08-20-12 | Blog Post

Recent Medicare Changes and Physician Payment Methods

Blog Posts

Ralph Z. Levy, Jr. is participating in a webinar hosted by Online Tech, Implications of Recent Medicare Announcements on Trends in Physician Payment Methods, tomorrow, Tuesday August 21, at 2PM ET.

Physicians should carefully scrutinize recent announcements by the Centers for Medicare & Medicaid Services (CMS) of possible future changes in methodologies for payments to physicians and as to possible policy changes and other trends in payments to physicians. Although CMS has indicated that these announcements are all intended to “improve patient care and lower health care costs,” physicians should be fairly warned that they must meet certain new and tightened criteria to be fully paid for their services.

One of the trends that is worth monitoring is an increased emphasis on preventative care as opposed to the treatment of diseases. This trend is evident by CMS’ announcement of a new payment that will start in 2013 for care provided by primary care physicians (PCP’s) to Medicare patients during the first thirty days after discharge from a hospital or nursing home.

This payment will be made to a patient’s community physician or practitioner for the coordination of care of the discharged patient and likely is consistent with the Affordable Care Act mandate to reduce payments to hospitals that have excessive readmissions for certain medical conditions. In addition, CMS recently announced a new initiative, called the Comprehensive Primary Care (CPC) initiative by which CMS will make additional payments to the 75 primary care practices that CMS approves to participate in the CPC program.

In return, the primary care practices must provide enhanced primary care services to the patients who participate in the program. This trend might indicate that certain specialty areas of practice such as anesthesiology and cardiology should be very conservative in budgeting for future payment increases. In contrast, primary care physicians (family physicians and community physicians) may be somewhat more aggressive in their financial plans.

The second trend that is worth noting is the “quantification of quality” policy change. With this change, CMS will not fully pay for all services but will compensate physicians fully only for high quality services. This trend is evident by the inclusion in a recent CMS announcement of changes to the 2013 Medicare physician fee schedule of a voluntary program in which physician groups can participate by which payments for physician services to participating groups will be adjusted based on the quality of care provided to the participating patients.

More importantly, payments to large physician groups (those with 25 or more physicians) that do not elect to participate in the program will be reduced by 1%. This means that physician groups should have electronic health records systems that interface with their billing systems in order for CMS to receive the quality of care information as part of fee billings.

A third trend that should be monitored closely is the “bundling” of payments into a single payment stream that were previously separately billed by various healthcare providers including physicians. In a recently announced pilot project, CMS solicited proposals for providers of health services of various types such as hospitals, laboratories and physician groups to provide services to a patient in regard to an “episode of care,” meaning a single hospital admission and possibly including certain post-discharge services. Under this proposal, CMS would make a single payment that is intended to compensate the hospital, laboratory, pathologists, admitting and treating physician for services provided to a patient during a single hospital admission.

These recent announcements could have dramatic implications for physician groups, which should plan for the possible dramatic future changes in payment methodologies for physician services.

ralphlevyRalph Z. Levy, Jr., Attorney, Dickinson Wright

Ralph Levy, Jr. is an attorney at Dickinson Wright PLLC’s Nashville Office. He focuses his practice in the areas of corporate, corporate governance, emerging business, estate planning & administration, healthcare, mergers & acquisitions, and taxation.

Mr. Levy is a member of the Nashville and Tennessee Bar Associations as well as the American Health Lawyers Association and the Middle Tennessee Estate Planning Council. He is a frequent speaker and writer with articles published in the Journal of Healthcare Compliance, the Nashville Bar Journal, Nephrology News & Issues, and Dialysis & Transplantation.

Mr. Levy received his A.B. from Colgate University, his J.D. from Vanderbilt University and his LL.M. in Taxation from New York University School of Law.

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