to follow up on an initial consultation, or subsequent consultative visits requested by the attending physician." The codes are to be used by physicians providing services to beneficiaries located at qualifying origination sites only and do not cover ongoing evaluation and management of hospital inpatients. CMS also finalizes its proposal to set the assigned Relative Value Units (RVUs) for these telehealth services at the same level as the RVUs for subsequent hospital care (CPT codes 99231 - 99233).

Not only does the MPFS Final Rule expand the list of allowed telehealth services, but it also expands the list of qualifying origination sites. As required by MIPPA, CMS adds the following to its list of qualifying originating sites for telehealth services: hospital-based or critical access hospital (CAH)-based renal dialysis centers (including satellites), skilled nursing facilities (SNFs) and community mental health centers (CMHCs).

Accordingly, CMS is now accepting comments on the addition of the following to the list of allowed telehealth services: nursing facility care services and health and behavior assessment and intervention. While CMS expresses significant concerns regarding the appropriateness of diabetes self-management training (DSMT) delivered via telehealth, it has left the door open by stating that, to date, no commenter has provided an adequate comparative study showing that the use of an interactive audio and video telecommunications system is an adequate substitute for face-to-face delivery of DSMT.

Geographic Practice Areas

Geographic practice areas were established at the inception of the Medicare program in 1966 by local carriers, based on their knowledge of the area physician charging patterns and economic conditions. There are currently 210 localities, most of which have changed little over the past 42 years. In response to recent physician concerns that the configuration of localities no longer accurately represents relative cost, CMS engaged Acumen, LLC to analyze potential options for reconfiguring the localities. On August 21 of this year, CMS issued an interim report on the results of Acumen's research and therein solicited public comment through November 3. The locality configuration remains the same for CY 2009, but CMS has vowed to continue its review. Thus, changes to locality configuration may still be on the horizon.

Drug Reimbursement

Computer-Generated Fax Prescriptions

On November 7, 2005, CMS issued the E-Prescribing and Prescription Drug Program final rule, in which it adopted the National Council for Prescription Drug Programs (NCPDP) SCRIPT standard as the standard for communicating prescriptions and prescription-related information between prescribers and dispensers. In the November 7, 2005, final rule, CMS included an exemption from the requirement to use NCPDP SCRIPT for entities that transmit prescriptions or prescription-related information for Part D covered drugs prescribed for Part D eligible individuals by means of computer-generated facsimile.

In the CY 2008 MPFS final rule, CMS eliminated the computer-generated fax prescription exemption to the e-prescribing rules as of January 1, 2009, except in the case of network failures. However, in response to comments subsequently received, CMS, in the CY 2009 proposed rule, proposed to continue allowing providers and suppliers to use computer-generated fax prescription for refills, when the prescriber is incapable of receiving electronic transmissions using the NCPDP SCRIPT standard.

In the CY 2009 MPFS Final Rule, CMS wholly reverses the modifications made in the CY 2008 final rule and re-adopted the original e-prescribing standards set forth in the November 2005 final rule. However, CMS warns that it will still eliminate the exemption for computer-generated faxes in all instances other than temporary network failure when MIPPA e-prescribing disincentives take effect January 1, 2012.

CAP Drugs

CMS has chosen not to finalize its proposed changes to the Competitive Acquisition for Part B Drugs Program (CAP) set forth in the CY 2009 proposed rule. Instead, it will continue to accept comments on these proposed changes, and will postpone action on the proposals pending possible further rulemaking.

Intravenous Immune Globulin

In the CY 2009 MPFS Final Rule, CMS finalizes its proposal to eliminate reimbursement for pre-administration services related to intravenous immune globulin (HCPCS Code G0332).

Dialysis Drugs

For End Stage Renal Disease (ESRD) facilities in CY 2009, CMS finalizes a 0 percent update to the ESRD drug per treatment drug add-on. This update was calculated, as proposed, by looking at both the Average Sale Price (ASP) of ESRD drugs over a three-year period, and estimating growth in per patient utilization for 2006 and 2007. This 0 percent per treatment drug add-on, combined with the implementation of MIPPA-mandated 1 percent increase, revises the drug add-on adjustment from 15.5 percent to 15.2 percent for CY 2009.

