SENATE PASSES ONE MONTH PATCH FOR PHYSICIAN FEE SCHEDULE [11-19-10]

Filed under: Industry Updates — Editor @ 1:48 pm

Late yesterday the Senate passed by unanimous consent a bill (The Physician Payment and Therapy Relief Act of 2010) to extend the existing 2.2 percent increase in the physician fee schedule through December 31, 2010. If the House passes the bill after the Thanksgiving recess, the 23 percent reduction in the fee schedule set for December 1, 2010 will be avoided. The legislation also provides that the payment increase will be disregarded for purposes of calculating Sustainable Growth Rates for periods after December 31, 2010. House Majority Leader Hoyer announced last night that the House would consider the bill on the floor on November 29th.

The estimated cost of the one month patch is $1 billion and it is paid for through a change in the multiple payment reduction policy for therapy services. The bill plays off of the MPPR policy set out in the physician fee schedule final rule promulgated last week by the Centers for Medicare and Medicaid Services. The final rule reduced by 25 percent the practice component of the second and subsequent therapy services furnished by a provider to the same beneficiary on the same date. The legislation passed yesterday would reduce the scheduled reduction in the practice expense component from 25 percent to 20 percent. In a significant change in policy, however, the bill removes the budget neutrality provision in the regulation so that the savings from the 20 percent reduction are returned to the federal government (hence the pay for) instead of being reallocated to other portions of the physician fee schedule.

The very short-term patch means, of course, that Congress will have to act again before the end of the year in order to prevent an estimated 25 percent reduction in the fee schedule from taking effect on January 1, 2011. Congress also needs to pass legislation to extend the exceptions process for the outpatient therapy caps before December 31, 2010. The committees of jurisdiction are already at work developing a 1 year fee schedule fix which will cost approximately $17 billion. Pay fors under consideration for this bill include revenue retrieved from individuals who have received erroneous payments of insurance subsidies, another reduction in the Medicare Improvement Fund, changes in some coding procedures, and reductions for certain medical equipment under the competitive bidding program.

The temporary fix is a mixed bag for rehabilitation providers. On one hand it avoids a draconian reduction in payments on December 1st. On the other, it puts in statute the MPPR reduction—a policy which rehabilitation providers of all types oppose.

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