The Lynx Group

CMS Finalizes Payment Policies for 2013, Signaling a Shift toward Paying for Value

November 2012, Vol 3, No 8
Ross D. Margulies, JD, MPH
Health Policy Specialist, Foley Hoag, LLP
Jayson Slotnik, JD, MPH
Managing Partner
Health Policy Strategies, Inc.
Bethesda, MD

In this article we address the final payment rules issued on November 1, 2012, by the Centers for Medicare & Medicaid Services (CMS), the Physician Fee Schedule (PFS), and the Hospital Outpatient Prospective Payment System. These annual updates to Medicare payment rates for physicians and hospitals can have a dramatic impact on reimbursement and incentives within the Medicare program, but they also tend to impact trends in the commercial insurance market.

You previously read our summary of CMS’s payment proposals in the September issue of Value-Based Cancer Care, and, by and large, the final rules come as no surprise. In possibly the biggest change in payment rules, CMS is increasing payment for primary care specialties (and therefore decreasing payments to select other specialties) as a result of several changes in the way CMS is calculating payments in 2013.

Specifically, in large part because of a new set of payment codes for transitional care management services in the month after a patient is being discharged from a hospital, family physicians will receive a 7% payment increase in 2013. In addition, payments to primary care specialties will increase as a result of redistributions from changes in payments for services that are furnished by other specialties. Other healthcare professionals who provide primary care services, including internal medicine physicians, would receive a 3% to 5% increase in pay. Of note, the new set of codes for transitional care management services may be billed by any physician who provides the relevant services, including oncologists (CMS specifically cited oncology as a specialty that may take advantage of the new codes in the final rule).

An oncologist who is involved in the treatment of a patient—postdischarge from an acute care setting—with future medical decision-making, including communication with other healthcare professionals and assistance in scheduling any required follow-up, may be eligible to bill for the new transitional care management codes.

In our September summary of the proposed rule, we also noted CMS’s proposal in the 2013 PFS rule to reduce the payment for 2 radiation therapy services by as much as 20%. In this proposed rule, CMS indicated that based on information that was obtained from patients’ experiences regarding the length of intensity-modulated radiation therapy (IMRT) and stereotactic body radiation therapy (SBRT), CMS would reduce the procedure time for both treatment modalities to more accurately take into account actual patient experiences.

In a half sigh of relief to the rational oncology community, CMS slightly retreated from its original proposal. Although CMS will still cut payment rates for IMRT and SBRT services, the changes reflect an overall 7% reduction in payment for radiation oncology services and an overall 9% cut to radiation therapy centers, which is less than half of the 15% cuts for IMRT and 19% cuts for SBRT that were suggested in CMS’s original proposal.

Overall, both rules indicate a general shift in CMS’s policy toward paying for value. In particular, the new codes for transitional care management signal an increasing focus toward “whole patient” care. The oncology community can expect similar incentives to develop further in the commercial market in the wake of the current CMS decision.

Look for our analysis of the implications of the presidential elections for healthcare and oncologists in the next issue of this publication.

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