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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