September 2003

Medicare proposes 2004 fee schedule

The Centers for Medicare and Medicaid Services (CMS) announced a proposed rule that will update payment rates under the Medicare physician fee schedule for 2004 and decrease physician payments by 4.2 percent.

The physician fee schedule is updated on an annual basis according to a formula specified by statute, which is designed to rein in the growth in outlays for physician services. The formula requires CMS to adjust the update up or down depending on how actual expenditures compare to a target rate, called the sustainable growth rate or SGR.

The SGR in turn is calculated based on medical inflation, the projected growth in the domestic economy, projected growth in the number of beneficiaries in fee-for-service Medicare, and changes in law or regulation. The projected decrease in fees is 4.2 percent, but this rate will be updated before the final rule.

According to Garrett Cuneo, executive vice president of the American Chiropractic Association, “A quick read of the 2004 Medicare fee schedule indicates that the relative values for the CMT codes did not change. Our doctors were among 23 groups that had no change in their relative value units. Fifteen other physician and supplier groups had their relative value units decreased from anywhere up to 3 percent. Meanwhile, fourteen physician and supplier groups had an increase in their relative value units. Most increases were 1 percent or 2 percent, while one group, Oral/Maxillofacial Surgery, received an 8 percent increase in its relative value units. All services are hit by an overall 4.2 percent decrease in the dollar conversion factor.”

CMS is proposing to make several changes to the Medicare payment methodology in 2004. The proposed rule re-bases and revises the Medicare Economic Index (MEI), which measures inflation in physician practice costs and general wage levels. The MEI is one of the key components used to update physician payment rates.

The agency is proposing to change the base year used to derive the structure of costs for physician practices for the MEI from 1996 to 2000. It also wants to change the data sources, cost categories and price proxies used in the MEI.

The proposed rule was published in the August 15 Federal Register. CMS will accept comments on the proposals until October 7, and publish a final rule later this year.

Interested parties can read and comment on the proposed rule at http://cms.hhs.gov/physicians/.

Sources: Centers for Medicare and Medicaid Services, www.cms.gov; American Chiropractic Association.

Industry News from:
Chiropractic News from: