Change in Billing Codes for Medicare to Affect Physician Reimbursement

In June, 2006, the Centers for Medicare & Medicaid Services (CMS) proposed changes to the Medicare physician fee schedule. These changes reflect the recommendations of the American Medical Association Relative Value Update Committee (RUC) and, if adopted, will result in a substantial increase in physician reimbursement fees for patient “evaluation and management” services. These revisions, developed to more accurately reflect physician time spent with Medicare beneficiaries, will be the largest ever proposed with regard to management of patients.

“It’s time to increase Medicare’s payment rates for physicians to spend time with their patients,” said CMS Administrator Mark McClellan, MD, PhD. “We expect that improved payments for evaluation and management services will result in better outcomes, because physicians will get financial support for giving patients the help they need to manage illnesses more effectively.”

If the proposed changes are adopted, the work component for relative value units (RVUs) for an office or hospital visit requiring moderately complex decision-making would increase by 29 percent and 31 percent, respectively, while an intermediate office visit would increase by 37 percent. Both services are frequently performed by physicians and rank in the top 10 services physicians perform.

There is a catch, however! The overall budget must remain “revenue neutral,” meaning that procedural billing code reimbursement would be cut to make up for increases in patient “evaluation and management” services.

If adopted all changes would be implemented over four years, beginning January, 2007.

Additional details about this topic can be found on the AAPM&R Web site:
https://www.e-aapmr.org/imis/membersonly/hpl/physfee_0806.htm

Jackie Zinn, MD
AAPM&R Health Policy and Legislation Committee Liaison
University of Washington Medical Center
jzinn@u.washington.edu