CMS Announces Proposed Changes to Physician Fee Schedule

 The Centers for Medicare & Medicaid Services (CMS) today issued a notice proposing changes to the Medicare Physician Fee Schedule (MPFS) that would improve the accuracy of payments to physicians for the services they furnish to Medicare beneficiaries. The proposed notice includes substantial increases for “evaluation and management” services, that is, time and effort that physicians spend with patients in evaluating their condition, and advising and assisting them in managing their health. The changes reflect the recommendations of the Relative Value Update Committee (RUC) of the American Medical Association. The proposed notice addresses two components of physician payments under the MPFS: (1) a comprehensive review of physician work relative value units (RVUs), as well as (2) a proposed change in the methodology for calculating practice expenses. Other changes in physician payment policy will be addressed in a separate proposed rule to be published at a later date. CMS will respond to public comments on both sets of proposals and announce final policies in a final rule to be issued in early November. (The AMC/NOMA plans to forward comments during the period beginning June 29 on behalf of its physician members—look to future email blasts for specifics on this). In the notice, CMS is proposing to:

  • Adopt a “bottom-up” methodology for calculating direct costs. This involves using procedure-level data for clinical staff times, supplies and equipment that have been previously reviewed by the RUC;

  • Modify the methodology used to calculate indirect practice expenses; 

  • Utilize practice expense survey data for eight specialties: allergy/immunology, cardiology, dermatology, gastroenterology, radiology, radiation oncology, urology and independent diagnostic testing facilities; and 

  • ¨ Eliminate an exception to the current methodology, the so-called nonphysician work pool that has been used to calculate practice expense RVUs for services without physician work RVUs, and instead price these services using the standard practice expense methodology. 

If approved, the changes will apply to payments for services furnished to Medicare beneficiaries beginning with 2007.