Sleight of hand: The SGR bill’s important policy changes

What would you think if I told you that Medicare will require laboratories to disclose to CMS payment rates from private insurers? Or that they will identify physicians who order a high volume of CT tests and require them to pre-authorize those tests in 2020?  How about that CMS will begin its own analysis of the time and cost of providing services in order to determine RVUs, a job currently done by the AMA RUC committee? Would you be surprised?  Or, at least surprised you hadn’t heard about it?  Both the House and Senate have passed HR 4302, which provides another temporary fix to the sustainable growth rate (SGR) formula and a delay in the implementation of ICD-10.

In the furor over the manner in which the SGR fix bill was passed by the House and the accompanying howling about the delay of ICD-10, important policy changes included in the bill were left unmentioned. And some professional societies who had advocated for the ICD-10 delay weren’t happy with the bill, citing dismay at another temporary fix.  Perhaps there were objections to the three huge policy changes in the bill.

Section 216 is  “improving Medicare policies for clinical diagnostic laboratory tests.” The first section title, however, tells a fuller tale. “Reporting of private-sector payment rates for establishment of Medicare payment rates.” And the policy is just that. It requires that beginning in January 2016 laboratories report to Medicare their payment rates from private insurance companies. Laboratories will be required to report both the payment and volume including discounts on all non-capitated business. If the lab has multiple rates with one payer all of those rates must be reported.  A payer is defined as a health insurance company, a Medicare Advantage plan or Medicaid managed care plan. I don’t need to tell you why Medicare wants this information, do I? But, they aren’t being coy. It is in order to adjust their payment rates for lab services.

Section 218 will dismay some physicians who order high volumes of CT tests. (Whoever develops the titles for these sections is pure genius. This section is entitled “quality incentives for computed tomography diagnostic imaging and promoting evidence-based care.”) CMS wants to recognize the appropriate use of these technologies and be sure they’re used only for developed or endorsed indications. Starting in 2017 they will identify no more than 5% of ordering physicians who are outliers in ordering these tests and who have low adherence to the evidence-based guidelines. Beginning in 2020, it will require prior authorization for these high users to order these tests.  Exceptions are made for emergency care.

Most of you reading this know how relative values for CPT codes are set. The American Medical Association’s relative value update committee, commonly known as the RUC, researches the time and costs for providing every CPT code. They pass these values on to CMS, which accepts most of them without changes. Section 220 of this bill gives CMS authority to develop its own values and use them, instead.  The bill provides only $2 million each year for Medicare to collect information about the time expense and overhead of providing CPT services, so they can’t look at every CPT code, and will focus on codes they identify as misvalued.   Since some primary care groups have long complained about the RUC process as dominated by and favoring specialists, I expected cheering from them about this section of the bill.

This little bill is only 123 pages long. It provides a 0.0% change to the conversion factor, not a 24% decrease.  It addresses ICD-10 in one sentence, stating that CMS may not implement the ICD-10 code set prior to October 1, 2015. It extends policies.  But, perhaps, to paraphrase John Stewart you need a moment of Zen after the uproar about the bill.

Here it is,  a quote from the bill, your moment of Zen.

“Section 1898(b)(1) of the Social Security Act (42 U.S.C. 1395iii(b)(1) is amended by striking “$2,300,000,000” and inserting “$0.”

Betsy Nicoletti is president, Medical Practice Consulting and author of Auditing Physician Services. She blogs at Nicoletti Notes.

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  • Dr. Drake Ramoray

    I don’t necessarily see the big deal in reporting lab values. For our in house lab Medicare pays worse than everybody (even Medicaid in my state, although actually getting reimbursed by Medicaid is a different story). It is my understanding that most insurance companies set their rates based on a percentage of Medicare, so other than te government spending money to figure out they pay less than everyone else, I don’t really see the point.

    The imaging component is quite a bit different as it doesn’t sound like it will take into account regional or specialty variation. I can’t find the article at the moment but I recall a neurologist who specializes in MS who was being hassled for ordering “too many MRI’s” when compared to his neurology colleagues.

    • buzzkillerjsmith

      I too don’t give a rip about the labs. Their problem, not mine.

      CT scans? Ho hum. If you’re in the middle of the pack you’ll be fine. If you’re an outlier, you might want to find out why before the punitive changes but if that can’t be done and it gets to be too much of hassle, stop seeing the kinds of pts who might require preauths for CT scans.

      I suspect the neuology/MRI thing would be worked out if docs and pts squawk. Maybe not, but I really think that by 2020 we all will be hurting so bad from other stuff that it won’t be that big of a deal. If you’re spleen is ruptured a hangnail become less important. I could be wrong here.

      Anything that kills the RUC, buries it in a shallow grave, and then tamps the earth down is fine in my book.

      • Dr. Drake Ramoray

        I would agree. Just about anything would be better than the RUC for primary care docs and non-procedural specialists (something the author pointed out). That being said my crystal ball thinks that it’s just going to e everyone else cut down to our level of compensation and busy work. Even the current proposals freeze pay (or very minimal increases) for the next 5-10 years. I have often thought just for fun at our next staff meeting I will let my employees know thy won’t get a raise for the next decade.

        The exception that will be worse than the RUC is pay for performance. Which is exactly where we are headed. Surprise!!

        • buzzkillerjsmith

          I hope you’re wrong but you might very well be right.

    • LeoHolmMD

      I hope you are right…just keep the AMA out of it.

  • Deceased MD

    Not sure why CMS has to have a bill passed to question payments. Why don’t they question the costs that RUC brings forth? I think 90 percent of the time they don’t.

  • betsynicoletti

    For physician groups, I think that CMS taking on valuing some codes is the big news that was in the bill. Labs of course will care about releasing their payment amounts, but that won’t affect most physician groups. I do think it has the potential to be good for primary care.