The 2012 Medicare Physician Fee Schedule (MPFS) final rule, released by the Centers for Medicare & Medicaid Services (CMS) on Oct. 27, 2011, did not contain good news—especially for orthopaedists.
True, the recommended 27.4 percent cut in reimbursement for services under the Medicare Sustainable Growth Rate (SGR) formula was less than the previous estimate of 29.5 percent, due to lower-than-expected growth in Medicare costs. But this is the eleventh time the SGR formula has resulted in a payment cut, although the cuts have been averted through legislation every year except for 2002.
Such a drastic cut would have a significant impact on physician participation in the Medicare program and on beneficiary access to care. In light of this, the Obama administration has stated it is committed to ensuring these payment cuts do not take effect. Nonetheless, the future of the SGR and its impact on physician payments may depend more on the recommendations from the Congressional “Super Committee,” charged with finding ways to reduce the deficit, than on a Presidential commitment.
As of this writing, the Super Committee had not released any plan and, absent such a plan, a series of mandated cuts—including reductions in the Medicare budget—are scheduled to go into effect in 2013. Thus, even if an act of Congress delays the SGR cuts for another year, physicians continue to face the prospect of declining reimbursements, even as the number of Medicare beneficiaries swells and costs of doing business balloon.
Even more problematic: RVU changes
The final rule also includes a distinct Relative Value Unit (RVU) for every procedure with a CPT code in the fee schedule. CMS regularly reviews and updates the RVUs for procedures, including orthopaedic procedures, within the fee schedule. The extent of these changes varies from year to year, but the changes in the 2012 Physician Fee Schedule will have a significant impact on several orthopaedic procedures.
The Medicare total RVU includes the following three components: the work RVU, which captures the time and effort required by the physician to perform the procedure; the practice expense RVU, which captures the cost in terms of staff labor, equipment, supplies, and rent; and the malpractice RVU, which captures a portion of the malpractice cost. Overall, orthopaedic surgery is estimated to have a 1 percent decrease in total RVUs for 2012. This is largely the result of an ongoing transition in the way CMS calculates practice expense RVUs. Even though the practice expense RVUs increased for many musculoskeletal procedures, the impact on total RVUs was negative.
On a more granular level, CMS reviewed the work RVUs for more than two dozen orthopaedic procedures. The changes were based on responses by orthopaedic surgeons to surveys on the amount of time and intensity required to deliver these services. Table 1 summarizes the codes reviewed in the 2012 Medicare Physician Fee Schedule and shows the 2011 total RVUs, the 2012 total RVUs, and the difference between them for each code.
Meniscectomy repair codes
Two common orthopaedic procedures—arthroscopic meniscectomy repair CPT codes 29880 (arthroscopic meniscectomy medial and lateral) and 29881 (arthroscopic meniscectomy medial or lateral)—were drastically altered. As shown in Table 1, the total RVUs for CPT code 29880 went from 20.14 to 16.85, a decrease of 16 percent. The total RVUs for CPT code 29881 dropped from 18.82 to 16.16, a decrease of 14 percent. In addition, the actual CPT descriptors for each of these codes have been changed to include chondroplasty when performed at the same time. Thus, physicians should no longer report the G2089 (for Medicare only) code or CPT code 29877 at the same time as 29880 or 29881.
Although these changes appear drastic, they actually could have been worse. As part of its periodic review of the values for established procedures, CMS requested that the AAOS, in collaboration with the Arthroscopy Association of North America (AANA) and the American Association of Hip and Knee Surgeons (AAHKS), conduct member surveys on the amount of time and intensity required to deliver these services.
