Medicare Proposes Cutting Medicare Physician Reimbursement in 2012

Medicare physician reimbursements may be slashed by as much as 30 percent.  The Centers for Medicare & Medicaid Services (CMS) has proposed changes that will update payment policies and rates for physicians, dialysis facilities and for services to Medicare beneficiaries in hospital outpatient departments, and cut Medicare payments to home health agencies.  CMS’ proposed rule for Medicare payments to physicians and non-physician practitioners includes a 29.5 percent payment rate cut next year.  “This payment cut would have serious consequences and we cannot and will not allow it to happen,” said CMS Administrator Donald M. Berwick in a statement. “We need a permanent (Sustainable Growth Rate) fix to solve this problem once and for all.  That’s why the president’s budget and his fiscal framework call for averting these cuts and why we are determined to pass and implement a permanent and sustainable fix.”  Additionally, CMS proposed a 3.35 percent cut in Medicare payments to home health agencies; a 1.8 percent increase in payment rates for dialysis treatments; a 1.5 percent increase in hospital outpatient rates; and a 0.9 percent increase in ambulatory-surgery center payments.

CMS’ proposed 2012 Physician Fee Schedule includes updated payment policies for physicians and nonphysician practitioners.  CMS estimates total payments under the Medicare Physician Fee Schedule for 2012 will be $80 billion.  In updating the Physician Fee Schedule, CMS must comply with the Sustainable Growth Rate formula, which is estimated to reduce Medicare payments to physicians by 29.5 percent.  In previous physician fee schedules, payment cuts through the SGR have been cancelled through legislation.  Additionally, CMS plans to recover $10 million next year by reducing payments for chiropractic codes by approximately two percent as part of the budget neutrality requirement of the Medicare Prescription Drug, Improvement and Modernization Act of 2003.

Another component of the proposed rule would create a process for certain physician-owned hospitals to apply for an exception to the Patient Protection and Affordable Care Act’s (ACA) ban on capacity expansions at such facilities.  The proposed rule also would amend the Medicare Electronic Health Record Incentive Program to let eligible hospitals and critical-access hospitals report clinical quality measures in 2012 through an electronic reporting pilot.

Additionally, CMS has issued a proposed rule that would update payment policies and rates for services furnished to Medicare beneficiaries in hospital outpatient departments and ambulatory surgical centers starting next calendar year.  The rule helps emphasize the importance of beneficiaries being able to receive quality care without regard to the care setting.  “The CMS is committed to using every tool at its disposal to create incentives that will improve the quality and safety of care received by Medicare beneficiaries, wherever that care is provided,” Berwick said.

The rules include proposals that would strengthen the Hospital Value-Based Purchasing program,  as required by the ACA and whose purpose is to improve the safety and quality of patient care and make healthcare more affordable.  The program — established through a CMS final rule — ties a portion of a hospital’s payment for inpatient stays under the Inpatient Prospective Payment System,  a method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount.

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