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September 1999
Volume 63 |
Number 9
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WASHINGTON REPORT
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| HCFA Issues Proposed
Rule on Expenses, "-25" Modifier and Discontinuous Time |
Michael
Scott, Director
Governmental and Legal Affairs
On July 22, the Health Care Financing Administration (HCFA) issued
a proposed rule setting forth several changes in payment policy
under the Medicare Fee Schedule (MFS) for calendar year 2000.
Those portions of the rule of direct interest to ASA members deal
with implementation of resource-based values under the MFS for
malpractice insurance costs, refinement of resource-based practice
expense values first implemented last January 1, use of the CPT
modifier "-25" and proper calculation of discontinuous anesthesia
time. Of particular concern is HCFA's estimate that reimbursement
to anesthesiologists will progressively decline by 8 percent between
2000 and 2001, based upon its proposed practice expense refinements.
Malpractice Expense
When the MFS was placed into effect in 1992, allowances
for malpractice insurance costs were not derived from actual malpractice
premium data, but rather were calculated from existing charge-based
data. The terms of the Balanced Budget Act of 1997 (BBA) required
HCFA to develop resource-based allowances for use beginning in
calendar year 2000, and the proposed rule responds to that requirement.
HCFA's proposed allowances are based on a three-step process under
which a national average premium for each specialty is calculated,
a risk factor for each specialty is factored in and then malpractice
RVUs for each code are calculated (in the case of anesthesia codes,
malpractice cost is calculated as a percentage of the anesthesia
conversion factor).
Based upon national average premiums for the period 1990-95,
during which the anesthesiology average premium dropped by an
annual average of 6.5 percent, HCFA calculates that after making
the necessary adjustments to achieve budget neutrality, implementation
of the resource-based malpractice expense values will negatively
impact anesthesiology reimbursement by 0.1 percent. At the same
time, HCFA notes its intention to collect more recent premium
data, a step that could conceivably modestly affect HCFA's proposed
change for the specialty.
Practice Expenses
As in the case of malpractice insurance expenses, physicians'
other practice expenses accounted for under the MFS were originally
derived from charge-based data. In 1994, however, Congress directed
HCFA to develop resource-based practice expense data and to place
these values into effect beginning in 1998. Under the terms of
the BBA, the effective date was delayed to January 1, 1999, with
the new resource-based values to be phased in over a three-year
period and become fully effective January 1, 2002. Over this period,
HCFA was required to engage in a process of continuous refinement
of the practice expense values.
HCFA's practice expense values for 1999 were derived from
the AMA's Socioeconomic Monitoring System (SMS) survey data on
physician practices in various specialties as well as from information
on direct expenses developed by several Clinical Practice Expense
Panels (CPEPs) previously appointed by HCFA. Using the so-called
"top down" method of determining expenses associated with each
procedure, HCFA essentially assumed that the SMS data provided
a reasonably accurate method of allocating relative resource costs
among the specialties, and that the allocation of direct costs
to specific procedures within the specialty could be accomplished
based upon the CPEP data.
Included in the practice expense calculations for 1999
are certain CPEP-developed expenses for the use of physician-employed
clinical personnel to provide care for hospital patients. Of specific
interest to the specialty, the CPEP anesthesiology panel had included
inputs of up to 195 minutes of clinical staff time per procedure
in a facility setting, divided among a registered nurse, a physician
assistant and an anesthesia technician. In the July 22 proposed
rule, HCFA now proposes to disallow these expenses, either on
the grounds that Medicare already pays for such personnel through
Part A, that use of such personnel is not typical or that a literal
reading of the law does not allow these expenses to be included.
As noted, HCFA estimates that elimination of these direct
costs will result in an 8-percent decline in reimbursement to
anesthesiologists under Medicare. Since practice expenses currently
represent about 21.5 percent of total reimbursement for anesthesiology
services, the proposed cut will, when fully phased in, apparently
reduce currently allowed anesthesiology practice expenses by about
37 percent overall.
