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Preliminary Impact Analysis of 2012 Physician Fee Schedule Proposed Rule
By: Andrew Woods, JD
Jason McKitrick
ACRO Legislative Counsel
Liberty Partners Group LLC
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On July 1, 2011, CMS released the Proposed Rule for the CY 2012 Physician Fee Schedule
(PFS). In the Proposed Rule, CMS indicates that the primary impacts to specialties are due to:
(1) the third year of the four-year transition to the utilization of new Physician Practice Information Survey (PPIS) data; and (2) rebasing of the Medicare Economic Index (MEI).
I. Third Year of the PPIS Survey
As part of the CY 2010 Physician Fee Schedule Proposed Rule comment period, ACRO raised serious concerns regarding policies relating to (1) the application of a 90 percent equipment utilization rate for radiation therapy equipment and (2) the use of data from the AMA Physician Practice Information Survey (PPIS) in place of the AMA's SMS survey data and supplemental survey data. Those proposed changes would have resulted in an average reduction in payment of more than 35 percent for the family of radiation treatment delivery services described by CPT codes 77401 through 77418.
In the CY 2010 Physician Fee Schedule Final Rule, CMS recognized ACRO's arguments regarding the distinction between radiation therapy and diagnostic imaging and, consequently, reversed its application of the equipment utilization policy to radiation therapy equipment. In addition, while CMS finalized its proposal to use PPIS data, CMS finalized a four-year transition to the use of the new PPIS data (75/25 for CY 2010, 50/50 for CY 2011, 25/75 for CY 2012, and 0/100 for CY 2013) because of the magnitude of payment reductions for certain specialties. While the radiation oncology community commended CMS for reversing its decision regarding equipment utilization, it has continued to expressed concern regarding the continued application of blended PE/HR values used in the PPIS data as not reflective of practice expense costs incurred at freestanding radiation therapy centers. CMS notes in the CY 2012 Proposed Rule that it is transitioning an additional 25 percent of PPIS data in PE RVUs.
II. Rebasing of the Medicare Economic Index
In the CY 2011 Physician Fee Schedule Final Rule, CMS finalized its proposal to rebase the MEI to reflect appropriate physicians' expenses. CMS noted in that rule that specialties with a high proportion of total RVUs attributable to PE, such as radiation oncology, were estimated to experience an increase in aggregate payments. As noted in previous memoranda to ACRO, while MEI rebasing masked the otherwise negative impacts to "radiation oncology" and "radiation therapy centers" in 2011 from the PPIS policy, the negative effects of the PPIS policy continue through 2013.
CY 2012 Conversion Factor:
In the CY 2011 Physician Fee Schedule Final Rule, CMS noted Section 1848(c)(2)(B)(ii)(II) of the Social Security Act required that the increases made to PE values as a result of the MEI rebasing be accomplished on a budget neutral basis. Rather than make corresponding reductions to work RVUs, however, CMS finalized its proposal to apply a budget neutrality adjustment of 0.9181 to the conversion factor (CF). Largely as a result of this policy, the CY 2011 PFS CF was reduced to $33.9764.
Although CMS makes certain budget neutrality adjustments to the CY 2012 proposed CF, the adjustments are minor: the adjustments raise the CY 2012 CF from $33.9764 to $34.0103. This memorandum assumes Congress will otherwise freeze the CY 2012 CF, rather than allow scheduled 29.5 percent cuts to reduce the CF to $23.9635.
III. Preliminary Impact Analysis
The Proposed Rule impact table shows the CY 2012 and CY 2013 impacts from the third and fourth year phase-ins of the four year transition to the use of PPIS data as represented in the table below.
Specialty CY 2012 CY 2013
Radiation Oncology 4% 8%
Radiation Therapy Centers 5% 9%
Previous memoranda to ACRO noted that "radiation therapy center" RVUs are only about 4 percent of total RVUs contained in CMS's specialty designations of "radiation therapy centers" and "radiation oncology." Because these two specialties are self-reported, there is no particular barrier, for example, for an entity which is in fact a radiation therapy center to report to CMS as a radiation oncology specialty. Ultimately, the impact of the Proposed Rule on a particular center will depend on center-specific variables (e.g. case mix).
IV. Radiation Oncology Codes Subject to Future AMA RUC Review
As part of its effort to continue to identify, review and adjust "potentially misvalued codes," CMS requested that the AMA RUC review the following radiation oncology codes:
77421 (Stereoscopic X-Ray Guidance)
77301 (Radiotherapy Dose Plan, IMRT)
77014 (Ct Scan for Therapy Guide)
These codes were identified by CMS along with over 70 other codes because they (1) have not been reviewed for at least 6 years, (2) represent high Medicare expenditures under the PFS, and (3) have a significant impact on PFS payment on a specialty level. CMS requests that the AMA RUC review at least half of these codes (including the aforementioned radiation oncology codes) by July 2012 in order for CMS to include any revised valuations for these codes in the CY 2013 PFS final rule with comment period.
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If you have any questions, please do not hesitate to contact Andrew Woods at (202) 442-3710. |
