Making adjustments: Policy provision could reduce amount of physician fee cuts

Key Points

This month, the agency will complete its review of comments submitted regarding the adjustments, including an analysis by David M. Pariser, M.D., president of the American Academy of Dermatology (AAD). The final rule is to be issued by Nov. 1, with implementation on or after Jan. 1, 2010.

While CMS' proposed regulation includes a 21.5 percent reduction in Medicare payments for next year, Congress is expected to eliminate part, if not all, of that cut in the coming months, perhaps as part of the healthcare reform legislation now in discussion.

At the heart of the payment issue is the Sustainable Growth Rate (SGR) formula on which physician payments under Medicare are based, and which AAD and other physician groups have long contended should be either substantially revised or eliminated. The SGR mechanism consists of three components:

In its proposed regulation, CMS would remove physician-administered drugs from the definition of "physician services" within SGR, in anticipation of enactment of Medicare physician payment reform.

"The academy was very pleased to see CMS' proposal to eliminate physician-administered drugs from the definition of 'physician services' for 2010," Dr. Pariser said in the letter to CMS, repeating AAD's contention that including such drugs has unfairly contributed to the discrepancy between actual and target Part B expenditures, resulting in proposed cuts year after year that have been consistently overturned by Congress.

"While this won't alone fix the major problems associated with the SGR, in the absence of major reform, it will at least slow the rate of increase in the negative updates for physician services in years subsequent to 2010," Dr. Pariser said.

Dermatology's concerns

There are several additional provisions in the CMS proposal that would affect dermatologists, and AAD commented extensively. They include the following:

Under the new plan, practitioners would use existing E/M service codes for these services, with savings redistributed to increase payments for existing E/M services.

AAD said the plan could disproportionately impact physicians who frequently perform consultations for the sickest and most challenging patients. AAD urged CMS to delay implementation pending further study of the potential impact and to establish alternatives to avoid harming patient care and care coordination.

AAD said a proposed requirement that a physician must report a minimum of three measures and on 15 patients for at least one of those measures would exclude many dermatologists, since the average provider may see only six new melanoma cases per year and could not meet the 15-patient minimum.

AAD said it would like to work with CMS to establish an alternative that would not be unfair to dermatologists.

Bob Gatty, former congressional aide, covers Washington for businesses specializing in healthcare and related issues. Contact him at bob@gattyedits.com
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