Medicare proposal would boost primary care pay.

Increased pay for primary care physicians, decreased pay for specialists, and a potential way to get rid of the sustainable growth rate formula are addressed in the Obama Administration's proposed rule on the 2010 Medicare Physician Fee Schedule.

Physicians' organizations have sought repeal of the sustainable growth rate (SGR)--the statutory formula used to set physician payment rates under Medicare--saying that it is flawed and does not reflect the true cost of providing medical care.

One criticism is that the formula counts the price of physician-administered drugs, over which physicians have little control, as a physician service. The SGR is designed to cut payments when health care expenditures rise above a target; the inclusion of drugs has caused physicians to exceed those targets more rapidly and has contributed to pay cuts over the years. Removal of physician-administered drugs from the SGR should reduce the number of years that physicians see pay cuts, according to the Centers for Medicare and Medicaid Services. The American Medical Association is betting that the change will make it less expensive for Congress to repeal the SGR.

Even if enacted, the 2010 Medicare Physician Fee Schedule proposed rule will not stop the 21.5% pay cut slated to start on Jan. 1, 2010. But several physicians interviewed expressed hope that Congress would step in again this year to roll back the cut through health care reform legislation or in a separate bill.

The 21.5% cut would affect physicians across the board, but the impact of the rest of the fee schedule proposal is specialty-specific, including plans to eliminate consultation codes, increase payments for evaluation and management (E&M) services, and update the practice expense component of physician fees based on new survey data.

The proposal would eliminate the use of all consultation codes except telehealth codes starting Jan. 1. CMS also would increase the work relative value units for new and established office visits, increase the work values for initial hospital and initial nursing facility visits, and incorporate the increased use of these visits into practice expense and malpractice relative value unit calculations. "We believe the rationale for a different payment for a consultation service is no longer supported because documentation requirements are now similar across all E&M services," the CMS wrote.

The plan also would boost payment for the Welcome to Medicare physical, which focuses on primary care, health promotion, and disease prevention.

The CMS estimates that the various proposals would add up to a 6%-8% primary care payment increase, excluding the impact of the 21.5% cut. A final rule is expected in November.

The American College of Physicians, which at press time was developing detailed responses for submission to the CMS, declined to provide comment on the proposed rule.

"This is very welcome news to primary care physicians and is long overdue," commented Dr. Ted Epperly, president of the American Academy of Family Physicians.

Assuming that the 21.5% cut is stopped, 2010 could be a good year for primary care, Dr. Epperly said. In addition to the 6%-8% increase in the fee schedule proposed rule, primary care physicians could gain 5%-10% in payments through health care reform legislation pending in Congress. These increases will be critical for primary care physicians because they need money to invest in retooling their practices to provide care under the medical home model.

Equally important, he said, is that increasing the payments sends the message to medical students that primary care is a viable field and that they don't have to go into subspecialties to earn a living.

Conversely, subspecialists would lose out under the proposed rule, receiving either cuts or only small increases.

The combined proposals will result in an average 11% cut in Medicare payments for cardiologists, in part due to the elimination of consultation codes, but also because of practice expense changes based on new survey data. The American College of Cardiology criticized the CMS for proposing significant payment cuts based on a small amount of survey data.

"These proposed cuts are based on the incorporation of a few esoteric pieces of data into a complex formula," Dr. Alfred Bove, president of the ACC, said in a statement. "The focus on this formula completely ignores the very important issues of access that are certain to be created by these huge slashes in payment."

The combined proposals will result in a 1% cut for rheumatologists on average, according to CMS estimates that do not include the 21.5% cut.

The cut represents a dangerous precedent because it pits one group of physicians against another by taking money away from specialists to provide additional compensation to primary care, said Dr. Sharad Lakhanpal, clinical professor of internal medicine at the University of Texas Southwestern Medical School in Dallas and chairman of the government affairs committee at the American College of Rheumatology.

The shift is especially frustrating for rheumatologists, he said, because they provide mainly E&M services but aren't getting the same payment increases that primary care physicians are getting, Dr. Lakhanpal said. Rheumatologists don't perform many procedures, so most of their payments come from consultations. The work involved in a consult warrants additional pay, he said.

Endocrinologists are in a similar position as specialists who perform few procedures but do many consultations with complex patients. The CMS estimates that endocrinologists would see a 3% increase in payments, not including the 21.5% overall payment cut. But that small increase barely keeps pace with inflation, said Dr. Jonathan D. Leffert, chair of the legislative and regulatory committee for the American Association of Clinical Endocrinologists and an endocrinologist in Dallas.

But money aside, Dr. Leffert said he disagrees with the CMS on the principle of payment for consultations. Consults are often done with patients with multiple, complex medical problems. "I think there's a lot of validity to that being an extra workload," he said.

The fee schedule proposal also includes policy changes related to imaging. The proposed rule would cut payments for certain high-cost imaging services by assuming that imaging equipment priced at more than $1 million is used 90% of the time, compared with the current assumption of use at 50%.

The proposed change is based on studies from the Medicare Payment Advisory Commission (MedPAC) showing that the use of high-cost imaging equipment is higher than previously thought. For example, MedPAC found that in certain markets, MRIs were being used an average of about 46 hours a week, or 92% of a 50-hour workweek.

As written, the rule would not affect lower-cost imaging services such as bone density testing and ultrasound. However, the American College of Cardiology estimates that as a result of the proposed changes, there would be payment cuts for cardiac MR, cardiac CT, and non-hospital cardiac catheterization services.

The agency said it will continue to examine the data for equipment valued at less than $1 million but is not proposing a change at this time. The CMS noted that it does not expect the imaging proposal to create access issues in rural areas.

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