Review of E&M codes could benefit primary care

July 13, 2011

Much of the hoopla has focused on a nearly 30% cut in rates in the proposed update to the physician fee schedule for 2012, even though Congress is likely to intervene to keep the reductions from being so severe. But, a provision calling for review of all of the evaluation and management (E&M) codes is likely to be more significant in the long term for primary care physicians.

Much of the hoopla has focused on a nearly 30% cut in rates in the Centers for Medicare & Medicaid’s (CMS) proposed update to the physician fee schedule for 2012, even though, as in past years, Congress is likely to intervene to keep the reductions from being so severe.

But a provision calling for review of all of the evaluation and management (E&M) codes is likely to be more significant in the long term for primary care physicians (PCPs). Groups such as the American College of Physicians and the American Academy of Family Physicians have long contended that those codes are unfairly undervalued, which greatly affects revenue for primary care practices.

The review of E&M codes is necessary, according to Jonathan Blum, deputy administrator and director for the Center for Medicare Management, because “[w]e believe strong efforts are needed to evaluate Medicare’s fee schedule to ensure that it is paying accurately and ensuring that Medicare beneficiaries continue to have access to vital services, such as primary care services.”

In addition to reviewing E&M codes for a potential increase in their valuation, CMS wants to review the highest volume and dollar codes across all specialties to determine whether they are overvalued. Adjusting values could help equalize payments, so that the income of some specialists would no longer be four times that of a PCP.

Also of particular interest to PCPs, CMS proposes and has agreed to fund a health risk assessment that provides a baseline for development of a personalized prevention plan. The assessment would be conducted during the annual wellness visits called for under the Patient Protection and Affordable Care Act and covered as of Jan. 1, 2011.

In addition, the proposed update contains changes in adjustments for costs based on geographical area. CMS announced that it is replacing some of the data sources, e.g. data from the American Community Survey in place of rental data from the Department of Housing and Urban Development, but maintains that past adjustments have reflected accurately geographic variations in the cost of practice, despite an Institute of Medicine report that suggested otherwise.

So if the 30% cut is unlikely to occur, why formally propose it? The answer is that CMS must issue proposed rules that reflect the current law, which includes the cuts generated by the sustainable growth rate (SGR) formula. The SGR formula has called for reductions in payment rates 11 times since it was introduced in 1997, but Congress has let the cuts occur only once, in 2002, and th­at was 5%, far less than the 30% proposed.

CMS Administrator Donald Berwick, MD, is calling for a permanent solution to the constant threat of huge reductions in payment rates, noting, “[t]his payment cut would have serious consequences and we cannot and will not allow it to happen.”

CMS will accept comments on the proposed rule until Aug. 30, and plans to issue a final rule by Nov. 1. A full version can be accessed at the Federal Register Web site.

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