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From AWV to SGR – here are details you’ll want to know about Medicare for 2012
e-Reports, Nov. 21, 2011
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Below is a brief AMA analysis of the 1,235-page final rule, with a focus on key points raised in an AMA letter to the Centers for Medicare & Medicaid Services Untitled document

Sustainable Growth Rate (SGR)

On Nov. 1, CMS released the 2012 Medicare physician payment schedule final rule, indicating that, absent congressional action, payments will be cut 27.4 percent Jan. 1, instead of 29.5 percent as in the proposed rule. The 2012 rate represents accumulated cuts over time as Congress passed short-term SGR patches. The 2012 component of the total cut was projected to be -6.1 percent but dropped to -3.3 percent due to reduced 2010 SGR spending per enrollee. CMS projected a 5.5 percent increase but it was 4.2 percent.

Also, the Medicare Economic Index grew 0.6 percent instead of the projected 0.3 percent. A positive 0.2 percent budget neutrality adjustment resulted due to the Relative Value Scale (RVS) Update Committee’s work on misvalued codes.

An impact table the AMA prepared does not show effects of the -27.4 percent SGR cut but does show impact of other policy changes on various specialties; find the table here.


CMS finalized its proposal for the 2012 and 2013 incentive and 2013 and 2014 penalty programs. As with the 2012 penalty, physicians must report 10 times during the first six months of 2012 and 2013 to avoid e-prescribing penalties in subsequent years.

Program improvements include allowing use of a certified electronic health record (EHR) to e-prescribe and making it easier to avoid penalties by not requiring physicians to link e-prescribing codes to qualifying visits and allowing application for hardship exemptions online.

Relative Value Scale Update Committee (RUC)

RUC members persuaded CMS that resources involved in hospital observation care and hospital inpatient visits are equivalent. CMS accepted 87 percent of the RUC’s 252 recommendations for the 2012 payment schedule for new and revised codes and those considered potentially misvalued, as well as 75 percent of the RUC’s 290 recommendations for the fourth Five-Year Review. That review’s acceptance rate would have been 90 percent if CMS had not largely ignored refinement panel recommendations to provide commenters an appeals process.

CMS has historically accepted the panel’s recommendations, but accepted only a third of their recommendations for 2012.

Physician Quality Reporting System (PQRS)

CMS finalized its proposal to provide interim feedback reports for physicians reporting individual measures and measure groups through claims-based reporting for 2012 and beyond. These reports will be a simplified version of the annual feedback reports CMS currently provides and will be based on claims for the first three months of each program year. Interim feedback reports will be provided during the summer of each program year. CMS finalized its proposal to use 2013 as the reporting period for the 2015 PQRS penalty. If CMS determines a physician or group practice has not satisfactorily reported quality data for the 2013 reporting period, 2015 payments will be reduced 1.5 percent.

Value Modifier

CMS finalized its proposal to base payment adjustments in 2015 on how an as-yet-unidentified subset of physicians perform in 2013 on cost and quality measures still not fully determined - using a methodology to be finalized in November 2012. Quality measures for modifiers will be based on PQRS and EHR measure sets, but as noted in the rule, the measures will be updated in 2013 and could change.

Cost measures for the modifier will be based on average total per capita cost for the physician’s patients and per capita cost for chronic obstructive pulmonary disease, heart failure, coronary artery disease and diabetes.

Multiple Procedure Cuts

CMS scaled back its proposal to apply a 50 percent reduction to the professional component of all but the highest valued code when more than one procedure on a list of 119 imaging services is performed on the same patient on the same day. CMS did not agree with comments that across-the-board multiple procedure cuts are inappropriate because the degree of overlapping work associated with these cases varies from service to service. CMS did concede its own further analysis did not support a 50 percent cut, and the final rule limits to 25 percent the multiple procedure payment reduction on 119 CT, MRI, MRA and ultrasound codes.

Geographic Practice Cost Indexes (GPCIs)

CMS finalized changes with minor revisions and will continue using apartment rental data as proxy for physician office rents. CMS promised detailed impacts of GPCI changes on its website.

Lab Test Signatures

CMS retracted the requirement for physicians to sign lab requisitions, a final step in the agency’s retreat from this mandate that began with postponing in 2011 and then agreeing not to enforce it. CMS has now reinstated its previous policy that physician signatures are not required on requisitions.

Annual Wellness Visit (AWV)

CMS is increasing the relative values for the AWV codes to recognize resources associated with adding a health risk assessment to the service requirements. CMS is continuing its policy of not covering a physical exam as part of these services.

Read the final rule on the Federal Register website.

See the AMA letter to CMS.

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