Medicare Fee Freeze Until March 2012

President Obama Signs the Temporary Payroll Tax Cut Continuation Act of 2011

--New Law Includes Physician Update Fix through February 2012--

On Friday, December 23, 2011, President Obama signed into law the Temporary Payroll Tax Cut Continuation Act of 2011 (TPTCCA).  This new law prevents a scheduled payment cut for physicians and other practitioners who treat Medicare patients from taking effect immediately.  While the negative update for the 2012 Medicare Physician Fee Schedule is now scheduled to take effect on March 1, 2012, the Administration remains strongly opposed to letting this cut take effect.  As he has repeatedly made clear, President Obama is committed to a permanent solution to eliminating the Sustainable Growth Rate’s cut.  We will continue to work with Congress to achieve this goal.

The Centers for Medicare & Medicaid Services (CMS) has also recently implemented several important changes for Medicare providers and beneficiaries, and we would like to remind physicians and practitioners of some of these key changes for 2012.  For many of your patients, Medicare costs will go down.  Medicare cost-sharing for Part B services will decline in some cases and, for the first time, the Part B deductible will decrease, by $22, to $140.

Additionally, health care professionals will be paid more to provide certain important services for people with Medicare.  CMS has increased the payment amount for the initial and annual wellness visit – which has no cost sharing for patients -- to account for the introduction of health risk assessment (HRA).  CMS believes it is important to balance the comprehensiveness of the HRA with the potential burden on patients and health professional time constraints.  As such, in 2012, CMS will allow for variation in the content of the HRA.

The Medicare Part D prescription drug program has also been enhanced for 2012, with the coverage gap being further reduced as it is phased-out over the next several years.  These improvements to the drug benefit from the Affordable Care Act have already saved millions of seniors nearly $2 billion.

We wish to remind physicians and practitioners about the Primary Care Incentive Program.  Again in 2012, primary care physicians, nurse practitioners, clinical nurse specialists, and physician assistants may be eligible to receive an incentive payment equal to 10 percent of their allowed charges for primary care services under Medicare Part B.  This incentive is paid in addition to any physician incentive payments for services furnished in Health Professional Shortage Areas.  Please remember that if a practitioner has reassigned his or her benefits to another entity, such as a group practice, Medicare will pay that entity and not the individual practitioner.

The Affordable Care Act created the Center for Medicare and Medicaid Innovation that offers physicians, practitioners and other health care leaders the opportunity to propose innovative payment and service delivery models to lower costs, improve quality, and improve health.  More information can be found at www.innovations.cms.gov .

Attached please find summaries of key provisions of the TPTCCA along with some information about how these changes may affect providers and provider billing.  

President Obama Signs the Temporary Payroll Tax Cut Continuation Act of 2011

Physician Payment Update

Section 301 of the TPTCCA prevents a payment cut for physicians that would have taken effect on January 1, 2012.  An update of zero percent is effective for claims with dates of service January 1, 2012, through February 29, 2012.  While the physician fee schedule update will be zero percent, other changes to the relative value units used to calculate the fee schedule rates must be budget neutral.  To make those changes budget neutral, the conversion factor must be adjusted for 2012.  CMS is currently developing the 2012 Medicare Physician Fee Schedule (MPFS) to implement the zero percent update.  As previously advised, Medicare claims administration contractors will be holding new, January 2012 claims for up to 10 business days in order to effectively test and implement the new 2012 MPFS.  We expect these claims to be released into processing no later than January 18, 2012.  Claims with dates of service prior to January 1, 2012, are unaffected.  Finally, Medicare contractors will be posting the new rates on their websites no later than January 11, 2012.  

Extension of Medicare Physician Work Geographic Adjustment Floor

Current law requires payment rates under the MPFS to be adjusted geographically to reflect area differences in the cost of practice.  The following three components of the MPFS payment are adjusted:  physician work, practice expense, and malpractice expense.  Section 303 of the TPTCCA extends the existing 1.0 floor on the physician work geographic practice cost index, through February 29, 2012.  As with the physician payment update, this change will be accomplished through a revised 2012 MPFS.

Extension of Physician Fee Schedule Mental Health Add-On Payments

For calendar year 2011, certain mental health services' payment rates continued to be increased by five percent over what they would otherwise be paid using the standard MPFS payment methodology.  Section 307 of the TPTCCA extends the five percent increase in payments for these mental health services, through February 29, 2012.  Similar to the zero percent update and the physician work geographic adjustment floor extension, the five percent increase will be reflected in the revised 2012 MPFS.

Extension of Medicare Modernization Act Section 508 Reclassifications

Section 302 of the TPTCCA extends Section 508 reclassifications and certain special exception wage indexes for 2 months, from October 1, 2011, through November 30, 2011.  For the period beginning on October 1, 2011, and ending on November 30, 2011, Section 302 also requires removing Section 508 and special exception wage data from the calculation of the reclassified wage index if doing so raises the reclassified wage index.  All hospitals affected by Section 302 of the TPTCCA shall be assigned a special wage index effective for only October and November 2011.  We will apply the provision to both inpatient and outpatient hospital payments.  For hospital outpatient payments, a special exception wage index will be applicable from January 1, 2012, through February 29, 2012.

Extension of Exceptions Process for Medicare Therapy Caps

Section 304 of the TPTCCA extends the exceptions process for outpatient therapy caps.  Outpatient therapy service providers may continue to submit claims with the KX modifier, when an exception is appropriate, for services furnished on or after January 1, 2012, through February 29, 2012.   

The therapy caps are determined on a calendar year basis, so all patients begin a new cap year on January 1, 2012.  For physical therapy and speech language pathology services combined, the limit on incurred expenses is $1,880.  For occupational therapy services, the limit is $1,880.  Deductible and coinsurance amounts applied to therapy services count toward the amount accrued before a cap is reached, and also apply for services above the cap where the KX modifier is used.