Late yesterday, the House of Representatives passed a 6-month fix to the Medicare Physician Fee Schedule. The legislation passed not only reverses the 21.3% pay cut that affected claims with dates of service from June 1st, but also provides for a 2.2% increase to the previously determined fee schedule for 2010. This enhancement in pay will now be in effect for all claims with dates of service between June 1 and November 30, 2010.
The legislation that originally contained the pay fix was returned to the Senate for consideration by House Speaker Nancy Pelosi on Friday June 18th. In addition to the pay increase, the larger bill contained extensions of unemployment benefits and supplemental payments to the states to augment Medicaid programs. Senate Majority Leader Harry Reid spent the second half of yesterday afternoon attempting to garner the 60 votes needed to advance the legislation to a full vote on the floor. Ultimately, his efforts failed when the cloture vote tally of 57-40 doomed the bill. Minutes after the Senate vote, the House, by an overwhelming majority, passed the breakaway bill containing the pay fix that was sent to them late last week. The legislation was signed this morning by President Obama.
CMS has been processing claims with a 21.3% cut for the last 5 working days. It is expected that CMS will soon announce that claims are now going to be processed at the pay fix rate. Any claims that have been processed over the last week will need to be reprocessed at the new, higher rates absent the previous cut.
While this legislation brings the latest chapter in this drama to a close, the story will begin anew as December 1st approaches. If either another temporary remedy affecting the fee schedule or a permanent fix to the Sustainable Growth Rate (SGR) formula is not passed prior to this date, physicians will face a 23% across-the-board cut in reimbursement.
I invite you to look very carefully at the mathematics involved with this. The conversion factor for 2010 was frozen at the beginning of January at 36.0846. Due to the larger health care reform legislation passed earlier in the year, the conversion factor was decreased for all 2010 claims to 36.0791. This did not affect claims already processed, but if you have recently submitted claims to your contractor for dates of service from early 2010, you may have noticed that the payments are decreased by a few pennies from how similar services were processed in the beginning of the year. The 2.2% increase now in effect applies to the lower, updated conversion factor.
While the latest conversion factor for the six-month period has not been released as of yet, a 2.2% increase to 36.0791 gives you a number in the neighborhood of 36.8728. Now, let’s suppose for purposes of envisioning the worst-case scenario that a 23% cut goes into effect on December 1st. This cut would be applied not to the temporary conversion factor, but the legislated conversion factor of 36.0791, which would give you a conversion factor closely resembling (again, not exact due to a lack of CMS announcement at the time of this writing) 27.7809.
The conversion factor is slated to take a further hit at the beginning on 2011, which would result in reductions that would bring the total net cut very close to the 30% range. Words have yet to be devised that would fully describe the negative impact on the healthcare delivery system in the United States that occurs if such a cut ever takes place.
For now, enjoy the summer sun and bask in the beauty of Autumn’s color when it arrives, as it could very well be a winter longer than any other we’ve ever experienced.