Impact of 2005 Medicare physician fee schedule on group practices

Impact of 2005 Medicare physician fee schedule on group practices

On Nov. 15, the Centers for Medicare & Medicaid Services (CMS) published the 2005 Medicare physician fee schedule in the Federal Register. This annual schedule includes payment rates for covered services, as well as changes to Medicare policy. The following is a brief analysis of the rule’s highlights. See a full analysis on the Medical Group Management Association (MGMA) Government Affairs area of the MGMA Web site:

Payment update

The rule includes the 1.5 percent increase in average Medicare physician reimbursement for 2005. This increase represents the minimum amount approved by Congress in last year’s Medicare Prescription Drug, Improvement and Modernization Act (MMA) as a result of extensive advocacy by MGMA and others. Without this mandated minimum, physician practices would have received a 3.3 percent cut in 2005. The final 2005 physician conversion factor is $37.8975, and the national anesthesia service conversion factor is $17.7594. Those factors are effective for services rendered on or after Jan. 1, 2005.

Drug rates altered by MMA

Since Jan. 1, Medicare reimburses the costs of outpatient drugs at 106 percent of the average sales price (ASP). The first quarter rates for 2005 correspond to third-quarter 2004 sales data reported by pharmaceutical companies. Each quarter, Medicare will publish new rates to update drug reimbursement.

The final fee schedule rule includes revisions to drug administration codes and billing rules. Numerous new G-codes correspond to new codes adopted by the American Medical Association for 2006. The new G-codes expedite the use of the new codes and enable non-oncology practitioners to use administration codes commonly used by oncology/hematology practices.

In addition, the rule gives details for a one-year demonstration project for oncology practices. During 2005, Medicare will provide $300 million in additional reimbursement to oncology practices that measure and treat pain, nausea, vomiting and fatigue in chemotherapy patients. CMS has established 12 new G-codes for practices to report those services.

One-time physical and screening for cardiovascular disease and diabetes

The final rule includes new preventive benefits for patients approved in the MMA: a one-time physical for new Medicare enrollees, diabetes screening and cardiovascular screening blood tests.

New Medicare beneficiaries enrolled on or after Jan. 1, 2005, are eligible for a screening physical during the first six months of their coverage. Previously, Medicare did not cover physicals. Under the new benefit, enrollees may receive a physical examination, including measurements of height, weight, blood pressure, visual acuity and an electrocardiogram, but excluding clinical laboratory tests. The services will be billed using one of several new G-codes for the provision of a physical and/or the electrocardiogram. Other covered screening services rendered subsequent to the physical may be billed in addition to the new G-codes.

Screening for diabetes is another new benefit mandated under the MMA. The final rule further defines factors for people at risk of diabetes and those with problematic glucose levels. The new benefit will be available after Jan. 1 to those eligible, not to exceed two screening tests per year.

The MMA expands Medicare coverage of cardiovascular screening blood tests rendered after Jan. 1, 2005, to include cholesterol levels and other lipid or triglyceride levels. In the rule, CMS specifies that covered tests include a 12-hour fasting lipid panel consisting of total cholesterol, high-density lipoprotein cholesterol and triglyceride levels. The agency defines the benefit coverage period as one screening test every five years.

Physician scarcity areas offer new 5 percent bonus payment

Certain physicians providing Medicare services in newly defined “physician scarcity areas” are entitled to a 5 percent bonus payment. Under the MMA, primary and specialty care physicians practicing in scarcity areas will automatically receive the quarterly bonus based on the ZIP code of the site of service.

Primary care physicians eligible for the scarcity area bonus payment include those in general practice, family practice, internal medicine and obstetrics/gynecology. All other physicians will be considered specialists and eligible for the specialty care bonus payment.

A list of ZIP codes posted to the CMS Web site identifies areas that will automatically be credited with the 5 percent payment, as well as areas that partially fall into designated scarcity areas. Providers should further investigate whether they qualify for the bonus payment and use a modifier for claims identification. Anesthesia services must use the modifier to receive the bonus payment.

Certain Medicare services are not eligible for the bonus payments. They include services rendered by dentists, chiropractors, podiatrists, optometrists, nonphysician practitioners and the technical component of covered services, incident-to services and therapy services.

CMS restricts therapy services to professionals with therapy training

In the 2004 proposed Medicare physician fee schedule, CMS solicited comments on qualifications for practitioners performing therapy services incident to a physician’s professional services. In the 2005 proposed rule, the agency responded to comments received and proposed to limit the coverage of services performed incident to the service of a physician, physician assistant, clinical nurse specialist or nurse practitioner. The final rule released on Nov. 15 adopts this policy change, effective as of March 1, 2005.

* For incident-to physical therapy services, the provider must meet the Medicare definition of a physical therapist or supervised physical therapist assistant. No state licensure to practice physical therapy is required.

* For incident-to occupational therapy services, the provider must meet the Medicare definition of an occupational therapist or supervised occupational therapist assistant. No state licensure to practice physical therapy is required.

* For incident-to speech language therapy services, the provider must meet the Medicare definition of a special language pathologist. No state licensure to practice physical therapy is required.

The final rule does not prohibit practitioners – including physicians, physician assistants, clinical nurse specialists or nurse practitioners who perform services under their own benefit and are licensed in the state – from performing therapy services. In a clarification, CMS notes that it never considered athletic trainers as qualified professionals to render covered Medicare services. CMS also modified the regulatory language to make clear that physician assistants, clinical nurse specialists and nurse practitioners may perform therapy services incident to a physician’s professional service if licensed by state law.

Medicare deductible increased to $110

The MMA requires that the Part B deductible, which group practices may collect, be increased to $110 for 2005. Beginning in 2006, the deductible will be indexed to the annual increase of the average cost of Part B services. Congress increased the deductible in part to offset coverage improvements in the MMA, including new benefits such as the “Welcome to Medicare” physical.

By the MGMA Government Affairs Department,

Copyright Medical Group Management Association Publications Feb 2005

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