There is a lot for community oncology to absorb in the 2013 Medicare Physician Fee Schedule proposed rule that CMS just published for comment. The top line in the media is that primary care MDs will receive a 7% pay increase. Of course, that would be offset by the 27.4% fee cut to all physicians if Congress does not act by yearend to patch the failed SGR-based reimbursement system. Although oncology is slated for a 1% pay cut to Medicare services, radiation and imaging are targeted for severe cuts.
 
There is a lot to absorb but below we provide a top-line summary, understandable for all, followed by a more detailed discussion. Additionally, COA will be providing a tool for you to assess the impact the cuts to your practice. 
 
Summary
 
Primary care will receive a 7% payment increase.
 
Medicare physician-related fees will be cut 27.4% cut (the conversion factor set at $24.7124, down from $34.0376) on 1/1/13 unless Congress acts to avert it.
 
Medical oncology will be cut 1%, as scheduled; however, this is significantly less than the 21% cut CMS originally proposed that community oncology successfully fought to overturn.
 
Radiation oncology will be cut by 15% and entities with a specialty code of radiation therapy center cut by 19%.
 
Diagnostic imaging will be cut by 4% due to expansion of multiple procedures same day interpretation.
 
The failure of Congress to solve the debt crisis triggers sequestration (automatic budget cuts), which will reduce all Medicare payments, including drugs, by 2% on top of any other Medicare-related cuts.
 
Medicare drug reimbursement to remain at ASP + 6% for physicians and increased from ASP + 4% to 6% for hospitals.
 
CMS acknowledges the relationship between reimbursement and drug shortages as it proposes to prevent Medicare payment for drugs in short supply to be decreased in cases where ASP exceeds AMP (average manufacturer’s price) by 5% for 2 consecutive quarters.
 
Misvalued CPT codes with annual allowed charges of $100,000 will be reviewed.
 
PQRS pays a .5% payment bonus for participation in 2013 and measures will be added for oncology.
 
Value-based purchasing modifier methodology will be implemented with the base year being 2013.
 
CMS is still evaluating implementation of the GPCIs, which are payment adjustments to Medicare-defined regions of the country.
 
Further detail on some of the proposed revisions highlighted above from the changes to payment policies and rates under the 2013 Medicare Physician Fee Schedule proposed rule (MPFS) appear below.  CMS will accept comments through September 4, 2012.  COA will be submitting comments and providing additional information/insight for practices to submit their own comments, which will be critical.
 
Detail on Key Provisions
 
Sustainable Growth Rate (SGR)
Effective January 1, 2013, the Medicare Conversion Factor reflects a 27.4% cut, unless Congress takes action on the flawed SGR system before that time.  CMS estimates the 2013 MPFS conversion factor will be set at approximately $24.7124, reflective of a budget neutrality adjustment, down from $34.0376 this year.
 
Specialty Cuts
Specialists will experience a fee cut in order to pay for the payment boost to primary care, NPs, and PAs.  Oncology is looking at a 1% cut. Please keep in mind that, in addition to the potential 1% cut to the specialty of oncology/hematology, we also face the threat of sequestration being enacted, which levies cuts in Medicare payments to providers (those cuts are limited to 2 percent of such payments in any year, or about $10.8 billion in 2013), inclusive of drugs.
 
Practice Expense RVUs
Year 2013 will complete the fourth and final year transition to new Practice Expense Relative Value Units (PE RVUs) utilizing Physician Practice Information Survey (PPIS) data.  Note that in calendar year 2010 for oncology, clinical laboratories, and independent diagnostic facilities, CMS used the supplemental survey data to determine PE/HR values.  The Medicare Modernization Act also requires CMS to use the medical oncology supplemental survey data submitted in 2003 for oncology drug administration services. 
 
ASP
While the MPFS does not alter ASP + 6% reimbursement for drugs, the hospital outpatient proposed rule for 2013 proposes an increase in the payment rate for most separately payable drugs and biologicals to ASP + 6% for hospitals (up from the current 2012 rate of ASP + 4%).

Potentially Misvalued Codes
CMS proposes to review Harvard-valued CPT codes with annual allowed charges of $10 million or more as a part of the potentially misvalued codes initiative. They are prioritizing for review CPT codes that have annual Medicare allowed charges of $100,000 or more, include direct equipment inputs that amount to $100 or more, and have PE procedure times of greater than 5 minutes.  One such code is CPT 77336 — continuing medical physics consultation, including assessment of treatment parameters, quality assurance of dose delivery, and review of patient treatment documentation in support of the radiation oncologist, reported per week of therapy.  Of note, CMS uses “time to complete” information posted directly on the ASTRO site to justify its proposed reductions in reimbursement relative to time to complete certain procedures.
 
Radiation/Imaging Cuts; Time Component CPTs Review
The impact of the MPFS on radiation oncology is projected to be a negative 15%, with entities having a specialty code of radiation therapy center in the Medicare physician/supplier enrollment file experiencing an ever more drastic 19% reduction.  Diagnostic imaging will be cut by 4%. Reducing the interest rate assumptions used to establish PE expense payments will drastically impact procedures such as radiation and advanced imaging which are directly linked to high cost capital equipment expenditures. Table 9 in the fee schedule (services with stand alone PE procedure time) lists services with a time component up for review.
 
