Neurosurgery Coding Alert

On Feb. 28, Medicare published an update to its final rule for the 2003 Physician Fee Schedule in the Federal Register. Although physicians will breathe a sigh of relief to learn that Medicare payments will rise (rather than, as expected, decrease) for 2003, the final rule will likely complicate billing for procedures provided during the first two months of the year.

As announced in the Dec. 31, 2002, Federal Register, CMS expected the conversion factor that determines payment for Medicare services (relative value units as assigned by the Physician Fee Schedule X conversion factor = payment in dollars adjusted for regional costs) to fall from $36.1992 for 2002 to $34.5920 for 2003, a reduction of about 4.4 percent. The formula by which the agency determines the conversion factor is set by law and cannot be changed except by congressional action (see the February 2003 Neurosurgery Coding Alert for complete details).

Fortunately, Congress acted on Feb. 13 to approve the Consolidated Appropriations Resolution 2003, which President Bush signed into law a week later. The Resolution allowed an increase in the conversion factor for 2003, which CMS has now set at $36.7856 ($0.5864 or 1.6 percent higher than the 2002 figure). The new conversion factor becomes effective March 1 and applies to all services provided on or after March 1, 2003.

The delayed implementation of the 2003 Physician Fee Schedule has created some logistical problems for Medicare payers and providers. For example, based on the Dec. 31 final rule and as further explained by CMS Program Memorandum AB-02-181 (Change Request 2468), dated Dec. 23, 2002, CMS will reimburse all services provided during January and February 2003 at the 2002 rate ($36.1992). And, payers had to delay all claims containing new-for-2003 codes (available since November 2002) billed prior to implementation of the 2003 fee until March 1 because, under the 2002 fee schedule, there was no way to pay them. For instance, if the physician reported 61322 (Craniectomy or craniotomy, decompressive, with or without duraplasty, for treatment of intracranial hypertension, without evacuation of associated intraparenchymal hematoma; without lobectomy), a new-in-2003 code, prior to March 1, 2003, the payer could not process the claim because it had no fee schedule available to establish appropriate reimbursement. As of March 1, payers should reimburse such claims without delay at the 2003 rate.

Because of processing delays, not all services provided in January and February were settled prior to March 1. For example, the surgeon might perform a craniectomy for evacuation of hematoma (61314) on Feb. 28 but does not submit the claim until March 3, which the payer does not then settle until several weeks later. The service was provided prior to March 1 and is therefore eligible for payment at the 2002 rate. But because the payer received the claim for the service after March 1, it will reimburse at the 2003 rate.

As of March 1, CMS has not officially announced a method for dealing with this problem. Based on the wording of memo AB-02-181 and other information, Medicare carriers will likely expect to recoup their "overpayment" of services provided prior to March 1 but paid at the 2003 rate. For instance, let's return to the above example of the craniectomy and hematoma evacuation provided on Feb. 28. Under the 2002 schedule (at which the procedure is due), the surgery would pay about $1,440, while under the 2003 schedule (at which the procedure will likely be paid because it is processed after March 1) it would pay about $1,464 a difference of $24. Because the carrier overpaid, it will eventually expect to recoup the $24. Most likely, carriers will expect such refunds by July 1, 2003, but CMS has not yet confirmed this.