October 14, 2015

NASHVILLE, Tennessee — The 0.5% Medicare raise that physicians are counting on next year could shrink, or even vanish, if the Obama Administration does not hit a savings target, attendees heard here at the Medical Group Management Association (MGMA) 2015 Annual Conference.

The pay increase was authorized by the Medicare Access and CHIP Reauthorization Act (MACRA), which repealed the sustainable growth rate formula for Medicare reimbursement. However, other laws, including the Affordable Care Act, have set regulatory machinery in motion that could erase the raise.

The Affordable Care Act requires the Centers for Medicare and Medicaid Services (CMS) to periodically identify and adjust Medicare rates for physician services that are overpaid. "Misvalued services" — also referred to as misvalued codes, as in CPT billing codes — can arise when the time and expense required to perform a service gradually decrease, but the payment rate remains the same. Given advances in technology, many surgical and diagnostic procedures fall in this category.

The 2014 Protecting Access to Medicare Act directed CMS to reprice enough misvalued services to reduce Medicare fee-for-service spending on physician services by 0.5% each year from 2017 to 2020. Another 2014 law moved that start date up to 2016, and set a 1.0% savings target for that year.

The fate of the raise will be known when the final physician fee schedule for 2016 is released, which could be later this month, said Jennifer McLaughlin, JD, senior government affairs representative for the MGMA.

Our response is to ask CMS to use as broad an approach as possible to make that 1% target.

In the proposed fee schedule, released in July, the CMS said that if its misvalued code initiative fell short of the 1.0% mark, the agency would have to reduce total fee-for-service spending to make up the difference.

Such a spending cut could partially or completely offset the 0.5% increase promised under MACRA, McLaughlin explained. "As you can imagine, our response is to ask CMS to use as broad an approach as possible to make that 1% target."

It looks like CMS is not on course to reach its goal.

In the draft 2016 fee schedule, proposed markdowns for misvalued codes would reduce fee-for-service spending next year by 0.25%, according to CMS estimates. That figure is preliminary, according to the agency, because in the final version of the fee schedule, more misvalued codes will have been identified and adjusted.

In a September 4 letter to CMS, Anders Gilberg, senior vice president of government affairs at the MGMA, urged the agency to make up the 0.75% shortfall in savings.

"It would be unfortunate if CMS takes a narrow approach to defining what payment adjustments can be counted so that the misvalued code target would be nearly impossible to reach," he wrote, pointing out that Congress included a 0.5% payment increase, which could be nullified, "depending on the methodology CMS implements to meet this requirement."

Medical Group Management Association (MGMA) 2015 Annual Conference. Presented October 13, 2015.


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