The results were startling. The typical times reported to perform these procedures were much lower than those used as a base for the previous RVUs. For an arthroscopic meniscectomy medial and lateral (code 29880), the “skin-to-skin” time went from 80 minutes to 45 minutes, a 44 percent decrease. For arthroscopic meniscectomy medial or lateral (code 29881), the “skin-to-skin” time went from 66 minutes to 40 minutes, a decrease of 39 percent. The fact that the total RVUs decreased just 16 percent and 14 percent, respectively, means that the collaborative efforts of the AAOS, AAHKS, and AANA enabled these procedures to retain a significant amount of their previous value.
Arthroscopic shoulder codes
The other major change applies to CPT code 29826 (arthroscopic shoulder acromioplasty), which was also a required review. In this case, CMS had claims data showing that, in the Medicare population, CPT code 29826 was being reported more than 97 percent of the time in conjunction with one or more of the following CPT codes: 29824 (arthroscopic claviculectomy), 29827 (arthroscopic rotator cuff repair), and 29828 (arthroscopic biceps tenodesis).
The AAOS, through its Coding, Coverage, and Reimbursement Committee and representatives on the American Medical Association’s Relative Value Unit Update Committee (RUC), sought to mitigate the impact of this finding. It recommended that CMS convert 29826 to a ZZZ or add-on code rather than create a so-called “supercode” to include arthroscopic acromioplasty with each of these three codes. Although this resulted in a significant decrease in total RVUs for the arthroscopic shoulder acromioplasty procedure, the impact when the procedure is performed with the other arthroscopic shoulder CPT codes is minor.
For example, a surgeon who performed arthroscopic shoulder acromioplasty in conjunction with another arthroscopic procedure, such as arthroscopic rotator cuff repair, would be subject to the endoscopic multiple procedure discount for the acromioplasty. Thus, the surgeon would only be able to bill approximately 6.00 total RVUs for the acromioplasty. By changing the acromioplasty to an add-on code, the total RVUs for the procedure will be 5.65 in 2012.
Other issues covered
In addition to the specific procedure code values, the MPFS Final Rule addressed other important regulatory issues including Medicare quality incentive programs such as the Physician Quality Reporting System, the e-Prescribing program, the Health Information Technology adoption and implementation program, and the development of a value-based modifier.
CMS also announced that it is expanding the potentially misvalued code initiative—an effort to ensure Medicare is paying accurately for physician services—and more closely managing the payment system. This year, CMS is focusing on codes billed by physicians that result in the highest Medicare expenditures under the MPFS to determine whether these codes are overvalued.
In the past, CMS has targeted specific codes for review that may have affected a few procedural specialties such as cardiology, radiology, or nuclear medicine, but has not taken a look at the highest expenditure codes across all specialties. Included in this initiative are several high-volume orthopaedic procedures such as spinal fusion, spinal laminectomy, total knee arthroplasty, and total hip arthroplasty.
The rule also includes several changes to federal rules regarding expansion of physician-owned hospitals, prohibitions on physician self-referral, and patient notification requirements. It outlines the processes that physician-owned hospitals must follow to request exemptions to restrictions on self-referral and expansion and prohibits physician owned hospita;s from discriminating against beneficiaries of federal healthcare programs. Capacity increases, if granted, must not result in a hospital’s increasing its number of licensed operating rooms, procedure rooms, and beds by more than 200 percent.
CMS is also making changes in how it adjusts payment for geographic variation in the cost of practice. Finally, starting in 2012, Medicare will pay only 75 percent of the professional component for advanced diagnostic imaging testing services when they are billed on the same day for the same patient as one or more other advanced diagnostic imaging tests. The AAOS has repeatedly lobbied against this particular payment policy and will continue to do so.
The final rule appeared in the Nov. 28, 2011, Federal Register. CMS will accept comments on provisions that are subject to comment until Dec. 31, 2011, and the AAOS plans to submit comments. AAOS Headline News Now and AAOS Advocacy Now will update members as new information becomes available.
Matthew Twetten is the AAOS senior manager, regulatory, quality and medical affairs and staff liaison to the AAOS Coding, Coverage, and Reimbursement Committee. He can be reached at firstname.lastname@example.org