Expect cut in physician Medicare reimbursement next year

You would see a -4.6% across-the-board cut in Part B payments next Jan., CMS formally predicts according to Part B News.

In new estimates, provided to MedPAC, CMS reveals that physician spending increased by 8.5% overall in 2005 and was spurred by physician billing of higher level E/M services and more procedures, imaging services and lab and other diagnostic tests.

The numbers come in a CMS letter to the Medicare Payment Advisory Commission (MedPAC). CMS is required to report early the estimated Sustainable Growth Rate (SGR) and its effect on the annual physician payment formula update.

The E/M bellcurve has shifted to the right, with the number of level-two established patient office visits (99212, $38.66, par. nat., physician office) dropping to 12% in 2005, from 18% in 1998, according to the agency.

Conversely, the percentage of level-four visits (99214, $82.62) jumped to 28% in 2005, up from 21% in 1998. The percentage of the other three established patient visit codes have remained virtually unchanged during the seven-year period

E/M service increases accounted for 31 % of the 8.5% overall volume increase, according to the April 7 letter to MedPAC.

This is important because physician Part B spending must be budget neutral, meaning more reimbursements in one area can translate into fewer dollars available for other areas.

The letter explains that Medicare Advantage (the managed care program formerly called Medicare+Choice) payments are not part of this calculation.

CMS also revised downward its estimates of spending growth for the MA in 2004. It was 11.4% instead of 15.2%.

Read the next issue of Part B News to learn more.

Have questions? I’m here to help.