Every January, new billing rules and rates go into place for physicians’ services as part of the annual update to Medicare’s Physician Fee Schedule. Dominating DC health policy concerns in this arena are the medical community’s efforts with Congress to address Medicare’s cost-of-living adjuster, known as the “sustainable growth rate” (SGR), which would have lowered 2010 fees across-the-board by 21 percent, if not for a last-minute temporary stay through the end of February. Negotiations with Congress are on-going to provide a long term or multi-year solution—a costly “fix” that I believe is well worth the price to keep physicians in the Medicare program, and seems to have widespread support.

Getting much less attention is a unilateral policy pronouncement made by the Centers for Medicare and Medicaid (CMS) that Medicare will no longer pay specialists a higher rate for consultations—services often provided by specialists like cardiologists and neurologists. Instead, all physician visit services, whether defined as “evaluation and management” (E&M) services or consultations, will be reimbursed at the same E&M rates.

CMS explained that this new policy would equalize reimbursement among primary care and specialists. Medicare Fee Schedule rates are based on “relative value units” (RVUs) for each CPT (billing) code, with higher RVUs for consulting codes. By eliminating payment for specific consultation codes, CMS was able to reallocate those RVUs into the E&M rates used by all physicians, and so raise those rates. This action was part of CMS’s determination to attract and retain primary care physicians to serve Medicare beneficiaries.

Given the typical 30 to 60 day lag in billing and reimbursement, specialists will not feel these new Medicare reductions in their consulting fees for a few weeks or more. Also, it is too soon to tell if the increases in the E&M rates will be seen as a sufficient reward for primary care.

I agree that we need more primary care physicians in our health care system to help guide all of us along a pathway of good health and wellness, as well as to treat Medicare patients and other more complicated patients, like those with chronic conditions and/or disabilities. But these generalists also need to have a reliable referral base of specialists who can diagnose, treat, and advise on managing particular concerns. We need all of these physicians and more, so I hope we can find a fair balance between them.

Source: Final Physician Fee Schedule Rules (PDF), p. 33 (via the CMS website)

Stephanie Mensh blogs regularly at Disruptive Women in Health Care.