Congress on January 1 passed HR 8, the American Taxpayer Relief Act, narrowly averting the so-called "fiscal cliff." The bill includes a one-year Medicare fee-for-service physician payment freeze, meaning the 26.5 percent sustainable growth rate (SGR) cut has been averted, for now. The 2 percent sequestration cuts have also been deferred for two months.
The one-year fix comes with a $25 billion price tag. The cost of physician payment reform has been growing over the years as Congress continues to enact frequent short-terms fixes. As recently as 2005 the cost of permanent reform would have been $48 billion, but today it is estimated to be nearly $300 billion over the next 10 years. If action is not taken soon, the cost will continue to escalate to $500 billion in only a few short years.
The one-year freeze will be paid for with cuts to the Affordable Care Act's (ACA) new CO-OP program and other health care programs ($15 billion of the cuts impacting hospitals). At SFMS/CMA's urging, the ACA's Medicaid increase for primary care physicians was not used to pay for this temporary fix, despite earlier attempts to do so.
The Medicare fix is being paid for by:
- Cuts to the ACA's CO-OP program (unobligated funds)
- Extending the statute of limitations for recouping overpayments.
- Adjusting the equipment utilization rate for Advanced imaging services.
- Rebasing end stage renal disease payments based on utilization of drugs.
- Equalizing stereotactic radiology hospital outpatient services with physician services.
- Rebasing of Disproportionate Share Hospital payments.
- Reducing multiple procedure payments when more than one therapy procedure is provided on the same day.
- Eliminating funding for the Medicare improvement fund.
- Eliminating the ACA long term care (LTC) CLASS act. (But establishes a LTC commission.)
- Adjusting Medicare Advantage payments to account for differences in coding practices between fee-for-service and managed care risk adjustment formulas.
Importantly, the bill also lays the groundwork for an alternative Medicare payment system by establishing data systems and a registry for reporting on quality that will help physicians.
What does this mean for physician claims?
Because federal law requires Medicare contractors to hold claims for 14 days before releasing payment, there should be little if any impact on physicians' cash flow. Although there has been no official word from the Centers for Medicare and Medicaid Services, claims for services provided in the early days of 2013 will likely be processed under the new 2013 fee schedule. Palmetto, California's Medicare contractor, should have the new fee schedule posted on its website in about 10 days.
The 2013 fee schedule will not be exactly the same as the 2012 fee schedule. Although Congress stopped the 26.5 percent SGR cut, there were other components of the fee schedule formula that affect payment that may have changed, such as the relative value units (RVUs).
Physicians have the option of holding claims and submitting them after the new fee schedule is released. If you choose to submit claims in the interim, SFMS suggests that both participating and non-participating physicians bill their usual and customary fees-for-services to Medicare. Billing at your customary fee ensures that Medicare pays the highest amount possible when the claim is processed.
Additional details will be provided as they become available.