Medicare finalizes 1.1% pay raise, bonus criteria

Washington -- The final Medicare physician fee schedule for 2009 shows just how large a bullet doctors dodged when they successfully lobbied Congress this year for a payment patch. It also spells out how some of them can move past that close call and secure a relatively healthy raise for next year's work.

Legislation enacted in July reversed a 10.6% cut that took effect at the beginning of that month. Starting in January 2009, a 1.1% across-the-board increase will replace an additional roughly 5% cut that would have gone into effect if lawmakers had not acted, the Centers for Medicare & Medicaid Services said in the final pay rule issued Oct. 30. Because the rule applies payment changes related to the most recent five-year adjustment in Medicare relative values for certain services, some physician specialties might see updates slightly larger than or smaller than 1.1%.

"Medicare's new rule confirms that physicians caring for seniors would have faced a harsh payment cut of 15.1% next year if Congress had not stepped in," said American Medical Association President-elect J. James Rohack, MD.

The upcoming 1.1% boost will fall short of the CMS-projected 1.6% increase in the cost to physicians of providing care next year. Payment freezes and increases in recent years also have come in under the rise in costs. But the agency stressed that two bonus opportunities exist to more than quadruple the raise that doctors will get for the year.

Physicians who successfully participate in the Physician Quality Reporting Initiative will receive a 2% bonus on all of their Medicare payments for the year. Also, the program for the first time will award a separate 2% bonus to physicians who successfully prescribe medications electronically for their Medicare patients. Although the sums will not be paid out until sometime in 2010, after Medicare has processed all of next year's claims, this means the maximum effective raise for 2009 will be 5.1%.

The rule gives more detail on how a doctor can secure an e-prescribing bonus. For example, he or she would need to have a qualified system that can adequately communicate with the patient's pharmacy, identify appropriate drugs and lower-cost alternatives, provide formulary information, and generate adverse event alerts. A physician must report one of three special e-prescribing codes at least half of the times they are applicable. Claims containing the codes must represent at least 10% of all the services for which the physician bills Medicare for the year.

CMS envisions that the e-prescribing bonus will provide the "tipping point" for the health care industry as a whole to move to widespread adoption of the technology, the agency said in the final rule. The effects would go well beyond physician pay.

"E-prescribing can greatly reduce the number of medication errors that jeopardize the health and safety of Medicare patients and waste precious health care dollars treating conditions that never should have happened," said CMS Acting Administrator Kerry Weems.

More enrollment headaches ahead?

Despite the prospect of more money on the table, physicians worry that more restrictive policies in other areas of the rule could increase the number of doctors who see their payments -- or their ability to see Medicare patients -- stop altogether.

"We are reviewing the 1,500-page rule now to determine how it addresses AMA concerns with proposals that would exacerbate already significant administrative hassles that take physicians away from patient care," Dr. Rohack said Nov. 10.

Earlier this year, for example, the AMA and others strongly opposed a provision in the proposed 2009 fee schedule rule to clamp down on retroactive Medicare billing. Doctors cannot bill until they are officially enrolled in Medicare, but afterward they can bill for services provided as far back as 27 months from when their enrollment takes effect. CMS proposed limiting that retroactive billing to only 30 days before the date the enrollment application was successfully filed or the date a doctor started providing services at a new practice location, whichever comes later.

The organizations argued that the process of enrolling or re-enrolling in Medicare has turned into a complex process that often takes much longer than a month to complete. Backlogs on the part of Medicare contractors often make the process even longer, and the prospect that this could lead to a denial of retroactive payments means that a doctor waiting to enroll or re-enroll might be unable to see Medicare patients until the contractors resolve the problems, they said.

"Simply adding another 'gotcha' regulation to the mix will only make matters worse," AMA Executive Vice President and CEO Michael D. Maves, MD, MBA, wrote in a comment letter on the proposed rule.

But CMS rejected the comments and adopted the new retroactive billing restrictions in the final rule. Agency officials insisted that they cannot know whether a newly enrolled physician met Medicare requirements prior to the date that the enrollment actually takes effect.

CMS in this case appears to be fixed on a solution in search of a problem, said Lisa Goldstein, government affairs representative with the Medical Group Management Assn. A practice taking on a new physician who needs to be enrolled in Medicare, for instance, would never risk the liability of having that doctor see Medicare patients if he or she were not in compliance with program rules, she said.

Goldstein said even more physicians could experience enrollment-related payment problems once the new restrictions take effect Jan. 1, 2009. Doctors are already citing widespread enrollment delays and payment stoppages related to this year's Medicare contracting reforms and the move to the National Provider Identifier.

Some of the physician comments on the proposed rule did have a positive impact. CMS had planned to ban the use of computer-generated faxes to order Medicare drug prescriptions starting next year, but a strong response from the AMA and others caused the agency to push off that effective date until 2012.

Many doctors who have electronic medical records systems rely on computer-generated faxes for drug orders. A Medicare ban in 2009 likely would have driven a large number of them to revert to paper prescriptions rather than having the intended effect of moving them toward true e-prescribing, said Steven E. Waldren, MD, the director of the American Academy of Family Physicians' Center for Health Information Technology.