HCFA expressly states in the proposed rule that because
it cannot specifically identify these disallowed direct costs
in the SMS data, it is not adjusting the SMS allocations among
specialties. If this is so, then the only explanation for the
decline in reimbursement is that disallowed practice expenses
are being shifted from anesthesia codes to other procedures performed
by anesthesiologists such as evaluation and management (E&M)
and pain management codes, which are also performed by other specialists.
As of this writing, ASA has not been able to verify the accuracy
of this conclusion, and HCFA personnel have not been able to provide
clarifying data.
ASA intends, in its comments on the proposed rule, to
challenge the propriety of HCFA's action. Recent survey data available
to ASA confirms the fact that many anesthesiology practices do
employ clinical personnel, not otherwise paid for by HCFA, to
assist in the provision of anesthesiology services. ASA will be
working with its consultant, Compass Health Analytics of Boston,
both to examine HCFA's methodology and to attempt to buttress
its argument for appropriate recognition of clinical assistance
expenses.
Use of the CPT Modifier "-25"
AMA CPT-4 contains a modifier "-25" to identify a "significant,
separately identifiable evaluation and management service by the
same physician on the same day of the procedure or other service."
HCFA has recognized the appropriateness of the modifier for some
time and, if the modifier is used, has allowed payment for such
an E&M service "above and beyond the preoperative and postoperative
work of the procedure" provided on the day of a global surgery.
HCFA's proposed rule adds the clarification that for procedures
where the global surgery rules do not apply, a provider may only
bill for a separately identifiable E&M service by using the
"-25" modifier. According to HCFA, requiring use of the modifier
will assist carriers in claims adjudication, eliminate unnecessary
denials and alert physicians to the need for documentation in
the medical record to support additional payment.
Discontinuous Anesthesia Time
Responding to pressure from ASA, HCFA's proposed rule
also contains specific instruction on billing for anesthesia time
when that time is discontinuous, that is, when for some reason
there is a break in the continuous presence of the anesthesia
provider. Although accounting for this time has not been a problem
with most Medicare carriers, a few have simply refused to develop
a policy on the issue, thus making HCFA's intervention desirable.
Under the MFS, anesthesia services are paid on the basis
of base (complexity) units and by the use of 15-minute time units
counting from preparation of the patient for anesthesia care and
ending when the patient may be safely placed under postoperative
care. In this continuum, however, there may be periods when a
patient can be safely observed by nonanesthesia personnel, as
between the time a patient receives regional anesthesia and is
moved to the operating room, or between the time the patient is
being prepared for induction and anesthesia is actually induced.
HCFA proposes to revise its current reimbursement regulations
to provide that "In counting anesthesia time, the anesthesia practitioner
can add blocks of anesthesia time around an interruption in anesthesia
time as long as the anesthesia practitioner is furnishing continuous
anesthesia care within the time periods around the interruption."
The agency cautions, however, that this addition should not be
interpreted as meaning that it now will pay for time units for
the pre-anesthesia examination and evaluation, services for which
payment is included in the anesthesia base units.
House Begins Month-Long Recess Without Action on Managed
Care
With chances for a compromise on patient protection appearing
increasingly dim, House Speaker Dennis Hastert (R-IL) determined
not to schedule floor debate on competing managed care bills prior
to the August recess. The legislative impasse was formed by the
breakdown in discussions between Thomas J. Bliley, Jr., (R-VA)
and John D. Dingell (D-MI), Chairman and Ranking Minority Member,
respectively, of the House Commerce Committee, and rejection by
moderate Republicans of a leadership attempt to fashion a bill
drawn largely from the weak bill passed by the Senate in July.
Immediately prior to recess, however, Congressman Charlie Norwood
(R-GA) and Congressman Dingell introduced the Bipartisan Consensus
Managed Care Improvement Act (H.R. 2723), which by the time of
this writing had attracted 21 Republican co-sponsors -- more than
enough, when combined with the Democrats, to assure passage of
the bill. At the same time, however, Congressmen Tom Coburn (R-OK)
and John Shadegg (R-AZ) announced development of their own GOP
"compromise" bill and sought endorsements from the medical community.
No one is certain which bill, if any, will actually be brought
to the House floor after the recess.
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