On November 29, 2010, CMS is publishing its final Medicare physician fee schedule (MPFS) rule for 2011. The rule addresses a wide variety of Medicare Part B policies, including many changes mandated by the ACA, as detailed after the jump.

Among many other things, the final rule:

  • Establishes a 2011 conversion factor of $25.5217, compared to the conversion factor of $36.8728 applicable June 1-November 30, 2010. This steep drop is due primarily to the statutory sustainable growth rate (SGR) formula, which reduces rates by a total of 24.9% from November 2010 to January 2011 (reflecting the December 1, 2010 expiration of a temporary increase established by Congress plus an additional 2.9% cut that goes into effect January 1, 2011). CMS also has adopted a rescaling /budget neutrality adjustment of -8.2%, which is designed to offset rescaled relative value units and a rebased Medicare Economic Index (MEI) for 2011. Congress is expected to once again step in to at least mitigate the SGR cuts, but the timing and scope of any such action is still speculative at this time.
  • Updates several durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program policies, including provisions that: expand Round 2 by adding 21 of the largest metropolitan statistical areas (MSAs); subdivide three of the largest MSAs; implement a national mail order competitive bidding program for diabetic testing supplies and make other refinements related to the furnishing of diabetes supplies; modify the definition of mail-order suppliers; create an appeals process for suppliers considered to be in breach of contract; and modify policies related to off-the-shelf orthotics, oxygen and oxygen equipment, and reimbursement to grandfathered suppliers. In addition, the rule addresses payment policy for power wheelchairs outside of the competitive bidding program.
  • Implements ACA provisions that assign a 75% utilization rate assumption to certain expensive diagnostic imaging equipment used in diagnostic CT and MRI services, and that increase the multiple procedure payment reduction (MPPR) applied to the technical component of certain single session imaging services to contiguous body parts from 25% to 50% for more than one imaging procedure preformed in the same session. CMS also adopted its proposal (not mandated by the ACA) to apply the MPPR policy across imaging families and not limited to contiguous body areas. In addition, the rule implements an ACA requirement that physicians who refer patients to certain imaging services under the in-office ancillary services exception to the physician self-referral prohibition inform patients of their option to receive these services from other area suppliers and to provide a list of at least five alternative suppliers within a 25-mile radius of the physician’s office.
  • Establishes a multiple procedure payment reduction policy applicable to certain Part B outpatient therapy services, under which CMS will apply a 25% payment reduction to the practice expense component of the second and subsequent therapy services for certain multiple therapy services furnished to a single patient in a single day (note that under the proposed rule, CMS would have imposed a 50% reduction).
  • Updates certain payment policies for Part B drugs, including establishing a new “carry over” process to address certain delays in manufacturer reporting of pricing data for multiple-source drugs, and establishing an “intentional overfill” policy under which the Medicare payment limit will based on the amount of product in a vial or container as reflected on the FDA-approved label.
  • Finalizes a proposal to use the annual MPFS rulemaking to consider changes in practice expense (PE) price inputs for supplies and equipment, but CMS deferred adopting its proposal to base PE inputs for supplies $150 or more on the U.S. General Services Administration medical supply schedule while it continues to review this policy.
  • Implements ACA provisions that: establish the methodology for applying the ACA’s “multi-factor productivity” adjustment to the updates for the ASC, ambulance, clinical laboratory and DMEPOS fee schedules; update the Physician Quality Reporting Initiative and Electronic Prescribing Incentive Program; eliminate beneficiary coinsurance for most preventive services and expand coverage of certain preventive services; require the Secretary to identify and make appropriate adjustments to the relative values of misvalued services; and revise the timely filing requirements for Medicare claims.