Kenneth Simon, M.D., M.B.A.,F.A.C.S.Senior Medical Officer

Center for Medicare ManagementCenters for Medicare & Medicaid Services

July 27, 2009

2009 CMS UpdatePhysician Payment Formula

Physician work RVUs (~52%) x GPCI = __________Practice Expense RVUs (~46%) x GPCI = __________Malpractice RVUs (~4%) x GPCI = __________

CF x $36.0666 = ___________ Total payment = ___________

1 RVU = $36.0666

2009 CMS Update

Practice Expense

Section 121 of the SSA mandated CMS develop a methodology for a resource-based system for determining PE RVUs for each physician service.

Section 4505 (a) of BBA required the new methodology be phased in over 4 years, effective for services furnished in CY 1999 and full transition by CY 2002.

In CY 1999, we began the 4-year transition to a resource-based PE RVUs using a “top-down” methodology whereby we allocated aggregate specialty-specific practice costs to individual procedures.

For CY 2007, we implemented a new methodology for calculating PE RVUs. Under this new methodology, we use the same data sources for calculating PE, but instead of using the “top-down” approach to calculate the direct PE RVUs, under which the aggregate direct and indirect costs for each specialty are allocated to each individual service, we now use a “bottom-up” approach to calculate the direct costs.

2009 CMS UpdatePractice ExpenseUnder the “bottom up” approach, we determine the direct PE by adding the costs

of the resources (that is, the clinical staff, equipment, and supplies) typically required to provide each service. The costs of the resources are calculated using the refined direct PE inputs assigned to each CPT code in our PE database, which are based on our review of recommendations received from the AMA’s Relative Value Update Committee (RUC).

Physician Practice Information Survey (PPIS)The AMA has conducted a new survey, the PPIS, which was expanded (relative to

the SMS) to include nonphysician practitioners (NPPs) paid under the PFS. The PPIS, administered in CY 2007 and CY 2008, was designed to update the specialty-specific PE/HR data used to develop PE RVUs.

The PPIS is a multispecialty, nationally representative, PE survey of both physician and NPPs using a consistent survey instrument and methods highly consistent with those used for the SMS and the supplemental surveys. The PPIS has gathered information from 3,656 respondents across 51 physician specialty and health care professional groups. We believe the PPIS is the most comprehensive source of PE survey information available to date.

2009 CMS UpdatePractice ExpenseWe are not proposing to use the PPIS data for reproductive endocrinology, sleep

medicine, and spine surgery since these specialties are not separately recognized by Medicare and we do not know how to blend this data with the Medicare recognized specialty data. We seek comment on this issue.

The impact of using the PPIS-based PE/HR is shown in the next table.

2009 CMS UpdateMalpractice RVUsMalpractice RVUs were charge-based from 1992-1999Section 4505(f) of BBA required CMS to implement resource-based malpractice

RVUs for services furnished beginning in 2000. The statute requires CMS to review, and adjust if necessary, no less often than 5 years.

Initial implementation of resource-based malpractice RVUs began in 2000. The first review and update of resource-based malpractice RVUs was published in

the CY 2005 PFS Final Rule. In this current rule, we are proposing to implement the second review and update

of malpractice RVUs. Because malpractice costs vary by State and specialty, the malpractice premium

information must be weighted geographically and across specialties. Accordingly, the proposed malpractice expense RVUs are based upon three data sources:

● Actual CY 2006 and CY2007 malpractice premium data.● CY 2008 Medicare payment data on allowed services and charges.● CY 2008 Geographic adjustment data for malpractice premiums.

2009 CMS UpdateMalpractice RVUsSimilar to the previous update of the resource based malpractice expense RVUs, we ‑

are proposing to revise the RVUs using specialty-specific malpractice premium data because they represent the actual malpractice expense to the physician. In addition, malpractice premium data are widely available through State Departments of Insurance. We propose to use actual CY 2006 and CY 2007 malpractice premium data because they are the most current data available (CY 2008 malpractice premium data were not consistently available during the data collection process).

2009 CMS UpdateInitial Preventive Physical Examination (IPPE)Sec. 611 of the MMA established the IPPE benefit. This enabled

patients to receive a complete examination with additional screening tests the first six months of their enrollment into the program. This exam had a base value of 1.34 rvus equivalent to a 99203 visit.

