Primary Care 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 family physicians 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 use as a base for their fee schedules. Many of the wins and losses included in the fee schedule will carry over to private insurance.

Some family physicians think the Medicare fee schedule exists in a bubble, but Medicare significantly influences private payers'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 computer software to manage clinical and clerical duties. Several carriers use the fee schedule directly.

"Although the RVU system is designed for Medicare reimbursement, virtually every other payer system uses it in one way or another," Hart notes. 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.

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" in article 5.)

Despite the initial bad news of the reduction, family physicians may face bigger reimbursement problems. The 4.4 percent fee schedule cut is not the complete story, 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."Medicare has also slashed the number of RVUs for someprocedures."

The overall impact on family practices is a 5 percent decrease, based on the combined impact of changes in payment due to RVUs and the Physician Fee Schedule update, according to the Final Rule. The reduction affects not only E/M services but also most procedures, such as repairs, lesion removal, ear irrigation, and joint injections.

Although all FPs will have to contend with the 4.4 percent conversion-factor decrease, the cut will affect each practice differently, says Chip Hart, marketer for The Physician's Computer Company, which supports and develops computer software to manage clinical and clerical duties. To determine the fee schedule's effecton each code, you should consider the:

1. Medicare conversion factor
2. geographic adjustments
3. individual code values.

As noted, the schedule changed the RVUs for some codes. This is the result of the on going refinement of the practice expense component to a resource-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 for 2003. Meanwhile, the NFPE values for 99391-99393 (Periodic comprehensive preventive medicine reevaluation and management of an individual) increased by 0.01 each.

The 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 during the course of a year, however, the decrease adds up.

"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," Hart says. For instance, wart removal code 17000 previously paid $62.62 unadjusted. For 2003, the code will pay $57.77, an 8 percent decrease. Office visits received either a 4 percent (99202, 99211, 99213) or 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.

For a comparison of the 2002 E/M rates to 2003's, see "CMS Cuts E/M Reimbursement Levels" on page 20.

To see what your practice can expect from the 2003 reductions, compare 2002's figures to 2003's. "You shouldrun your top-25 codes, figure what the reimbursement was supposed to have been in 2002, and compare it with thescheduled 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 American Academyof Family Physicians and your local, state and national medical or osteopathicsocieties, 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.