Primary Care Emphasis
Included in the MPFS is a 7% increase in payments to family physicians, a 3-5% payment increase to other primary care practitioners, and a new procedure code to recognize additional resources community physicians must utilize on behalf of patients as they monitor patients more closely in the 30 days following a hospital discharge
 
Drug Pricing and Drug Shortages
CMS is intent on maintaining the thresholds for widely available market price (WAMP) and average manufacturer’s price (AMP) at 5% for drugs. This means that in any 2 consecutive quarters where ASP exceeds AMP for a drug by 5% or greater, AMP will be used instead of ASP, reducing reimbursement for that drug. However, in the MPFS, CMS is acknowledging the relationship between Medicare drug reimbursement and drug shortages because it is proposing to prevent this substitution — thereby, lowering drug reimbursement — for drugs in short supply.
 
PQRS Oncology Measures
The Physician Quality Reporting System (PQRS) will continue in 2013 with the potential addition of some notable cancer quality measures:
 
Medical and Radiation — Pain Intensity Quantified                   
Medical and Radiation — Plan of Care for Pain                           
Radiation Dose Limits to Normal Tissues                                       C
Cancer Resection — Percentage of surgical patients aged 18 years and older undergoing resection for lung or esophageal cancer who had clinical staging provided prior to surgery                                                                         
 
Cancer Stage Documented: Percentage of patients, regardless of age, with a diagnosis of breast, colon, or rectal cancer who are seen in the ambulatory setting who have a baseline AJCC cancer stage or documentation that the cancer is metastatic in the medical record at least once within 12 months                
 
Performance Status: Prior to Lung or Esophageal Cancer Resection: Percentage of patients aged 18 years and older undergoing resection for lung or esophageal cancer who had performance status documented and reviewed within 2 weeks prior to surgery. 
 
CMS proposes integrating reporting on quality measures under PQRS with reporting requirements under the EHR incentive program, as well as several expansions to the Physician Compare website including:  Reducing minimum reporting threshold from 25 to 20 patients; publicly reporting 2013 patient experience data for groups participating in the 2013 PQRS GPRO or who are part of an ACO under the Medicare Shared Savings Program on the Physician Compare website no earlier than 2014.
           
Quality Measures
Beginning with reporting periods occurring in 2014, CMS is proposing 45 individual quality measures specified in Table 33 available for reporting under the PQRS.  Notable cancer related measures include:  Prostate Cancer: Three Dimensional (3D) Radiotherapy and Advanced Care Plan and Patient and Family Engagement.
           
CMS is proposing 5 measures available for reporting in PQRS under the patient and family            engagement domain beginning in 2013 or 2014.  Of these measures, 2 are cancer related measures that are NQF-endorsed, and therefore satisfy the requirement that PQRS provide consensus-based measures for reporting under section 1848(k)(2)(C)(i) of the Act:
 
Oncology: Medical and Radiation — Plan of Care for Pain
Oncology: Medical and Radiation — Pain Intensity Quantified
 
Value Based Modifier
The value-based modifier adjusts payments to providers based upon quality of care furnished to Medicare beneficiaries relative to cost.  Note the base year for this value modifier will be 2013 and applies to groups of 25 or more.  The physician payment rates will not actually be employed until 2015.  The rule also proposes a system wherein those groups with higher quality and lower costs are paid more and, conversely, groups with lower quality and higher costs are paid less.  Again, this modifier applies to all groups of physicians with 25 or more eligible professionals.
 
Geographic Practice Cost Indexes (GPCIs)
CMS continues to evaluate CPCIs employing the Institute of Medicine (IOM) report relating to GPCI methodology. CMS, by statute did not employ the proposed 2012 fee schedule changes to the GPCI floor, which would have resulted in drastic reimbursement cuts to many areas of the country.  For 2013, CMS proposes to leave untouched Alaska and the frontier states of Montana, North/South Dakota, Nevada, and Wyoming.  CMS is currently waiting for pending reports from the IOM and Medicare Payment Advisory Commission (MEDPAC) on GPCI implementation/methodology; however, in the MPFS request feedback on recommended changes to the GPCIs based upon studies currently available. Unless a reprieve is granted yet again, there is the possibility of additional reimbursement cuts due to GPCI implementation.
 
The IOM recommends replacing the current work GPCI methodology with a regression-based approach.  They currently use three steps to calculate the work GPCI.  These steps include:
           
(1) Selecting the proxy occupations and calculating an occupation-specific index for each proxy.
(2) Assigning weights to each proxy-occupation index based on the each occupation’s share of total national wages to create an aggregate proxy-occupation index. 
(3) Adjusting the aggregate proxy-occupation index by a physician inclusion factor to calculate the final work GPCI.
 
COA will provide more information/insight in the coming weeks on the MPFS. Understand that in addition to the potential 1% cut to the specialty of oncology/hematology, we also face an additional SGR cut of 27.4% if no patch is enacted, as well as the threat of sequestration being enacted which would cut all of Medicare by 2% (those cuts are limited to 2 percent of such payments in any year, or about $10.8 billion in 2013). This includes cutting drug reimbursement to a rounded ASP + 4%.
 
In addition to the MPFS, CMS also issued a proposed rule for hospital outpatient departments (HOPPS), which would receive a 2.1% payment rate hike in 2013, while ambulatory surgery centers would see payments increase by 1.3%. There is also the proposed increase to drug reimbursement to ASP + 6%, up from 4%. The proposals would affect outpatient departments at more than 4,000 hospitals and about 5,000 Medicare-certified ambulatory surgery centers (ASC). With the proposed hikes, CMS predicts payments for services provided to Medicare beneficiaries in outpatient departments will total roughly $48.1 billion next year and payments to ASCs will total almost $4.1 billion.