Physician Fee Schedule (PFS) for CY 2011 Proposed Rule

On June 25, CMS released Medicare physician fee schedule proposed rule for calendar year 2011. The rule makes annual payment updates mandated by law and implements certain provisions of the ACA. A final rule is expected by November 1 and will take effect January 2011.

Geographic Practice Cost Indices - CMS proposes to implement a number of statutory changes to the practice expense GPCIs in accordance with the new health reform law. This includes extending the 1.0 work GPCI floor for services furnished through December 31; revising the methodology for calculating the Practice Expense GPCIs for CY 2010-2011 to reflect one-half of the relative cost differences for each locality compared to the national average; and establishing a 1.0 PE GPCI floor for physicians' services delivered in frontier states.

CAH Method 2 Payment Policies Under Section 5501 of the ACA and as referenced in the PFS proposed rule, an eligible primary care physician in a HPSA may receive both a 10% HPSA bonus and a PCIP payment. Also CAHs that use Method II or the Optional Method would receive their 101% facility payment (as of the ACA) plus 115% for physician payments plus 10% for the new PCIP or HSIP bonus.

Medicare Telehealth - CMS maintains a specific list of services that can be billed as telemedicine services for patients presenting to an eligible provider in a designated rural area. The "originating site," where the patient presents, may bill Medicare for a facility fee, while the physician providing the service through telecommunications from a "distant site" is paid the amount allowed by the Medicare fee schedule. In the rule, CMS reviews requests to expand the list. For inpatients, CMS proposes to add subsequent hospital care services to the list of approved telemedicine services, with the limitation of one telehealth visit every three days. For post-acute settings; to add subsequent nursing facility care services that are not federally mandated, with the limitation of one telehealth visit every 30 days.

Bonus for Primary Care Services and General Surgery Services - The ACA provides for a 10 percent primary care incentive payment (PCIP) for certain primary care services delivered by a primary care practitioner for five years, beginning January 1, 2011. In the rule, CMS proposes to use CY 2009 PFS claims data to determine those practitioners who are eligible for the PCIP in CY 2011. In order for NPs, CNSs and PAs to be eligible, they must be billing for their services under their own National Provider Identifier (NPI) and not furnishing services incident to physicians' services.

Also, the ACA provides a 10 percent HPSA surgical incentive payment (HSIP) for certain major procedure codes delivered by general surgeons in a HPSA for five years, beginning January 1, 2011. For the HSIP program, CMS proposes to define major surgical procedures as those for which a 10-day or 90-day global period is used for payment under the PFS. In addition, CMS indicates that the procedure must be in a location that was defined by the HHS Secretary as of December 31 of the prior year as a geographic HPSA.

The PCIP and HSIP will be made quarterly. For those CAHs paid under the optional method, in which they bill on behalf of practitioners for their professional services, CMS will make quarterly payments directly to the CAH.

PCIP/HSIP for CAHs under the Optional Method - Payment is made to the eligible primary care practitioner or, where the physician has reassigned his or her benefits to a critical access hospital (CAH) pa id under the optional method, to the CAH based on an institutional claim. HPSA surgical incentive payment is made to the surgeon or, where the surgeon has reassigned his or her benefits to a critical access hospital (CAH) paid under the optional method, to the CAH based on an institutional claim.

Exceptions Process for Medicare Therapy Caps - The rule extends the exceptions process for therapy caps through December 31, 2010.

Payment for Technical Component of Certain Physician Pathology Services - The rule continues payment to independent laboratories for the therapy component of physician pathology services for fee for-service Medicare beneficiaries who are inpatients or outpatients of a covered hospital through CY 2010.

Ambulance Add-On - The rule implements the PPACA's extension to the existing add-on payment for ground ambulance services - a 3 percent add-on for rural areas and a 2 percent add-on for urban areas - through December 31. It also extends through December 31 the "super rural" ambulance add-on. These provisions are retroactive to January 1, 2010.

Medicare Reasonable Costs Payments for Certain Clinical Diagnostic Lab Tests - Reinstitutes reasonable cost payment for clinical diagnostic laboratory tests performed by hospitals with fewer than 50 beds that are located in qualified rural areas as part of their outpatient services for cost reporting periods beginning on or after July 1, 2010 through June 30, 2011.

Extension of the Work Geographic Index Floor - The law extends the 1.0 work GPCI floor for services furnished through December 31. Absent further statutory extension of the policy, however, as of January 1, 2011, this provision will expire. Second, for CYs 2010 and 2011, the PPACA implements a geographic adjustment factor to the physician expense (PE) portion of the GPCI. Third, this section of the law requires the HHS Secretary to analyze the current methods and data sources it uses to determine the practice expense component of the PFS, specifically the relative cost differences in employee wages and office rent compared to the national average, and to make appropriate adjustments to the PE GPCI by no later than January 1, 2012.Finally, effective January 1, 2011, the law establishes a 1.0 PE GPCI floor for PFS services furnished in frontier states, defined by CMS as Montana, Wyoming, Nevada, North Dakota and South Dakota.


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