Pediatric Coding Alert

Medicare not only cut relative value unit (RVU) reimbursement for 2003 by 4.4 percent in the Physician Fee Schedule but also reduced the number of RVUs granted to numerous codes. The double reduction will force pediatricians to economize and consider the value of remaining a Medicare provider or using a Medicare resource-based relative value scale (RBRVS) system.

In December, CMS issued the 2003 National Physician Fee Schedule Relative Value File, which many payers base their Fee Schedule on. Many of the wins and losses discussed in the fee schedule's preamble will carry over to private insurance, including awarding work RVUs to critical care transport codes and accepting the AMA's RBRVS review update committee's (RUC) recommendations regarding work RVUs for the new critical care codes.

Some pediatricians think CPT coding exists in a bubble, but Medicare significantly influences carriers' policies. "Most non-Medicare payers use the Medicare Physician Fee Schedule as a benchmark at the very least," says Chip Hart, marketer for The Physician's Computer Company, which supports and develops pediatric-specific software to manage clinical and clerical duties for pediatric offices. Several carriers use the fee schedule directly, Hart says.

"Although the RVU system is designed for Medicare reimbursement, virtually every other payer system uses it in one way or another." In fact, the American Academy of Pediatrics (AAP) notes, "despite [the limitations of the system], private payers have moved rapidly to adopt this method of reimbursement." Awareness of Medicare's actions and directives, therefore, can help practices understand private payers' rules.

Last year, the Medicare Physician Fee Schedule reimbursed about $36.20 ($36.1992) per RVU known as the conversion factor, which represented a 5.5 percent decrease from 2001. For 2003, Medicare will pay about $34.59 ($34.5920) per RVU, which represents a 4.4 percent cut from 2002. "That equates to an approximate 10 percent decrease in reimbursement for plans that are tied to Medicare," says Karen S. Walker, administrator of Pediatric Services of Florida Inc., a 250-physician pediatric independent practice association on the West Coast of Florida, with headquarters in St. Petersburg.

From 2001 to 2002, pediatricians averaged a 3.7 percent reduction in reimbursement on their most frequently used codes, Walker says. "With another reduction of up to 4.4 percent looming on the horizon, on top of malpractice insurance premium increases that averaged 300 percent, they'll be giving another pound of flesh."

Medicare published the final rule, effective March 1, in the Dec. 31, 2002, Federal Register. You may download the document from www.access.gpo.gov/ su_docs/fedreg/a021231c.html (scroll down to CMS and select text or pdf version) or visit the CMS Web site at cms.hhs.gov/physicians/pfs/. (For implementation information, see "Don't Let the Interim Fee Schedule Filing Rules Drive You Crazy" on page 14.)

Although all pediatricians will have to contend with the 4.4 percent conversion-factor decrease, the cut will affect each practice differently, Hart says. To determine the fee schedule's affect on each code, you should consider the:

1. Medicare conversion factor

2. geographic adjustments

3. individual code values.

"In 2003, each of these items has changed," Hart says. CMS increased or decreased each region's geographic practice cost index (GPCI), depending on the locality. In addition, the schedule slightly altered many key pediatric codes.

For instance, the GPCI for 2002 gave Idaho an expense GPCI of 0.887 and a malpractice GPCI of 0.532. In 2003, the new values are 0.881 and 0.497, respectively. The additional regional decrease means that the overall reimbursement for Idaho doctors dropped even more than the 4.4 percent conversion-factor cut.

The schedule also changed the RVUs for some codes. This is the result of the phase-in conversion of the practice expense component to a relative-value-based system. For example, the nonfacility practice expense (NFPE) value for 99214 (Office visit for an established patient) decreased from 1.04 to 1.03. Meanwhile, the NFPE values for 99391-99393 (Periodic comprehensive preventive medicine reevaluation and management of an individual ...) increased 0.01 each.

The GPCI and individual code changes add up to pennies for the most part, Hart says. The 99214 decrease amounts to about a $0.34 cut per service. The cut may seem minimal initially. When it's spread over "all" of your E/Ms over the course of a year, however, the decrease adds up.

CMS adjusted the RVUs to equalize reimbursement for cognitive services, such as office visits, with procedures, says Steven F. Isenberg, MD, FACS, director of physician services for Zotec Solutions Inc., which provides practice management and billing solutions for the healthcare industry. CMS reduced every E/M RVU except 99201 (New patient office visit ...).

"The changes in the E/M codes are minimal, but there certainly was not an increase in the E/M RVUs to offset the variable, but often dramatic reductions in procedural RVUs," he says. For instance, wart removal code 17000 previously paid $62.62 unadjusted. For 2003, the code will pay $58.48, a 7 percent decrease. Office visits received either a 4 percent (99202, 99211, 99213) or a 5 percent cut (99203-99205, 99212, 99214-99215). Hospital services (99221-99236) fell 5 percent, and discharge services were cut 2 percent (99238) and 3 percent (99239). Critical care now pays 5 percent (99291) and 6 percent (99292) less than the 2002 rates.

"These reductions are particularly hard-hitting for pediatricians, as their practices are more visit-intensive than those of their adult counterparts," Walker adds. For a comparison of the 2002 E/M rates to 2003's, see page 13 (hospital code RVUs are facility totals).

Despite the bad news, pediatricians should thank the AMA's RUC and the AMAfor its diligent work to obtain work RVUs for the revised pediatric critical care patient transport codes (99289-99290). In 2001, Medicare rejected the RUC's value recommendations for these codes and refused to reimburse for them. Based on the changes the CPT editorial panel made to the codes for 2003, CMS awarded 99289 4.8 work RVUs and 99290 2.4 work RVUs. "The AAPhas done a lot on behalf of pediatricians over the last two to three years to fix many of the problems related to RBRVS and pediatric use," Hart says.

Pediatricians are rarely Medicare providers. Children qualify for Medicare benefits mainly with chronic renal disease. Therefore, pediatricians should avoid being directly tied to a Medicare-based fee schedule. There is no logic with the decreased conversion factor for pediatricians who should use the RBRVS system with a negotiated conversion factor. Medicare decreased the conversion factor due to legislated budget-neutrality.

To see what your practice can expect from the 2003 reductions, compare 2002's figures to 2003's. "You should run your top-25 codes, figure what the reimbursement was supposed to have been in 2002, and compare it with the scheduled reimbursement for 2003," Isenberg says.

Practices will have to strive to operate as efficiently as possible in the wake of the declines. Work with the AAP and your local, state and national societies, and focus on improving your systems to collect what you have legitimately earned. Remember that you have until Feb. 28 to decide if you will be a participating physician in Medicare this year.