Summary of the Proposed Rule on the 2009 Medicare Physician Fee Schedule

The Centers for Medicare and Medicaid Services (CMS) released the review copy of the 2009 Medicare Physician Fee Schedule (MFS) proposed rule on June 20, 2008. The federal register copy will be published on July 7, 2008. The American College of Radiology (ACR) will be submitting comments to CMS addressing issues of concern by Aug. 30, 2008. Following are the highlights of the proposed rule.

CMS Proposes that All Physicians’ Offices that Provide Imaging Services Be Subject to Independent Diagnostic Testing Facility (IDTF) Standards

A. Improving quality of diagnostic testing services provided by physician and non-physician practitioner organizations

In the proposed rule, CMS proposes a fundamental change in how they regulate who can perform diagnostic imaging services. Specifically, CMS wants all physician and non-physician practitioner (NPP) organizations providing diagnostic imaging services to enroll as an independent diagnostic testing facility (IDTF) for each practice location providing these services (diagnostic mammography is excluded). This indeed is great news for the ACR. For the past couple of years, the ACR has been working diligently with the Congress and CMS on quality and patient safety for imaging service performed within an office setting. The ACR has been very vocal about the rigorous education and training standards that need to be applied nationally to all physicians, regardless of their specialty, who perform and/or interpret diagnostic exams in their office, just as they would if they were performing/interpreting these procedures in a hospital setting. The ACR has also been vocal about the safety and quality standards that needed to be applied to the equipment as well as the ancillary personnel who operate it. The ACR made recommendations to Congress and Medicare that these more rigorous and nationalized standards could be adopted utilizing CMS’ existing authority governing IDTFs, which CMS has outlined in the proposed rule.

Practices that offer diagnostic imaging services must meet most of the quality and performance standards that currently apply to IDTFs, which include:

Having technical staff on duty with the appropriate credentials to perform tests
Limiting a supervising physician to providing general supervision to no more than three IDTF sites
Requiring a supervising physician to prove proficiency in the performance and interpretation of each type of diagnostic procedure furnished in the office
Keeping equipment calibrated, maintaining it as indicated in the manual, and maintaining an inventory of diagnostic testing equipment
Complying with all applicable federal and state licensure and regulatory requirements for the health and safety of patients
Providing complete and accurate information on Medicare enrollment applications, and reporting to the administrative contractor any changes in ownership, location, and general supervision, as well as any adverse legal actions, within 30 days. Other changes to information on the enrollment application would have to be reported within 90 days.
Maintaining a physical facility with space for equipment appropriate to the services designated on the enrollment application, adequate patient privacy accommodations, and storage of both business records and current medical records within the office setting
Maintaining a primary business phone under the name of the physician or NPP
Having proper storage for medical records and being able to retrieve medical records upon request from CMS or its fee-for-service contractor within two business days
Permitting unannounced and on-site inspections to confirm compliance with these standards.

CMS proposes to give physicians and NPPs who are currently enrolled in Medicare until Sept. 30, 2009, to comply with the standards. For newly enrolled physicians and NPPs, the effective date would be Jan. 1, 2009.

CMS is seeking comments on the following:

· If CMS should consider establishing additional exceptions to the established performance standards for physician and NPP organizations providing diagnostic testing services.

· Whether physicians or NPPs conduct diagnostic tests without benefit of qualified non-physician personnel and under what circumstances the testing occurs.

· Whether the policy should apply only to imaging services or to other diagnostic services frequently provided by the primary care physicians.

· Within imaging services, CMS seeks comment about whether the policy should be limited to advanced diagnostic testing procedures which could include MRI, CT and NM and other diagnostic procedures.

· Comments on what would be appropriate criteria to limit this provision.

This proposal fits well with the ACR’s proposed legislation which calls for mandatory accreditation for all of the higher modality imaging services provided for Medicare patients.

B. Mobile Entity Billing Requirements

CMS proposes a new performance standard for mobile units. CMS believes that entities providing mobile diagnostic services to Medicare beneficiaries must be enrolled in the Medicare program, comply with the IDTF performance standards, and directly bill Medicare for services they provide. CMS believes that it is essential that mobile units use qualified physicians or non-physician personnel to perform diagnostic testing procedures. If the proposed provision is adopted, the effective date is the same as the effective date of the final rule.

C. Revocation of Enrollment and Billing Privileges of IDTFs in the Medicare Program

CMS proposes that revoked IDTFs must submit all outstanding claims for not previously submitted items and services provided within 30 calendar days, and not 27 months, of the revocation effective date.

Conversion Factor (CF) Update for 2009
The 2008 (July to December) CF is $34.0682 with the implementation of a 10.6 percent cut. CMS proposes to implement an additional negative 5.4 percent update in 2009 for physician services.

