CMS issues proposed 2012 Medicare fee schedule
Posted 7-25-11
The Centers for Medicare & Medicaid Services (CMS) recently released the proposed 2012 Medicare physician fee schedule. As required by law, the fee schedule includes a 29.5 percent cut in Medicare payments. The lower rates are mandated by the sustainable growth rate (SGR) formula.
Although it remains unclear if Congress will be able to come to a consensus on a long-term fix for the flawed payment formula, lawmakers are expected to once again intervene and eliminate the cut. Everyone involved agrees that letting the cuts take effect would devastate access to care for seniors.
“This payment cut would have serious consequences and we cannot and will not allow it to happen. We need a permanent SGR fix to solve this problem once and for all,” said CMS Administrator Don Berwick, M.D. “That’s why the President’s budget and his fiscal framework call for averting these cuts and why we are determined to pass and implement a permanent and sustainable fix.”
The California Medical Association (CMA) continues to vigorously advocate for long-term reforms. The cost of physician payment reform has been growing over the years as Congress enacted frequent short-term 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 now, the cost will continue to escalate to $500 billion in only a few short years.
The “Gang of Six”—a bipartisan group of Senators who have been meeting to develop a federal deficit reduction plan—just unveiled a new sweeping proposal that reduces the deficit by $4 trillion and includes a permanent fix to the SGR. While there is opposition, it appears to be gaining support as the long-term solution to be adopted after a short-term debt ceiling deal is negotiated between Congress and President Obama.
In addition to the SGR cut, the 2012 fee schedule also proposes extensive changes to the practice expense components of the Geographic Practice Cost Index (GPCI). According to CMS, on average, California physician payments will be reduced by an additional 1 percent as a result of the practice expense changes. CMA is currently analyzing the changes to determine the impact on California physicians by locality and whether they are appropriate and based on accurate data.
At CMA’s urging, CMS is giving greater weight to non-physician employee wages, which is the fastest growing cost component in California physician practices. CMS has also made changes to how it calculates the impact of rent on physician practice costs. While we are still analyzing these changes, we believe they could benefit California physicians in the long term.
The fee schedule also proposes a set of quality and cost measures to be used in the new Value Index Modifier, which beginning in 2015 will reward physicians who spend less than the national average per Medicare patient. Although CMA and AMA continue to oppose the Value Index and are working to eliminate it entirely, we were successful in obtaining amendments to the authorizing legislation that ensure the Value Index payments are cost and risk-adjusted to account for California’s higher practice costs and low-income, uninsured, ethnically diverse patient population.
CMA is performing a comprehensive analysis of the 2012 fee schedule and will provide official comments to CMS before the August 30 deadline. The final rule is expected to be issued on or about November 1.
Source - CMA Alert 7-25-11