Section 101(b) of the MIPPA changed the benefit by adding 1- body mass index, 2- end-of-life planning , and 3- removed the screening electrocardiogram (EKG) as a mandatory service of IPPE.

CMS received comments from several medical groups that this service was undervalued,

We are proposing to increase the work rvus for this service, code G0402 to 2.30 rvus, equivalent to code 99204.

Preventive Physical ExaminationOther preventive screening benefits include:Vaccine administration (Pneumococcal, Influenza, and

Hepatitis B)Screening mammographyScreening pap smear and pelvic examsProstate cancer screeningColorectal cancer screeningBone mass measurementDiabetes outpatient self-management training servicesGlaucoma screeningMedical Nutrition Therapy for diabetes or renal

diseaseCardiovascular screening blood testsDiabetes screening tests

2009 CMS Update

Consultation CodesA consult service is an evaluation and management (E/M) service furnished

to evaluate and possibly treat a patient’s problem. It can involve an opinion, advice, recommendation, suggestion, direction, or counsel from a physician or qualified NPP at the request of another physician or appropriate source.

A consultation service must be documented by the requestor and a written report given to the requesting professional.

Physicians and various specialty societies have expressed concern and indicated it was burdensome to the requestor and consultant to provide written documentation.

The OIG in 2006 published a report on “Consultations in Medicare: Coding and reimbursement”. The findings in the OIG report (based on claims paid by Medicare in 2001) indicated that Medicare allowed approximately $1.1 billion more in 2001 than it should have for services that were billed as consultations.

2009 CMS Update

Consultation CodeThe OIG report indicated approximately 75% of services paid as

consultations did not meet all applicable program requirements resulting in improper payments. The errors were categorized as the following:

a) 47% were billed as the wrong type or level of consultation, b) 19% did not meet the definition of a consultation, c) 9% lacked appropriate documentation.The OIG recommended that CMS, through its contractors

educate clinicians about Medicare criteria and proper billing for all types and levels of consultations, especially high level consults and inpatient follow-up consultations.

2009 CMS Update

ConsultationsCMS and the AMA-CPT staff continued to work together in an attempt to

improve guidance and instruction for consultation services in the CPT coding definition.

The continued concern and confusion regarding consultation resulted in the AMA deleting the inpatient follow-up consultation codes in 2006.

There has continued to be issues related to transfer of care and the use of consultation codes.

CMS proposes to budget neutrally eliminate all inpatient and outpatient consultation codes, except for the telehealth consultation codes, beginning in 2010.

Physicians will be instructed to use the initial hospital day and subsequent hospital day codes for the inpatient setting and new and established E/M codes in the outpatient setting.

2009 CMS Update

ConsultationsCMS will increase the physician work RVUs for new and established

office visits by 6% to reflect the elimination of the office consultation codes.

CMS will increase the physician work RVUs by 2% for initial hospital and facility visits to reflect elimination of the facility consultation codes.

2009 CMS Update

Potentially Misvalued Services Under the Physician Fee ScheduleCMS in collaboration with the AMA-RUC has been using several

vehicles to identify potentially misvalued codes, namely, site of service anomalies, services with high volume growth, and services with high intra-service work per unit time (IWPUT).

There were 204 services identified as misvalued last year and CMS will continue to work with the AMA-RUC to use additional approaches, such as the fastest growing procedure codes, review, review of Harvard-valued codes, and review of PE RVUs.

High Cost SuppliesWe proposed last year to establish a process to update the prices

associated with high cost supplies over $150 every 2 years. We explained we would need the cooperation of the medical community in obtaining typical prices in the marketplace.

2009 CMS Update

Potentially Misvalued Services Under the Physician Fee ScheduleSite of Service AnomaliesOf the 204 potentially misvalued codes identified in 2008, we

recognized that many of them included deletion or modification of certain inputs such as hospital days, office visits, service times, and discharge day management services in the global period.

23-Hour StayServices performed in the outpatient setting and require a hospital

stay of less than 24 hours, we consider this an outpatient service and recognize the additional time associated with the patient evaluation and assessment in the post-service period.

