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Medicare Releases 2010 Payment Rules – the Good, the Bad, and the . . .

A display copy of the annual Medicare Physician Fee Schedule was released on October 30 by the Centers for Medicare and Medicaid Services (CMS). The final rule, which contains a plethora of regulatory changes, initiatives, and clarifications, will guide Medicare's payment and coverage policies for health care professionals, facilities, and Medicare beneficiaries beginning January 1, 2010.

In August of this year, AAPA submitted official comments to CMS on a number of provisions contained in the proposed fee schedule rule. The 2010 final rule represents decisions reached by CMS officials after consideration of comments offered by interested parties.

Here's a look at some of provisions in the final rule:

• Medicare is projecting a 21.2 percent decrease in the 2010 fee schedule. This payment decrease, based on a congressionally mandated payment formula known as the sustainable growth rate (SGR), is not a surprise. Health care professional groups such as AAPA have been lobbying Congress for months to have the decrease rescinded. For the past 8 years Congress has intervened to offset the proposed decrease. It is expected that Congress will play the same role this year to avoid payment reductions. Nearly everyone, including CMS officials, wants to prevent the decrease.

"The Administration tried to avert the pending fee schedule cut in the FY 2010 budget proposal that it submitted to Congress, and remains committed to repealing the SGR," said Jonathan Blum, director of the CMS Center for Medicare Management.

• CMS will permanently remove the cost of physician-administered drugs from the definition of physician services in the SGR. This action will mitigate future fee schedule decreases, but excluding the cost of physician-administered drugs won't affect the 2010 schedule.
• CMS officials made a decision to eliminate reimbursement for outpatient and inpatient consultation codes (except for G codes that are used to bill consults as part of the telehealth benefit). Reimbursement that had been paid for consultations will result in increased payments for existing new and established patient evaluation and management or E/M services in a budget neutral manner. Payment adjustments will be made to the surgical global period payment to reflect the higher value of E/M office services furnished during the 10- or 90-day post-op timeframe.

• A benefit category for cardiac and pulmonary rehabilitation services was established. However, CMS stated that the statutory language in the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) requires that a physician provide immediate and direct supervision of cardiac, intensive cardiac, and pulmonary rehabilitation services.

AAPA argued, and CMS officials agreed, that in the 2010 Outpatient Prospective Payment System proposed rule, PAs have the ability to provide direct supervision of services they personally perform within State scope of practice and hospital privileging guidelines. In addition, statutorily PAs provide care to Medicare beneficiaries based on the overarching concept that PAs deliver "physician services," and the inability of PAs to supervise cardiac and pulmonary rehabilitation services will hinder beneficiary access to these vital services.

CMS responded that it is their belief that MIPPA language was specific to physician performance of the direct supervision responsibilities in these specific areas and that they did not have the authority to extend the supervision responsibilities to non-MDs/DOs. AAPA reimbursement staff will continue to pursue this issue with CMS officials.

• Language that defines a PA as a "qualified person" eligible to provide kidney disease patient education services to patients with Stage IV chronic kidney disease.
• An increase in the Medicare payment percentage for mental health services from 50 to 55 percent. Medicare will adjust its payment percentage each year until it reaches the 80 percent payment threshold - putting coverage of mental health services at the same rate as other Medicare covered services.
• The addition of 30 Physician Quality Reporting Initiative measures that health care professionals utilize to report quality care measures and qualify for the 2 percent Medicare bonus payment.
• A payment increase in the initial preventive physical exam or the so-called "Welcome to Medicare exam" that is provided for Medicare beneficiaries within the first 12 months of Medicare enrollment.

If you're suffering from a case of temporary insomnia and care to read through the more than 1,600-page fee schedule, it can be found at http://www.federalregister.gov/OFRUpload/OFRData/2009-26502_PI.pdf.

Elimination of Consults in the Final Fee Schedule

While some specialists are less than pleased at the CMS decision to eliminate consult codes from the Medicare payment system, the policy change is a net gain for PAs and the physicians with whom they practice. Current policy allows PAs to personally perform consultations. However, CMS policy says that a physician and a PA can't share a consult. For most evaluation and management (E/M) services in the hospital setting, if both a PA and a physician treat the same patient on the same calendar day, the entire service can be combined and billed under the physician, if the physician and the PA have a common employer. In 2006 Medicare policy changed and excluded consultations from being billed as a shared service.

The elimination of the use of consult codes by Medicare means that virtually all hospital E/M codes/services may be shared between physicians and PAs, resulting in the ability for physicians to collect 100 percent of the Medicare fee schedule (as opposed to payment at 85 percent when billed under the PA) when both health care professionals provide care to the same patient on the same day.

While AAPA feels that PAs should be separately recognized when they deliver patient care, we realize that certain hospitals and physicians were limiting the ability of PAs to participate in the performance of consultations because Medicare policy did not allow that service to be shared. PAs should encourage billing personnel to utilize billing software to help keep tract of the PA's contribution to revenue and patient care, despite the fact that many PA-provided services are being captured and billed under the supervising physician.

Pick Up the Phone or Answer the E-Mail Message

AAPA Reimbursement Department staff members are reaching out to state chapter leaders in an attempt to engage in a focused discussion about reimbursement conditions in each state. Over the next few weeks, state chapter leaders can expect a request to engage in a conference call discussion about state reimbursement issues including Medicaid, Medicare, workers' compensation, and private insurers.

Reimbursement reports are being prepared and will be sent out to each state. Every effort is being made to include as many chapter officers/leaders as possible in these conference calls. Understanding the busy clinical schedules that most PAs have, Reimbursement Department staff is offering to host these calls in the evening.

These discussions allow chapters to learn about the most up-to-date policies that govern reimbursement in their states, as well as strategies to change policies that limit PA practice.

Reimbursement Watch is a bi-monthly newsletter written by Michael Powe, AAPA Vice President of Health Systems and Reimbursement Policy. You are more than welcome to  reprint items, just credit American Academy of Physician Assistant's Reimbursement Watch. Your comments, questions, and suggestions are welcome. Phone 703-836-2272 ext. 3211,  Fax 703-684-1924 or Write: AAPA 950 North Washington Street, Alexandria, VA 22314-1552.  E-mail address: This e-mail address is being protected from spambots. You need JavaScript enabled to view it .