General Surgery Coding Alert

CMS has announced a reduction in the national Physician Fee Schedule conversion factor to $34.5920 for 2003, down from $36.1992 for 2002.

The conversion factor, when multiplied by the relative value units (RVUs) as assigned by the annual Physician Fee Schedule, determines physician payments for Medicare patients. At present, CMS "[is] finalizing the calendar year (CY) 2002 interim RVUs and issuing interim RVUs for new and revised procedure codes for calendar year (CY) 2003." The final rule, when published, will become effective March 1, 2003. All services provided between Jan. 1 and Feb. 28, 2003, will be paid under the 2002 fee schedule.

According to CMS, the 4.4 percent decrease in the conversion factor is the result of "a calculation methodology specified by law." The CMS announcement goes on to note, "The law required the [U.S. Department of Health and Human Services] to set annual updates based in part on estimates of several factors. Although subsequent after-the-fact data indicate that actual increases were different to some degree from earlier estimates, the law does not permit those estimates to be revised."

In short, although the original formula for updating the Medicare conversion factor each year "is flawed and must be fixed," according to CMS administrator Tom Scully, it is a matter of law and cannot be changed without an explicit act of Congress. Without such congressional action, Medicare payments will likely continue to fall each year. CMS has stated that it intends to work closely with Congress to develop legislation to reverse the trend toward lower physician payments "and hopes that such legislation can be passed before the negative update takes effect."

"Nothing would make us happier than to not be issuing this rule," Scully says. "But after months of extensive review of the law and the formula, it is clear that this is the appropriate update required by the existing statute. The administration has been, and continues to be, anxious to work with Congress to fix the flaws in the formula."

CMS has requested physician comment on methods to recalculate fee schedule rates prospectively in the event that Congress allows the department to do so. Physicians wishing to comment should contact CMS by mail:

Centers for Medicare & Medicaid Services
Department of Health and Human Services
Attention: CMS-1204-FC
P.O. Box 8013
Baltimore, MD 21244-8013

Be sure to refer to file code CMS-1204-FC and include one original and two copies of your comments.