Imaging Reimbursement

Multiple Procedure Payment Reductions

Multiple procedure payment reduction (MPPR), initially implemented January 1, 2006, provides that when two or more procedures in one of eleven imaging code families are furnished on the same patient in a single session, the TC of the first procedure is paid at 100 percent, but the TC of each subsequent procedure in that family is paid at 75 percent. This reduction does not apply to the PC of such procedures. For CY 2009, CMS proposed adding ten procedures to the list of those subject to MPPR, and now finalizes the addition of all ten.

IDTFs

In the CY 2009 proposed rule, CMS proposed requiring physicians and NPPs providing in-office diagnostic testing services to enroll as independent diagnostic testing facilities (IDTFs) and to meet most of the performance standards of an IDTF. CMS also proposed to require mobile diagnostic entities to enroll in Medicare, comply with the IDTF standards, and bill for their services, regardless of the location where the services were provided. In the MPFS Final Rule, CMS backs off the requirement for physicians and NPPs due to the passage of MIPPA two weeks after issuance of the proposed rule. Section 135 of MIPPA requires the Secretary to establish an accreditation process for entities furnishing advanced diagnostic testing procedures, including MRI, CT, nuclear medicine and other diagnostic testing procedures, but excluding X-ray, ultrasound, and fluoroscopy, by January 1, 2012.

Mobile Provider Standards

Mobile diagnostic testing providers, unlike physicians and NPPs providing in-office services, did not get a reprieve. With the exception of those entities providing services "under arrangement" with hospitals, by January 1, 2009, entities furnishing mobile diagnostic services must enroll in Medicare and bill directly for the mobile diagnostic services they furnish, regardless of where services are furnished. According to the preamble to the MPFS Final Rule, and much to the surprise of many, entities that only lease equipment and provide technicians who conduct diagnostic tests in the offices of the billing physician, and furnish testing under the supervision of a physician who shares an office with the billing physician are included in this new requirement. This requirement will be problematic for many mobile equipment entities.

Physician and NPP Enrollment

Effective Date of Enrollment

Historically, physicians and NPPs have been permitted to retroactively bill Medicare for services provided up to 27 months prior to the physician's or NPP's enrollment in Medicare. In its proposed rule for CY 2009, CMS proposed two alternative definitions for the "effective date" of Medicare enrollment (1) the date a practitioner's application is approved by the Medicare administrative contractor; or (2) the later of (a) the date an application is submitted to the Medicare contractor, if the application is subsequently approved, or (b) the date the practitioner began rendering services at the new practice location. The first alternative would prohibit a physician or NPP from billing for services provided to a beneficiary prior to the date the physician's or NPP's initial enrollment is approved by CMS. The second alternative allows the physician to bill for services in the time period between filing and approval, but only at the risk that such bills will be rejected if the application is ultimately not approved.

In the CY 2009 MPFS Final Rule, CMS adopts the second alternative, combined with two provisions that allow the physician and NPP to bill retroactively from the applicable "effective date." Under the first provision, a physician or NPP may bill for services up to 30 days prior to the effective date when the physician or NPP organization met all program requirements, including state licensure requirements, where services were furnished at the enrolled practice location prior to the date of filing and circumstances precluded enrollment in advance of providing services to Medicare beneficiaries. The second provision permits a physician or NPP to bill for services provided up to 90 days prior to the effective date when the physician or NPP organization met all program requirements, including state licensure requirements, services were furnished at the enrolled practice location prior to the date of filing, and a Presidentially-declared disaster precluded enrollment in advance of providing services to Medicare beneficiaries.

Enrollment and Overpayment or Payment Suspension

CMS finalizes its proposal to deny enrollment applications for additional billing privileges if the owner, physician, NPP, physician or NPP organization applying for such privileges has an outstanding overpayment or is subject to a payment suspension. Unfortunately, this policy likely will provide CMS and the Medicare contractors with significant new leverage in negotiating payment disputes. For example, CMS may impose a payment suspension on a provider when it possesses reliable information that an overpayment has occurred. Upon the imposition by CMS of a payment suspension, the affected provider has the right to submit a rebuttal for the purpose of reducing or terminating the suspension. Now, such provider will be precluded from enrolling any additional practice locations or ventures as long as the provider continues to dispute the alleged overpayment. This surely will result in providers bending to CMS demands, when they might not otherwise, in order to carry on and grow their businesses.

