On November 1, the Centers for Medicare and Medicaid Services (CMS) released its final rule updating the Medicare Physician Fee Schedule for calendar year 2012. Under the new fee schedule, Medicare payment rates for physicians, nurse practitioners and physical therapists will be cut by 27.4%, slightly less than the 29.5% reduction CMS had estimated in March.
In CMS’s press release, it noted that it is required to issue a final rule that reflects current law. In this case, the Sustainable Growth Rate (SGR) formula that was adopted in the Balanced Budget Act of 1997 is causing steep across-the-board reductions in payment rates that CMS is required to follow. On 10 previous occasions, application of the SGR formula resulted in payment cuts that were averted through legislation. According to CMS’s release, “The Obama Administration is committed to fixing the SGR and ensuring these payment cuts do not take effect.” CMS Administrator Dr. Donald M. Berwick added, “This payment rate cut would have dire consequences that should not be allowed to happen.”
In a statement, Peter W. Carmel, M.D., the President of the American Medical Association, referred to “the broken Medicare physician payment formula” and urged Congress to intervene through legislation as it has done in the past. "The release of the Medicare physician fee schedule rule serves as a reminder to Congress that there is a looming crisis in the Medicare program only they can stop, and the clock is ticking,” Dr. Carmel said. “Payments for Medicare physician services have fallen so far below increases in medical practice costs that there is a 20 percent gap between Medicare payment updates and the cost of caring for seniors.”
The rule includes numerous other payment changes, including increasing payments for Annual Wellness Visits, provided for under the Patient Protection and Affordable Care Act (PPACA) to reflect the additional office staff time required to perform health risk assessments; changes to geographic adjustments for payment amounts; payment reductions for multiple diagnostic imaging procedures interpreted by the same physician on the same day; and adding smoking cessation services to the list of services that can be furnished through telehealth.
The final rule will be published in the November 28, 2011 Federal Register and will be subject to public comments until January 31, 2012.