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Medicare’s 2013 Fee Schedule Compared to 2012

On November 1, 2012, the Centers for Medicare & Medicaid Services (CMS) released the final 2013 Medicare Physician Fee Schedule (MPFS) and its updated conversion factor. Under current law, providers paid under the MPFS will face significant cuts to reimbursement rates. Within the law governing reimbursement rates, a mechanism known as the Sustainable Growth Rate (SGR) automatically would have resulted in a significant decrease in Medicare reimbursement rates over the past several years. However, Congress has intervened each year to override the SGR, meaning rates have been generally flat each subsequent year. For 2013, if Congress does not intervene, the SGR will result in a 26.5 percent cut to the Medicare Part B conversion factor from $34.0376 to $25.0008.

As has been the case in past years, Congress appears committed to “pay-fix” measures that will avert this cut, as neither side of the political aisle seems interested in seeing rates drop in a manner that could cause a subset of physicians to cease taking Medicare patients. A fact sheet published by CMS on November 1, 2012, stated, “Congress has overridden the required reduction every year since 2003. The Administration is committed to fixing the SGR update methodology and ensuring these payment cuts do not take effect. Predictable, fiscally-responsible physician payments are essential for Medicare to sustain quality and lower health care costs over the long-term.”

Fee schedule revisions involve more than an annual change to the conversion factor; they also involve changes in the three categories that make up total Relative Value Unit (RVU) for each CPT code:  physician work, practice expense and malpractice risk. If the conversion factor is allowed to drop to $25.0008, virtually all physician fees will decrease. But whether there is a pay fix or not, you might be wondering what changes you’ll see in your “bread-and-butter” services as a result of RVU changes. The changes to your practice’s revenue will depend on which Current Procedural Terminology (CPT) codes you use the most—which is probably a function of your specialty and the locality in which you practice.

We don’t have room in this article to list the estimated effect on every CPT code, but we’ve shown in the tables below how some of the most commonly used codes will change from 2012 to 2013, using the scheduled conversion factor of $25.0008 and assuming there will be a pay fix resulting in a conversion factor equal to 2012 at $34.0376.

Winners & Losers

Assuming the conversion factor is maintained at a similar level to 2012, most of the listed codes actually receive a boost when calculated using national values—that is, without regard to Geographic Practice Cost Indices (GPCI). From a dollar standpoint, the biggest winner on this list is 58558 – Hysteroscopy Biopsy, which national value would be raised from $383.60 to $406.07. Other examples of procedures receiving boosts are 27236 – Treat Thigh Fracture ($10.21 increase), 52332 – Cystoscopy and Treatment ($9.87 increase) and 45378 – Diagnostic Colonoscopy ($8.17 increase).

Examples of procedures taking significant dollar amount reductions include 50590 – Fragmenting of Kidney Stone ($102.12 decrease), 47562 – Laparoscopic Cholecystectomy ($80.67 decrease) and 76830 – Transvaginal Us Non-Ob ($51.73 decrease).

Strictly from an RVU point of view, the Evaluation and Management services getting boosted could provide incentive to reduce admissions (Initial Observation Care, for example). Also receiving an RVU increase are certain endoscopic procedures that could help detect and treat cancer and other diseases in early stages. Perhaps this is designed to reduce the cost of care that occurs when disease has run its course undetected. Selected services on our list receiving the greatest RVU decrease are the Dopplers, Prostatectomy and Lithotripsy procedures.

In summary, what does this mean to your practice? As mentioned earlier, this depends very much on your specialty, your service mix and to some degree your payor mix. If your practice demographics don’t include many Medicare patients, there could be less impact. However, it is common practice for commercial and managed care plans to key their reimbursement rates off of Medicare’s RVU system, so the effects on your practice could be more significant than you might think at first blush. The only way to know for sure is to run the numbers. If you need assistance projecting the impact of the 2013 Medicare Fee Schedule on your practice, contact your BKD advisor.

This post was written by:

David’s areas of concentration include solo and group practice management consulting and surveys, medical practice valuations, practice marketing and new practice start-ups. He also assists with monthly accounting combined with ongoing financial analysis and troubleshooting, tax preparation and planning, personnel management and collections enhancement.

One Response to “Medicare’s 2013 Fee Schedule Compared to 2012”

  1. avatar Paul Nortman says:

    Can a reduction of 30 percent be compensated
    by volume or decreased cost.

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  • Karen Vance says:
    This would be under §484.18 of the Conditions of Participation describing regulations for the Plan of Care. Below is the Standard that addresses your issue: "§484.18(b) - Agency professional staff promptly alert the physician to any changes that suggest a need to alter the plan of care." From the State Operations Manual (guidance for state surveyors) "The
    February 24, 2011 on Webinars

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