Enrollment Data Changes

CMS finalizes its proposal to require physicians, NPPs and their organizations to notify their Medicare contractor of a change of ownership, final adverse action, or change of location within 30 days of the reportable event. Failure to so notify may result in an overpayment from the date of the reportable event.

Document Retention

CMS finalizes its proposal to require providers and suppliers to retain ordering and referring documentation for ten years after the date of each applicable service. Failure to maintain such documentation could result in the revocation of a provider's or supplier's billing privileges and exclusion from the Medicare program.

Post-Revocation Billing

The MPFS Final Rule for CY 2009 provides that a physician or NPP may not bill for services furnished after certain reportable events, including federal exclusion or debarment, felony conviction, or in the event a practice location is determined to be not operational by CMS or its contractor. Following any other revocation action, the physician or NPP will be required to submit all outstanding claims within 60 days of the effective date of revocation.

Delinquent Tax Collection Actions

CMS finalizes its proposal to extend its implementation of the Federal Payment Levy Program (FPLP) to permit the Internal Revenue Service to cover past due taxes from payment made to providers and suppliers under Medicare Part A and Part B. It should be noted, however, that FPLP does not permit the levying of payments that have been reassigned to a third party, such as the delinquent physician's practice group.

In its proposed rule for CY 2009, CMS solicited comments on two additional proposals. First, CMS proposed revoking a physician's billing privileges or taking some other type of administrative action when a physician or NPP has a federal tax delinquency that cannot be levied through the FPLP process. Surprisingly, CMS also proposed revoking the billing privileges of an organizational entity or taking some other type of administrative action against organizational entities when the owners of an organizational entity have a federal tax delinquency that cannot be levied through the FPLP process. While CMS refrains from finalizing either of these proposals, the language of the MPFS Final Rule makes it clear that these, and possibly additional measures, remain under consideration. 

Specific Provider Issues 

Comprehensive Outpatient Rehabilitation Facility (CORF)/Rehabilitation Agency Changes 

In the MPFS Final Rule for CY 2009, CMS finalizes the following proposed changes applicable to CORFs (1) updated qualifications for respiratory therapists providing services in CORFs, (2) a requirement that CORF physicians provide medical supervision of the CORF's non-physician staff, (3) certain changes concerning reimbursement for social and psychological services provided by CORFs, (4) clarification that a CORF may provide physical therapy, occupational therapy, and speech-language pathology services at a patient's home, as the patient's home will be considered alternate premises for the CORF, (5) addition of a definition for "extension location" of rehabilitation agency to reflect current practice and to permit the regulation of activities at the extension location, (6) removal of the requirement that a CORF have a physician on call to furnish necessary emergency medical care, but instead requiring CORFs to establish procedures to be followed in case of an emergency, and (7) elimination of the requirement that a rehabilitation agency provide social or vocational adjustment services.

Therapy Caps

A combined per beneficiary cap exists for outpatient physical therapy and speech-language pathology services, and a similar separate cap exists for outpatient occupational therapy services. An exception process, which ameliorated the effect of these caps, expired June 30, 2008. MIPPA, however, has extended the exception from July 1, 2008, through December 31, 2009.

Sleep Testing

CMS finalizes, with modification, its proposal to prohibit a supplier from receiving payment of a continuous positive airway pressure (CPAP) device if that supplier, or its affiliate, is directly or indirectly the provider of the sleep test used to diagnose a beneficiary with obstructive sleep apnea. In the MPFS Final Rule, CMS adds definitions for "affiliate" and "attended facility-based polysomnogram," and modifies the definitions of CPAP and "sleep test" in order to clarify application of this new prohibition. The MPFS Final Rule also establishes an exception from this prohibition for attended facility-based polysomnogram for the purpose of preserving the continuity of care provided pursuant to integrated sleep management programs. Lastly, CMS solicits comment on a future accreditation requirement for entities that furnish both sleep testing and CPAP.

Beneficiary Signature Requirements -- Ambulance and Other Providers and Suppliers

CMS finalizes, with some modification, its exemption for ambulance service providers from the requirement to obtain a beneficiary's signature on a claim form in cases where the beneficiary is transported by a non-emergency ambulance transport. CMS, however, declines to finalize its proposed requirement that such provider first make a reasonable effort to obtain the beneficiary's signature.

The MPFS Final Rule is available online.

For information regarding the MPFS proposed rule, please see Baker Hostetler's July 10, 2008 issue of the Health Law Update.