Opinion: Another year, another paycut: Medicare reimbursements face 2009 chopping block

Key Points

Another Medicare paycut - this one, an average 5.4 percent - is looming for 2009, as well as rule changes affecting the ability of dermatologists to provide diagnostic tests for patients without running afoul of federal physician self-referral and anti-markup prohibitions.

All of this - and more - is contained in Medicare Physician Fee Schedule (MPFS) regulations proposed June 30 by the Centers for Medicare & Medicaid Services (CMS), little more than a week before the Senate voted on July 9 to rescind the 10.6 percent cut for 2008 that was slated to take effect July 1.

The legislation, approved by the House of Representatives June 24, delays this year's cut for 18 months, financing it by reducing payments under the Medicare Advantage program.

The action sets the stage for expected new discussions next year within Congress and the new administration regarding the decade-old Medicare fee schedule formula, that requires payment cuts to physicians whenever the growth rate in Medicare costs climbs above the growth in the gross domestic product.

Physicians' groups have argued that the formula is unfair, outdated and must be reformed.

The new MPFS-proposed rule also expands the Physician Quality Reporting Initiative (PQRI), which allows eligible professionals to report quality measures related to their practices and receive incentive payments for their efforts.

CMS says the current formula used to determine physician payments requires it to reduce the 2009 MPFS by 5.4 percent.

Total Medicare spending under the 2009 fee schedule is projected at $54 billion, down 5 percent from the $57 billion projected for 2008 - a projection that included the 10.6 percent cut.

IDTF standards

CMS is proposing requiring that physicians and nonphysician-practitioner organizations that furnish diagnostic testing services must meet most of the quality and performance standards established for Independent Diagnostic Testing Facilities (IDTF).

They would have to enroll as suppliers of these services and meet applicable federal and state licensure, health and safety requirements that apply to IDTFs.

The standards would take effect Jan. 1, 2009, for newly enrolling suppliers, although existing suppliers would have until Sept. 30, 2009, to come into compliance.

CMS is specifically soliciting comments on whether to limit the enrollment requirement to less than the full range of diagnostic testing services, and, if so, what criteria should be used.

The proposal also would require entities furnishing mobile diagnostic services to enroll in Medicare and bill directly for the services they provide, regardless of where the services are furnished.

Anti-markup rule

The proposed rule includes two alternative approaches to revising anti-markup provisions contained in a regulation published last November.

Under the rule, a practice may not charge more to Medicare for a service than the "net charge" to the practice by a lab, imaging center or similar entity, excluding space and equipment costs.

The provision includes both the technical and professional components of diagnostic tests purchased from a separate entity or performed at a site other than the office of the billing physician, and billed by the physician or group ordering the test.

While the final anti-markup rule was published in November 2007, in January 2008, CMS delayed the effective date for one year - except for anatomic pathology diagnostic testing services furnished in a centralized building and for the technical component of purchased tests.

CMS said the delay was needed, because the definitions in the original rule "may not be entirely clear and could have unintended consequences."

Thus, the new proposal apparently constitutes the agency's effort to provide clarification.

The first alternative offered in the proposed regulation would exempt diagnostic testing services provided by a physician who shares a practice with a single physician or physician organization from the anti-markup rule. In all other cases, the rule would apply.

The second alternative would clarify earlier requirements that such services be provided in a "centralized building," and to account for circumstances in which physicians provide diagnostic testing services to more than one practice.