We will request the RUC to include the additional minutes in their recommendations to CMS.

2009 CMS UpdatePhysician Resource Use Measurement and Reporting ProgramSection 131(c) of MIPPA, required CMS to establish a Physician

Feedback Program using Medicare claims data and other data to provide confidential feedback reports to physicians that measure the resources involved in furnishing care to Medicare beneficiaries. This program has been renamed the “Physician Resource Use Measurement and Reporting Program”.

Phase I of this program used the following parameters: a) use of both per capita and episode of care methodologies for

resource use measurement, b) cost of service category analysis (eg, imaging), c) use of 4 calendar years of claims data, d) focus on high cost and/or high volume conditions,

2009 CMS UpdatePhysician Resource Use Measurement and Reporting ProgramPhase I program parameters e) reporting to physician specialties relevant to the selected focal

conditions, f) focus on physicians practicing in certain geographic areas, and g) low, medium, and high cost benchmarks.Comments received from the public favored CMS; 1-using per capita

and per episode methodologies as appropriate measures of cost for the Program, and 2- suggested using the most recent 3 years of FFS claims data for calculating resource use measurements.

CMS decided to focus on the following clinical conditions: 1- Congestive heart failure, 2- chronic obstructive pulmonary disease,

3- Prostate cancer, 4- cholecystitis,

2009 CMS Update

Physician Resource Use Measurement and Reporting ProgramCMS decided to focus on the following clinical conditions: 5- coronary artery disease with acute myocardial infarction, 6- hip fracture, 7- community-acquired pneumonia, 8- urinary tract

infection and 9- diabetes. We received numerous comments from the public to add diabetes as a priority condition for the Program.

Based on the high volume and high cost of the clinical conditions selected above, CMS focused reporting on the following specialties:

a) Internal medicine, b) family medicine, c) gastroenterology, d) cardiology, e) general surgery, f) infectious disease, g) neurology,

h) orthopedic surgery, i) physical medicine and rehabilitation, j) pulmonary medicine, and k) urology.

2009 CMS Update

Physician Resource Use Measurement and Reporting ProgramCMS mailed reports to physicians in the following sites: 1- Baltimore,

MD, 2- Boston, MA, 3- Greenville, SC, 4- Indianapolis, IN, 5- Northern New Jersey, 6- Orange County, CA, 7- Seattle, WA, 8- Syracuse, NY,

9- Cleveland, OH, 10- East Lansing, MI, 11- Little Rock, AR, 12- Miami, FL, and 13- Phoenix, AZ.The reports disseminated in phase I defined peer groups of physicians

by focusing on one condition, one specialty, and one of the geographic locations listed above.

Within each peer group, the resource use reports indicated whether the physician fell over the 90th percentile (high cost benchmark), below the 10th percentile (low cost benchmark), or over the 50th percentile (median cost benchmark).

2009 CMS Update

Physician Resource Use Measurement and Reporting ProgramCMS disseminated 230 resource use reports to physicians in each of

the 12 geographic locations.A de-identified sample of the resource use report can be viewed at: http://rurinfo.mathematica-mpr.com/ We are seeking public input on the design of the report as well as the

cost of service drill-down analysis on pages 10, 16, 20, 24, 28, 32, and 36 of the sample resource use report.

2009 CMS Update

Physician Resource Use Measurement and Reporting Program

Proposed goals for Phase II of the program:

1- Develop group reporting for physicians

2-Develop quality measurement information to assist in interpreting comparative resource use. Possible sources of quality measures include the Physician Quality Reporting Initiative (PQRI) and the Generating Medicare Physician Quality Performance Measurement Results Project (GEM).

2009 CMS Update

The E-Prescribing Incentive ProgramDefined as the transmission using electronic media, of prescription or

prescription-related information between a prescriber, dispenser, pharmacy benefit manager (PBM), or health plan, either directly or through an intermediary, including an e-prescribing network.

It’s estimated only 12% of office-based prescribers currently use e-prescribing,

This program is expected to result in the expansion of e-prescribing by authorizing a combination of financial incentives and payment adjustment and is separate from, and in addition to, any incentive payment that eligible professionals may earn through the PQRI program.