Combined CY 2009 Medicare Physician Fee Schedule Total Allowed Charge Impact

Specialty	Allowed Charges (mil)	Impact of Work and PE RUV Changes *	2009 Update	Combined Impact with CY 2009 Update**
Radiology	4,697	0 %	-5 %	-5 %
Radiation Oncology	1,591	-1 %	-5 %	-6 %
IR	196	-1 %	-5 %	-6 %
NM	66	0 %	-5 %	-6 %

*PE changes are CY 2009 third year transition changes

**Components may not sum to total due to rounding.

These changes amount to a total cut in the conversion factor by 16 percent as of Jan.1, 2009 unless Congress mandates a legislated fix.

Physician Work Relative Value Unit
In 2009, physician work adjustor remains at 0.8806, same as 2008. All physician work RVUs published in the federal register must by multiplied by the work adjustor of 0.8806 to determine the adjusted physician work RVU.

Practice Expense
In CY 2009, CMS continues with the third year of a four-year transition to fully implemented resource based practice expense relative values by CY 2010 using the new “bottom up” practice expense methodology. This means that they will use 75 percent of the new practice expense calculated values and 25 percent of the old. The new “bottom up” practice expense methodology will be fully implemented at 100% in 2010.

Equipment Utilization Rate and Interest Rate
CMS has kept the same equipment utilization rate of 50 percent and interest rate at 11 percent.

Geographic Practice Cost Index (GPCI) and Payment Localities
Section 103 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) extended application of 1.000 floor to the physician work GPCI through June 30, 2008. This provision expires along with the conversion factor relief on July 1, 2008. Accordingly, in 2009, there will not be 1.000 floor for the physician work GPCI unless Congress mandates further legislated fixes.

CMS has contracted with Acumen, LLC to study several options for revising the payment localities. CMS is currently reviewing several alternative approaches for reconfiguring payment localities on a nationwide basis. At this time, CMS proposes to not make any changes to their payment localities. When they are ready to propose a change to the locality configuration, they will provide opportunity for public comment.

Multiple Procedure Payment Reduction (continues at 25 percent)
CMS periodically updates the multiple procedure payment reduction (MPPR) list to reflect new and deleted codes. CMS proposes to add 10 codes to the MPPR list. CMS is removing code 76778, a deleted code, from the list.

Code	Descriptor	Family Group
70336	MRI, temporomandibular joint(s)	Family 5 MRI and MRA (Head/Brain/Neck)
70554	FMRI brain by tech	Family 5 MRI and MRA (Head/Brain/Neck)
75557	Cardiac MRI for morph	Family 4 MRI and MRA (Chest/Abd/Pelvis)
75559	Cardiac MRI w/stress img	Family 4 MRI and MRA (Chest/Abd/Pelvis)
75561	Cardiac MRI for morph w/contrast	Family 4 MRI and MRA (Chest/Abd/Pelvis)
75563	Cardiac MRI w/stress img and contrast	Family 4 MRI and MRA (Chest/Abd/Pelvis)
76776	US exam k transpl w/doppler	Family 1 Ultrasound (Chest/Abdomen/Pelvis - Non-Obstetrical
76870	US exam, scrotum	Family 1 Ultrasound (Chest/Abdomen/Pelvis - Non-Obstetrical
77058	MRI, one breast	Family 4 MRI and MRA (Chest/Abd/Pelvis)
77059	MRI, both breasts	Family 4 MRI and MRA (Chest/Abd/Pelvis)

Potentially Misvalued Services Under the Physician Fee Schedule
CMS is taking steps to address potentially misvalued services to include 1) updating high-cost supplies and 2) review of services often billed together and potentially expanding the multiple procedure payment reduction to additional non-surgical procedures. CMS is planning to perform a data analysis of non-surgical codes that are often billed together such as 60 to 70 percent of the time to determine if there are inequities in fee schedule payments. CMS is seeking comments on this proposal. Based on comments they receive, CMS may consider developing proposals to either bundle additional services or expand the multiple procedure payment reduction list to additional services.

CMS has also identified methods that they are requesting for the RUC to undertake to assist in identifying potentially misvalued codes to include1) review of the fastest growing procedure codes; 2) review of Harvard-valued codes; and 3) refinement of practice expense inputs.

Malpractice RVUs
CMS received comments from the ACR, American Medical Association and American College of Cardiology regarding the malpractice associated with professional component (PC) and technical component (TC). Due to lack of data, CMS proposes not to make any changes to the malpractice RVUs associated with PC and TC. CMS states they will work with their contractor to research available data sources for the malpractice costs associated with the TC portion of certain codes.

