Nixed Medicare consultation codes force doctors to make cutbacks

Patient care is impacted as practices report laying off staff and reducing services in response to Medicare's new policy.

By — Posted Aug. 2, 2010

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Thousands of physicians say they have been forced to adopt a number of damaging cost-cutting measures as a result of Medicare discontinuing its use of consultation codes, a policy adopted by the Centers for Medicare & Medicaid Services that took effect on Jan. 1.

Consultation codes are used most frequently by specialists after patients are referred to them by primary care physicians. Starting this year, Medicare eliminated the use of all consultation codes except telemedicine consults. It directed physicians instead to bill for the visits using only evaluation and management codes that apply.

According to a June 18 letter sent to CMS by the American Medical Association and more than 30 other physician organizations, the agency predicted that no specialty would see Medicare revenues decline by more than 3% because of the change. CMS also had stated that another goal was to reduce confusion and administrative burdens associated with filing consultation codes.

But the AMA said the policy has had the opposite effect. According to a survey of approximately 5,500 physicians, the vast majority of specialists have seen their revenue stream drop after the change -- most by more than 5% -- and three out of every 10 already have reduced services to Medicare patients or are contemplating other cost-cutting steps that will impact care.

Such is the case for Lawrence Martinelli, MD, an infectious diseases physician in Lubbock, Texas.

Dr. Martinelli works in a three-physician practice that acts as a referral center for the surrounding area. He estimates that his practice will lose nearly 8% in net revenue this year as a result of the elimination of the codes. The practice also has had to let go of two mid-level medical staff and a biller since March.

"The elimination of the inpatient consultation codes has hit us pretty hard," Dr. Martinelli said. "There is work being done that's just not being accounted for. It's increased the overall level of angst that we're all experiencing at this time of turmoil."

Unintended consequences

The AMA and the specialty organizations that signed the June letter have asked CMS to reconsider the policy as the agency works on the Medicare physician fee schedule for 2011.

In addition to the general cost-cutting steps that will affect Medicare patients, some survey respondents said they are likely to make changes that will discourage the kind of care coordination that CMS has been seeking in Medicare, the groups said. This includes specialists providing primary care physicians with written consultation patient reports.

Another unintended consequence involves prolonged services for hospitalized patients. The current procedural terminology system on which Medicare codes are based count both face-to-face time with the patient and time spent on the hospital floor. But CMS now recognizes only face-to-face time and not other services, such as reviewing charts, or talking with families and other medical staff.

"In effect, Medicare is denying payment for these services and further discouraging coordination of care between professionals," the letter states.

Yet another issue created by the elimination of the consultation codes involves the identification of new patients. While consultation codes do not distinguish between new and established patients, the office visit codes doctors must use in their place do make this distinction, with Medicare paying more for new patients.

But many practices focus on a narrower range of services than Medicare recognizes in its current list of specialties and subspecialties. So a patient seen by two subspecialists in the same group with very different areas of expertise, but who are in the same category on Medicare's list, will be seen as an established patient and not as a new patient.

The American College of Physicians initially had supported the elimination of the consultation codes when CMS first proposed it in 2009. But the organization said that was only in an effort to address the difficulty of billing such codes and the heightened chance of audits that come with the strict definition of what constitutes a consultation. The ACP also signed the June letter to CMS, but it has not asked the agency to rescind the policy outright because that would not resolve the audit concern, the group said.

CMS said the money that would have been paid out for consultations would be redistributed to boost pay for other evaluation and management codes, including ones typically used by primary care physicians. But the organizations signing the letter complained that inadequate budget neutrality adjustments have meant that shift has not occurred entirely as planned.

The effect on patients

Specialty organizations are weighing in on what the code elimination means for their members. They say its effect is going to translate into less access for patients.

The American Academy of Neurology estimates that nearly 75% of its members responding to the AMA survey have seen revenues fall by more than 10% since January, and nearly 40% have had to reduce staff.

Joel Kaufman, MD, a neurologist in Providence, R.I., has seen colleagues struggle because of the codes' elimination. "One of the keys to neurology is to spend the time with patients," Dr. Kaufman said. "Taking a good history is critical, so devaluing our time undermines the service. Ultimately, it means some patients are not getting the care or attention that they should."

The American College of Cardiology noted that the patients who need the most help will feel the effects the most.

"The decision ... has made it harder than ever for cardiologists to be appropriately paid for managing complex patients," said ACC President Ralph Brindis, MD, MPH.

The American College of Rheumatology estimates that the elimination of the codes has negatively affected 80% of practicing rheumatologists who responded to the AMA's survey.

"By removing consultation codes, CMS is stating that the advanced training and unique specialty care provided by rheumatologists is not valued," said ACR President Stanley B. Cohen, MD.

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Coping without consultation codes

Many of the 5,500 physician respondents to a recent survey by the AMA and 17 specialty societies about Medicare's elimination of consultation codes said the January policy change has cut into their revenue and caused them to pursue or consider cutbacks of their own.

Impact on revenue stream
No impact 4%
Decreased 1% to 5% 11%
Decreased more than 5% to 10% 20%
Decreased more than 10% to 15% 22%
Decreased more than 15% to 20% 18%
Decreased more than 20% 12%
Don't know 12%
Completed practice changes
Reduced number of new Medicare patients 20%
Reduced time spent with Medicare patients 11%
Stopped or reduced consultations on hospital inpatients 10%
Stopped or reduced Medicare consultations referred by primary care or attending physicians 7%
Stopped providing consultation patient reports 6%
Stopped or reduced consultations in the office 6%
Reduced number of established Medicare patients 5%
Stopped accepting new Medicare patients 5%
Stopped doing or reduced consultations on hospital outpatients 5%
Stopped doing or reduced consultations on SNF patients 4%
Stopped accepting established Medicare patients 1%
Planned practice changes
Defer purchase of new equipment and/or IT 39%
Eliminate staff 34%
Avoid patients with complex conditions 22%
Stop providing consultation patient reports 19%
Reduce patient care hours 16%
Reduce level of chart documentation 16%
Discontinue rural outreach 10%
Close satellite office 9%
Retire from medicine 9%

Note: Respondents could select multiple practice change answers.

Source: American Medical Association Consultation Codes Survey, June (link)

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