2009 CMS Update

The E-Prescribing Incentive Program

For 2010, CMS is authorized to provide an incentive payment to successful e-prescribers equal to 2% of the total estimated allowed charges for all covered services furnished during the 2010 reporting period.

The incentive payment for successful electronic prescribers for future years are the following: 1% for 2011, 1% for 2012, and 0.5% for 2013.

The e-prescribing initiative will not apply to those individuals who earn an incentive payment under the new Health Information Technology (HIT) incentive program authorized by the Recovery Act for eligible professionals who are meaningful EHR users. The new HIT incentive program for meaningful EHR users begins in 2011.

2009 CMS Update

The E-Prescribing Incentive ProgramSection 132(b) of MIPPA and amended by section 4001(f)(1) of the

Recovery Act, allows a PFS payment adjustment beginning in 2012 to those who are not successful electronic prescribers.

The eligible professional who is not a successful electronic prescriber for the reporting period for the year, the fee schedule amount for covered services provided during the year shall be less than the fee schedule amount by the following: 1% reduction for 2012, 1.5% reduction for 2013, and 2% for 2014.

Eligibility for the e-prescribing program is restricted by scope of practice to those professionals who have prescribing authority.

2009 CMS Update

The E-Prescribing Incentive ProgramBeginning in2010, incentive payments will be made to group practices by

separately analyzing whether the individuals within the group are successful prescribers , CMS will also begin making incentive payments to group practices based on the group as a whole being a successful prescriber.

Proposed criteria for a successful E-prescriber 1- the eligible professional reports on at least 50% of the reportable

cases, on any e-prescribing quality measures that have been established under the PQRI program and are applicable to covered services under the reporting period, or

2- the eligible professional submits a sufficient number of prescriptions under Part D during the reporting period,

2009 CMS UpdateThe E-Prescribing Incentive ProgramE-prescribing reporting mechanisms for 20101- claims based reporting, currently the only method of

reporting in 2009,2- registry-based reporting. CMS proposes only registries

qualified to submit quality measure results and numerator and denominator data on quality measures for eligible professionals for 2010 PQRI would be eligible to submit data on behalf of eligible professionals for the 2010 E-Prescribing program,

3- EHR-based reporting method, contingent on whether the EHR methodology is finalized for PQRI.

2009 CMS Update

Anesthesia Teaching ProgramsIf an Anesthesiologist personally performs the service alone or is

involved in the case as a teaching anesthesiologist with an anesthesia resident, payment for the anesthesiologist’s service is made at the regular fee schedule rate.

Payment is made on the basis of anesthesia base units and time units, calculated from the actual anesthesia time of the case, instead of work, PE, and PLI RVUs.

Section 139 of MIPPA establishes a “special payment rule” for teaching anesthesiologists. This provision allows payment to be made at the regular fee schedule for the teaching anesthesiologists involvement in the training of residents in either a single case or in two concurrent cases furnished on or after January 1, 2010.

2009 CMS UpdateAnesthesia Teaching ProgramsCMS proposes to add the following language specifying the special

payment rate for teaching anesthesiologists in 2010:1- Teaching anesthesiologist is involved in one resident case (which is

not concurrent to any other anesthesia case);2- Teaching anesthesiologist is involved in each of the two concurrent

resident cases (which are not concurrent to any other anesthesia case);

3- Teaching anesthesiologist is involved in one resident case that is concurrent to another case that is paid under the medical direction payment rules.

Other than the application of the special payment rule for teaching anesthesiologists in the mixed concurrent case described above, we are not proposing any other revisions to our medical direction payment policies.

2009 CMS UpdateAnesthesia Teaching ProgramsTeaching Anesthesiologists: Criteria for PaymentCurrently, the teaching anesthesiologist (TA) can be paid at the

regular rate for his involvement in a single resident case. The TA must be present with the resident during all critical portions of the anesthesia procedure and be immediately available to furnish services during the entire procedure.

CMS manual instructions currently allow different physicians in the same anesthesia group to provide parts of the anesthesia service and for the group to bill for the single anesthesia service. We refer to this practice as an “anesthesia handoff”,

From a quality standpoint, we do not believe that multiple handoffs among TA during a case that involves the training of an anesthesia resident would be optimal.

