February 21, 2011

There are not many anesthesiologists who will hesitate to answer “yes” to the question in the title. The first section of today’s Alert is not about the inadequacy of Medicare payment rates or the Sustainable Growth Rate (SGR) problem, though. Rather, CMS wants you to know that it will soon begin to reprocess millions of claims because of retroactive provisions in the Patient Protection and Affordable Care Act (PPACA) and retroactive adjustments to the Medicare Physician Fee Schedule.

1. Medicare Claims Reprocessing

On March 23, 2010, President Obama signed the PPACA into law. Various provisions of the new law were effective April 1, 2010, or earlier and therefore were implemented some time after their effective date. In addition, corrections to the 2010 physician fee schedule were implemented at the same time as the PPACA revisions to the fee schedule, with an effective date retroactive to January 1, 2010.

According to a CMS announcement dated February 9, 2011,

Due to the retroactive effective dates of these provisions and the [fee schedule] corrections, a large volume of Medicare Fee-for-Service (FFS) claims will be reprocessed. Given this large workload, CMS is taking steps to ensure that new claims coming into the Medicare program are processed timely and accurately, even as the retroactive adjustments are being made. CMS will begin to reprocess these claims over the next several weeks. CMS expects that this reprocessing effort will take some time and will vary depending upon the claim type, the volume and each individual Medicare claims administration contractor.

The most important thing for anesthesia groups to understand is that you will need to take action to receive the balance if you have claims that were underpaid for services provided in 2010 if your submitted charges were lower than the revised fee schedule amounts.

DO: Request a manual reopening/adjustment from your Medicare contractor if you have any claims that contain services with submitted charges lower than the revised 2010 fee schedule amounts. Use the final revised Medicare conversion factors (CFs) for 2010 in the table below for your non-anesthesia services. The anesthesia CFs in the table are national averages. To calculate your own geographic locality CF for the period January 1-May 31, if you do not remember it, divide your actual June-December CF by 1.022. Thus, for example, $21.5696/1.022 = $21.1053.  You may also download a table containing the CFs for each of the 90 localities for the two periods.  (This table was originally released by CMS in mid-2010, with just the CFs for the second period.  We have added the calculated CFs for the first period.)

DO NOT: Resubmit any of your affected claims. If you do, they will be denied as duplicate claims.

The revised CFs for the first five months of 2010, i.e., January through May, were established in mid-May, when CMS released new rates incorporating corrections to the 2010 physician fee schedule as well as changes resulting from the PPACA, e.g., to the fee schedule geographic practice cost indices. It is the claims for services performed during this period at which the CMS announcement is directed. On June 25, 2010, the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 provided for a 2.2 percent update to the 2010 fee schedule, effective for dates of service June 1, 2010 through November 30, 2010. Anticipating this legislation, CMS had instructed the contractors to hold physicians’ claims temporarily, so the great majority of claims for services from June onwards should have been paid at the correct rates. Finally, just before Thanksgiving Congress extended the then-current CFs through the end of December, 2010, making $21.5696 and $36.8729 the effective rates for anesthesia and other services, respectively, for the period June 1- December 31.

Physicians normally must request the reopening of claims within one year (12 months) of the date of service. PPACA created this deadline and made it retroactive to January 1, 2010. Some of the underpaid and overpaid claims from the first five months of 2010 are already stale, under this rule. The reprocessing announcement states, however, that CMS will extend the time to request adjustment of underpaid claims “as necessary.”

If the retroactive adjustment of the CFs shows that Medicare overpaid rather than underpaid your claims, your contractor will send you a request for repayment, aggregating small amounts so that the total amount is at least $10.00. You do not have to do anything about potential overpayments except respond to any request that you might receive from the contractor.

The reprocessing announcement concludes with a warning about waiving beneficiary co pays, which under some circumstances may violate the anti-kickback laws:

CMS wants to remind physicians, practitioners, suppliers, and other providers, impacted by the retroactive increases in payment rates for claims affected by the Affordable Care Act and 2010 MPFS changes, of the Office of Inspector General policy related to waiving beneficiary cost-sharing amounts attributable to retroactive increases in payment rates resulting from the operation of new Federal statutes or regulations. The policy may be found at http://oig.HHS.gov/fraud/docs/alertsandbulletins/Retroactive_Beneficiary_Cost-Sharing_Liability.pdf

Your billing system should be able to give you the necessary information on any payment adjustments that Medicare may owe you. ABC is verifying whether clients are owed any balances because of the changing CFs in 2010 and will work with the Medicare contractors to ensure all underpaid claims are reprocessed as necessary.

2. Future Medicare Payment Rates—The President’s Budget

The next SGR-based reduction in physician payment is now slated to go into effect on January 1, 2012. In his fiscal 2012 budget plan released on February 14th, President Obama proposed a two-year, $54 billion solution to stop the payment cuts, to be followed by a second phase of “relief from 2014-2021” that would cost another $215 billion. There were no specifics on a replacement for the SGR formula, although the Administration has previously supported permanent SGR reform.

The proposal includes various Medicare and Medicaid spending cuts that would raise $62.2 billion and more than offset the two-year “doc fix.” Among these cuts would be:

• Anti-fraud initiatives
• A restriction on the amount that the states may tax providers for Medicaid, which would reduce the federal government’s Medicaid funding
• Measures to increase the use of generic drugs
• A “pre-payment review” for power wheelchairs

State officials as well as pharma and the power wheelchair lobby immediately joined the many federal legislators who denounced the budget. There will certainly be modifications to the budget ultimately approved by Congress and sent back to the President. The fate of Medicare physician payment is anyone’s guess – but we will keep you posted.

With best wishes,

Tony Mira
President and CEO