January 8, 2010
Pathologists and other physicians escaped a cut of 21.2 percent in Medicare payments scheduled for Jan. 1, 2010, but have their fees frozen at 2009 levels for two months, through Feb. 28, giving Congress time to work out differences in changes to the current Medicare physician payment system.
Clinical laboratories were not so lucky. A cut of 1.9 percent in the annual update to the Medicare lab fee schedule took effect Jan. 1 (see In Focus), even as changes to the update formula are pending in health care reform legislation passed by the House and the Senate and awaiting reconciliation into a single bill.
The reprieve for physicians was approved in the 2010 defense spending bill signed into law by President Obama. Lawmakers opted for a short-term freeze on Medicare physician payments to give House and Senate negotiators time to resolve differences over repealing the current Sustainable Growth Rate (SGR) formula
used to calculate the annual update. The SGR has triggered negative updates for most of the decade and is projected to force even deeper cuts in the future.
To avoid disruption in Part B physician payments, the Centers for Medicare and Medicaid Services (CMS) has instructed its contractors to hold claims for up to the first 10 business days of January (Jan. 1 through Jan. 15) for 2010 dates of service.
This should have minimum impact on provider cash flow, CMS said, because, by law, clean electronic claims are not paid any sooner than 14 calendar days (29 days for paper claims) after the date of receipt.
Contractors will begin processing claims at the new rates by no later than Jan. 19, 2010. Meanwhile, all claims for services delivered on or before Dec. 31, 2009, will be processed and paid under normal procedures.
CMS also has extended the 2010 Annual Participation Enrollment Program end date from Jan. 31 to March 17. The effective date for any participation status change during the extension, however, remains Jan. 1 and will be in force for the entire year.
Repealing the SGR Physician Payment System
House and Senate bills pending reconciliation differ sharply over whether a physician fee fix should be short term or a permanent overhaul of the SGR system used to calculate the annual Medicare physician fee update.
The Senate health care reform bill blocks the 21.1 percent cut and gives physicians a 0.5 percent increase in 2010 at an estimated cost of $10.9 billion. A House-passed physician fee reform bill cancels the cut and initiates repeal of the SGR. In 2010, the fee update is to be based on the Medicare Economic Index, increasing physician payments by 1.2 percent; thereafter, the update would be tied to the Gross Domestic Product (NIR 09, 21/Nov. 23).
The House bill faces an uphill battle in the Senate because its cost of nearly $210 billion is not paid for. The Senate rejected a bid to repeal the SGR because it was not paid for (NIR 09, 19/Oct. 26).
Changes to the Lab Fee Update
House and Senate health care reform bills favor changing the formula used to calculate the annual Medicare lab fee schedule update. Currently, the update is the Consumer Price Index (CPI-U) minus 0.5 percent.
Both bills would replace the 0.5 percent reduction with a productivity adjustment, but differ on when to make the switch. The adjustment has ranged between minus 1.1 percent to minus 1.4 percent and is currently pegged at minus 1.3 percent.
The Senate provision would let the 1.9 percent cut go forward in 2010, and in 2011, replace the 0.5 percent reduction with a productivity adjustment and a guarantee that this would never reduce the update below zero. The House bill would apply the adjustment in 2010, with no protection against the update falling below zero. In 2010, this would translate to a cut of 2.7 percent.
The Senate bill also would make an additional cut of 1.75 percent in the update for years 2011 to 2015. This is projected to reduce the update below zero in each of those years. The House bill has no similar provision.
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January 8, 2010 - Table of Contents