Final rule fallout: The good and the bad
January 1, 2000 3 minutes read
Final rule fallout: The good and the bad
New SGR formula may stabilize fees
The Health Care Financing Administration’s (HCFA) new 2000 physician fee update is a 5.4% increase — the maximum under current law. The conversion factor will be $36.61. By contrast, last year’s payment update was 2.3% with a conversion factor of $34.73.
Practices will have to wait a few weeks before seeing any additional cash in their pockets because, as part of its Y2K contingency plan, HCFA is delaying making updated payments for services performed on or after Jan. 1 until Jan. 17.
Claims filed for services rendered before New Year’s Day should be paid as usual. Claims for services begun in 1999 but continued into 2000 will be held until the Jan. 17 fail-safe date, when HCFA hopes to feed the updated fee schedule into its computers.
SGR changes move forward
Before recessing for the Thanksgiving legislative break, the House passed an omnibus spending bill including many long-sought revisions in how Medicare’s sustainable growth rate (SGR) is calculated, which should moderate recent vola tility in Medicare payments while minimizing future errors in estimating future fees.
The SGR comprises four factors:
1. percentage increase in fees for physicians’ services;
2. the projected change in Part B enrollees (excluding those enrolled in Medicare+Choice);
3. the projected increase in real gross domestic product per capita;
4. the percentage change in physicians’ services resulting from changes in law/regulation.
In 1998, HCFA underestimated the gross domestic product by one-third. In 1999, the agency projected that Medicare+Choice enrollment would grow by 29%, but it actually grew by only 11%. These two errors resulted in a $3 billion underpayment to physicians, the American Medical Association estimates.
A major element in HCFA’s Nov. 2 final rule was the official implementation of its new two-tier coding policy that states "facility practice expense RVUs [relative value units] can never be higher than the nonfacility practice expense RVUs." For 2000, that adjustment affects 222 facility services, with more expected as HCFA expands the policy to other codes. Agency officials justify the action on the premise that office-based practices carry higher overhead in the form of office rent, equipment, and supplies than do physicians who render most of their medical services in a hospital setting.
As part of the initiative, this year Medicare stops paying physicians for the cost of bringing their staff to assist them with surgical or otherwise hospitalized patients. Hardest hit by the new policy are anesthesiologists and cardiac surgeons, who are looking at pay cuts of 8% and 6%, respectively.
The rule "totally contradicts the expressed will of Congress that practice expense reimbursement must recognize all costs’ incurred by physicians," says Nicholas T. Kouchoukos, MD, president of the Society of Thoracic Surgeons in Chicago. In turn, affected medical specialties are lobbying HCFA to postpone the change until 2001. A move opposed by many primary care practitioners.
"It just does not make sense to make a carte blanche assumption that those costs should be included in fee schedule," counters Robert Doherty, senior vice president for governmental affairs at the American College of Physicians-American Society of Internal Medicine, based in Philadelphia.
HCFA’s position, meanwhile, remains that:
1. Medicare should not pay twice for the same service.
2. It is not typical practice for most specialties to use their own staff in the facility setting.
3. Inclusion of those staff costs is inconsistent with both the law and Medicare regulations.
HCFA also points to an American Hospital Association study that found while 63% of the hospitals had a physician bring his or her own staff to a member facility over a six-month period, only 11% of hospitals said it was a regular practice. HCFA’s basic position is it has "not seen sufficient data to convince us that the use of the physician’s clinical staff in the facility setting is a typical practice." And until it does, the new rule stays.
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