2009 CMS UpdateAnesthesia Teaching ProgramsWe are soliciting comments on how the continuity of care and the

quality of care are preserved during handoffs. We are also interested in whether there are a maximum number of

handoffs and whether there are any studies that would have examined this issue,

Finally, we would like to know what factors or variables are contributing to anesthesia handoffs and what short term adjustments can be made to affect these factors.

Cardiac RehabilitationCardiac RehabilitationSection 144 of MIPPA amends coverage of cardiac rehabilitation

(CR) and intensive cardiac rehabilitation (ICR) beginning 1/1/2010,Currently, patients with the following clinical conditions can

participate:1- documented diagnosis of an acute MI within the prior 12

months, 2- coronary bypass surgery, 3- stable angina pectoris, 4- heart valve repair/replacement, 5- PTCA or coronary stenting,

and 6- a heart or heart/lung transplant.Comprehensive programs must include a medical evaluation, a

program to modify cardiac risk factors, prescribed exercise, education, and counseling and may last for up 36 sessions over 18 weeks or no more than 72 sessions over 36 weeks at contractor discretion if determined appropriate by the local Medicare contractor.

2009 CMS Update

Cardiac RehabilitationSection 144(a) of MIPPA will require:1- Cardiac risk factor modification- this includes education, counseling, and

behavioral intervention (smoking cessation, nutritional education & meal planning, etc),

2- a psychosocial assessment,3- outcomes assessment- Patient centered outcomes must be measured at the

beginning of the CR program, prior to each 30-day review of the individualized treatment plan, and at the end of the CR program,

4- CR services be provided under written individualized treatment plans, 5- For CR & ICR services provided in the physician office, the physician must be

immediately available to furnish assistance,6- For CR & ICR services provided in the outpatient setting of a hospital, direct

physician supervision is the standard.

2009 CMS UpdateCardiac Rehabilitation ICR programs, to be qualified for Medicare coverage, must demonstrate through peer-reviewed, published research that it has accomplished

one or more of the following: 1- positively affected the progression of coronary artery disease, 2- reduced the need for coronary bypass surgery, and 3- reduced the need for

percutaneous coronary interventions (PCIs). It must also demonstrate through peer-reviewed published research that the ICR

program accomplished statistically significant reduction for patients in 5 or more specific measures from the individual’s levels before ICR services to their levels after receipt of such services. These include: 1- LDL, 2- Triglycerides, 3- BMI, 4- systolic blood pressure, 5- diastolic blood pressure, and 6- the need for cholesterol, blood pressure, and diabetes medications.

CMS is proposing that programs apply to CMS to receive designation as qualified ICR programs. We also propose that qualified programs be re-evaluated on an annual basis.

2009 CMS UpdateCardiac RehabilitationCMS also proposes the physician who oversees or supervises (ie,

Medical Director) the CR and ICR program has the following: 1- be licensed in the State in which the ICR or CR program is offered,

2- have appropriate expertise in the management of individuals with cardiac pathophysiology,

3- have training and proficiency in cardiovascular disease management and exercise training of heart disease patients.

CMS is seeking comments on the precise level of expertise that is necessary for the Medical Director.

CMS is also seeking comments regarding specific training and expertise standards are required for the cardiac rehabilitation staff.

2009 CMS UpdatePulmonary RehabilitationSection 144 of MIPPA provides coverage for pulmonary rehabilitation furnished on

or after January 1, 2010 for Medicare beneficiaries with a diagnosis of moderate to severe chronic obstructive pulmonary disease (COPD) (Gold classification II and III).

A Pulmonary rehabilitation program includes all of the following:Physician-prescribed exerciseEducation or training (to the extent it’s clearly related to the individual’s needs)Psychosocial assessmentOutcomes assessmentOther items and services determined by the Secretary to be appropriate under

certain conditions.A written individualized treatment plan is developed for each patient. The plan must be reviewed and signed by the physician every 30 days and must

include the scope of services to be provided and the goals set for the patient.Pulmonary rehabilitation services will be covered in the physician office and

outpatient setting of a hospital.