Physician Self-Referral and Anti-Markup Issues
Self-Referral/Anti-Markup
Unfortunately, CMS has not offered in its CY 2009 proposed fee schedule rule any changes to the Stark self-referral in-office ancillary services exception. After ACR leaders and staff met last March at CMS headquarters in Baltimore on this critical issue, ACR anticipated that CMS might do so in the 2009 proposed rule.

Instead, CMS has proposed some intriguing changes to its notorious anti-markup rule for diagnostic tests. Historically, the anti-markup rule has prohibited physicians or suppliers profiting from, or marking up, the technical component of certain diagnostic tests that outside suppliers perform but which a different individual or entity bills to Medicare.

The more restrictive “anti-markup” provisions that CMS had proposed and decided to adopt as of November 2007 would have prevented billing physicians from marking up either the technical or professional component of diagnostic radiology services. The ACR supported CMS in adopting these provisions to restrict financial influence on patient care decisions and curb inappropriate imaging utilization.

However, various groups advocated delaying the controversial new rules so CMS could clarify key terms such as “in the office of a billing physician or other supplier.” CMS agreed in December 2007 to delay implementing its anti-markup changes until Jan. 1, 2009, except for: (1) The TC of a purchased diagnostic test, and (2) Any anatomic pathology diagnostic testing services furnished in space that (i) is utilized by a physician group practice as a "centralized building" (as defined by the Stark self-referral regulations) for purposes of complying with the physician self-referral rules, and (ii) does not qualify as a "same building" under Stark.

Thus, under current regulation, the only radiology-related service that cannot be marked up at all is the TC of a purchased diagnostic test. However, the professional component of such tests remains outside the anti-markup zone.

In its CY 2009 proposed rule, CMS presents two options for revising the anti-markup provision.

· First Option: Anti-markup provision would apply in all cases where the PC or TC of a diagnostic testing service is either 1) purchased from an outside supplier of, or 2) performed or supervised by, a physician who does not share a practice with the billing physician or physician organization. CMS would apply the anti-markup to a physician who is employed by, or contracts with, more than one billing physician or physician organization. Yet CMS acknowledged that a physician legitimately could provide diagnostic testing services to multiple physician practices (e.g., locum tenens contracts). It solicits comments on how to achieve that while preventing potentially abusive schemes that could circumvent the anti-markup rule.

· Second Option: CMS would keep most of the current anti-markup rule and its ‘site-of-service’ approach. It again would propose to extend the anti-markup provision to TCs and PCs of non-purchased tests that are performed outside the “office of the billing physician or other supplier.” CMS is soliciting comments as to whether this is the best approach.

New Exception for Incentive Payment and Shared Savings Programs
A notable, if modest, proposal would adopt a new regulatory exception to Stark for certain hospital-physician incentive payment or “shared savings” programs. CMS is impressed with the current array of pay-for-performance (P4P) or similar economically motivated programs to achieve higher quality care, but wants to balance health care innovation with protecting patients and Medicare. CMS would permit a hospital to pay its medical staff physicians under certain conditions and avoid any Stark problems. These conditions would reflect many of the attributes of the “gainsharing” programs that the Office of Inspector General (OIG) has found do not violate fraud and abuse laws.

Expiring Provisions
Medicare incentive payment for physician scarcity areas

Physician who provided services in physician scarcity areas (PSAs) received 5 percent incentive payment for services provided on or after Jan 1, 2005 and before Jan. 1, 2008. However, MMSEA provided for an extension of the bonus payments through June 30, 2008. CMS states that the 5 percent incentive payments will not longer be made for services provided on or after July 1, 2008.

Physician Quality Reporting Initiative (PQRI)

The rule proposes a total of 175 measures for reporting under the Physician Quality Reporting Initiative (PQRI) in 2009, an increase of 56 measures from 2008, including three new measures related to diagnostic radiology. The proposed rule would allow claims-based reporting either for individual measures or for Measures Groups (i.e. Preventive Care, Perioperative Care). CMS is also proposing to conduct another self-nomination process so that additional registries can submit quality measures data. In addition, if the 2008 Measure Testing Process is successful, CMS proposes to begin accepting data from Electronic Health Records (EHRs) for a limited subset of the proposed 2009 PQRI quality measures starting Jan. 1, 2009. Finally, Congress has not yet specifically authorized funding for bonus payments in 2009 and the proposed rule includes no provisions for bonus payments to clinicians that successfully reporting.

The ACR is currently reviewing the proposed changes to the MFS for 2009 and will comment more extensively. We will keep the membership updated on any further changes. Please contact the Economics and Health Policy Department at 800-227-5463 ext. 4584 with any questions.

Click here to read the 2009 MPFS proposed rule in its entirety.

Click here to read the CMS news release regarding the 2009 MPFS proposed rule.