CMS Releases 2012 Proposed Physician Rule on July 1 SGR Rule would Slash Physician Pay by 29.5% in 2012

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On July 1, the Centers for Medicare and Medicaid Services (CMS) released the proposed 2012 physician fee schedule, calling for the SGR-mandated 29.5% cut in the physician payments conversion factor effective January 1, 2012 unless Congress again overrides, or else passes legislation to replace, the SGR formula.  CMS will accept public comments until August 30th before issuing the final rule by November 1.

If the SGR pay cut takes effect January 1, 2012, the national physician conversion factor will plummet from $33.9764 currently to $23.9635 for 2012, according to CMS.

In contrast, the annual letter to Congress from the Medicare Payment Advisory Commission (MedPAC) recommended a 2012 Medicare physician reimbursement schedule increase of 1.0%.

In a letter released June 27, MGMA and 112 physician organizations urged the Obama administration and Congress to repeal the SGR formula as part of the deficit reduction plan. The SGR scheduled cuts involve an estimated $300 billion in federal health care costs over the next ten years.

In other provisions, CMS proposes to:
Extend the multiple procedure payment reduction (MPPR) policy to the professional component (PC) of imaging services, resulting in significant reductions in payment for radiology and interventional radiology; the highest PC payment will be paid in full with each additional procedure reduced by 50% when performed on the same patient on the same day in the same imaging session
Pay for physician services at facility rather than in-office rates for non-diagnostic services that are performed within three days prior to an inpatient admission, related to the admission, and performed in a physician practice wholly owned or operated by the hospital.
Continue the Physician Quality Reporting Initiative (PQRI) .5% bonus in 2012 for physicians and other eligible health care professionals who successfully participate
Add 26 new measures for individual claims and/or registry based reporting and an additional way to meet the clinical quality reporting objective
Use CY 2013 as the initial performance year for purposes of adjusting payments in CY 2015
Review reimbursement for specific CPT codes in 2012 to determine if they are overvalued or undervalued; candidates include Manual Therapy (97140), Group Therapy (97150), and possibly Therapeutic Activities (97530), Neuromuscular Reeducation (97112) and Physical Therapy Evaluation (97001)
Substitute 103% of the Average Manufacturer’s Price (AMP) for certain drugs currently paid at 106% of manufacturer’s Average Sales Price (ASP); applicable to drugs that exceed a price substitution threshold in two consecutive quarters or three of the preceding four quarters
The proposed rule also contains information on how to earn the 2012 e-prescribing bonus of 1.0% of allowed charges and how to avoid e-prescribing penalties in 2013 and 2014