2009 CMS UpdatePulmonary RehabilitationMIPPA authorizes the physician who oversees or supervises (eg, Medical Director) a

PR program must: 1- have expertise in the management of individuals with respiratory

pathophysiology, and 2- is licensed in the State where the PR program is offered.The Medical Director must have training and proficiency in chronic respiratory

disease management and exercise training of chronic respiratory disease patients. As part of his responsibility and accountability for the program, the program

medical director will be expected to retain all records and documentation for each beneficiary which are ordinarily compiled in their clinical practice.

We also propose that the substantiation of the program medical director’s expertise in respiratory pathophysiology would correlate to experience in the provision of care for individuals with chronic respiratory diseases.

We are proposing to allow up to 36 sessions for services provided with a PR program. This should translate to 2-3 sessions per week, which are a minimum of 60 minutes each. One session per day.

2009 CMS Update

Kidney Disease Patient Education Services

Section 152(b) of MIPPA provides for coverage of kidney disease education (KDE) services for patients.

We are proposing to define Kidney Disease Patient Education Services as face-to-face educational services provided to patients with Stage IV CKD (GFR of 15-29ml/min/1.73m2).

This patient population will require dialysis or a kidney transplant.CMS is seeking public comment on the appropriate level of education,

experience, training, and/or certification appropriate for a qualified person to effectively provide KDE services.

2009 CMS UpdateKidney Disease Patient Education ServicesFactors to consider include specific education and expertise for the following areas:

1- General kidney physiology and test results that would be associated with CKD,2- Psychological impact of the disease on the beneficiary, and impact on the family,

social life, work, and finances.3- The management of comorbidities (such as cardiovascular disease, diabetes,

hypertension, anemia, bone disease, and impairments in functioning) common in persons diagnosed with CKD.

4- Renal replacement therapeutic options, treatment modalities and settings, and advantages and disadvantages of each treatment option.

5- Diet, fluid restrictions, and medication usage to include side effects and informed decision-making.

6- Encouragement of patient active participation in decisionmaking and the ability to tailor educational needs to the individual beneficiary.

7- Other areas of health deemed important to patients with CKD.

2009 CMS UpdateKidney Disease Patient Education ServicesWe propose to allow up to six KDE sessions. We propose to define a

session as one that is 60 minutes in duration.We propose that qualified persons develop outcome assessments

and each beneficiary be assessed during one of the education sessions. The assessments should be tailored to the beneficiary’s reading level.

The goal is to enable the beneficiary to acquire sufficient information and use it to make informed choices about their healthcare.

We will create two “G” codes, GXX26 (individual) and GXX27 (group), to describe and bill for KDE services. Both codes will be paid at the non-facility rate. GXX26 will be crosswalked to code 97802 and GXX27 will be crosswalked to code 97804. This service is very similar to medical nutrition therapy in the individual (97802) and group (97804) setting.

2009 CMS Update

Physician Fee Schedule UpdateSince 1999, PFS rates have been updated under the sustainable growth rate (SGR)

system. The system was designed to limit total expenditures for physicians’ services to

sustainable levels. If expenditures exceeded a statutorily determined percentage amount, the PFS

update for the following year would be reduced. If the expenditures are less than the percentage increase amount, the PFS update is increased in the following year. The SGR is also a cumulative system.

The update is adjusted based on a comparison of cumulative actual spending to target spending from a base period through the current year.

The estimated PFS update for 2010 would be -21.5% for CY 2010.The Secretary has proposed to remove physician-administered drugs from the

definition of “physicians’ services” in section 1848(f)(4)(A) of the Act. This would remove drugs from the calculation of allowed and actual expenditures for all prior years.

2009 CMS UpdateThe information discussed today was published in the Federal

Register on July 1, 2009. There is a 60 day public comment period. All written comments must be received no later than 5p.m. on Monday, August 31, 2009.

In commenting, please refer to file code CMS-1413-P.Electronically: www.regulations.gov . Follow the instructions under

the “More Search Options” tab.Regular mail: Centers for Medicare & Medicaid Services, Department

of Health & Human Services, Attention: CMS-1413-P, P.O. Box 8013, Baltimore, MD 21244-8013

Express or overnight mail: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1413-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850

Thank You

Kenneth.Simon@cms.hhs.gov