M.D.s Win Small Victory In Medicare Payment Wars

Medicare payments for psychiatrists and other clinicians using codes for“ evaluation and management” (E&M) could increase substantially under a proposal by the Centers for Medicare and Medicaid (CMS).

The improvement in payment for E&M services is a bit of light for some in what has been an otherwise grim outlook for physician reimbursement in the Medicare program in coming years.

Overall payments for physicians have been projected to decrease next year by 5.1 percent; that projection assumes the proposed changes in payment for E&M and other codes are accepted. The overall negative impact on psychiatry, even with the upgrade in E&M codes could be even higher. (For psychologists and other nonmedical clinicians who cannot use the E&M codes, the cuts are expected to be even more drastic.)

Still, the proposal is hailed by physician groups and the government as a small victory for clinicians who spend time with their patients. The proposal was the result of a comprehensive review of physician work “relative value units” (work RVUs), a component of the elaborate formula used to calculate physician payment under the Medicare program.

“It's time to increase Medicare payment rates for physicians to spend time with their patients,” said CMS Administrator Mark McClellan, M.D., Ph.D., in a statement. “We expect that improved payments for evaluation and management services will result in better outcomes because physicians will get financial support for giving patients the help they need to manage illnesses more effectively.”

The proposal to increase payment for E&M codes, which appeared as a“ proposed notice” in the “Federal Register” on June 29, is part of a mandated five-year review of the hundreds of codes used by physicians to bill for the myriad services they provide to patients.

The yearly physician payment update issued by the federal government in which overall payment was projected to drop by 5.1 percent appeared as a proposed rule in the “Federal Register” on August 22 (Psychiatric News, September 1).

The review of work RVUs is designed to allow for a reassessment of the intensity of work required of physicians for each procedure they perform; for instance, some procedures may have become easier or harder to perform over time because of the introduction of technology.

The work RVU is one component of the resource-based Relative Value scale, or RBRVS, which is used to help determine physician payment under Medicare. (The other components are practice expenses and malpractice; the three components are added together and multiplied by a “conversion factor,” which is adjusted from year to year, to derive a payment rate for each code.)

The government's recommendations for changes to the work RVUs are based on those submitted by AMA's relative value Scale Update Committee (RUC), a 29-member body including representatives from all major medical specialties.

Psychiatrist Ronald Burd, M.D., who is APA's representative to the RUC, told Psychiatric News that the acceptance by CMS of the RUC recommendation to increase payment for evaluation and management is good news.

“We made the argument that E&M codes were undervalued and forwarded an increased value to CMS, which apparently has approved those values,” he said.

But he cautioned that proper documentation for evaluation and management is crucial. Burd noted that APA sponsors coding workshops at the annual meeting, and members seeking information about how to code for evaluation and management may also contact APA's Office of Healthcare Systems and Financing at (800) 343-4671.

“Psychiatrists need to be educated about proper documentation for evaluation and management,” Burd said.

Despite the good news about reimbursement for evaluation and management, the story behind the five-year review of codes—like almost everything associated with the government's formula for paying physicians—is not so simple.

Changes to the payment formula are required by law to be “budget neutral”— that is, changes in work RVUs that result in an increase or decrease in overall outlays of more than $20 million must be compensated for by adjustments in other areas. CMS has said that the proposed changes in payment for E&M and other codes would increase expenditures by $4 billion.

For that reason, CMS is proposing to apply a separate “work adjuster” to the work RVUs, reducing those values by 10 percent. (The actual number of work RVUs for each code, which are derived by the RUC, would remain constant, a feature that is favored by physicians since many private payers use the work RVUs in their own payment rates.) The “work adjuster” would likely vary from year to year depending on Medicare spending.

But APA and the AMA are urging CMS to adjust for budget neutrality by shifting the cut to the conversion factor—that dollar factor which is multiplied by the sum of the RVUs.

This would have the effect of spreading out the negative impact across all the RVUs— work, practice expense, and malpractice— and would mitigate the negative impact on psychiatrists since most of their RVUs are part of the work component.

In formal comments submitted to the government, APA noted that CMS had tried creating a separate work adjuster in the past but found it did not work well. “In fact, this caused problems sufficient to prompt CMS to reject this methodology entirely, take a different tack, and apply this adjustment to the conversion factor,” wrote APA Medical Director James H. Scully Jr., M.D., in his comments to CMS. “APA agrees with this revised approach.”

CMS is expected to respond to comments on the proposed changes in a final rule to be issued in early November.

The proposed notice is posted at<http://a257.g.akamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/2006/06-5665.htm>.▪