CMS Proposes Changes to Physician Fee Schedule Methodology

CMS has issued a notice proposing changes to the Medicare Physician Fee Schedule (MPFS) that will improve the accuracy of payments to physicians for the services they furnish to Medicare beneficiaries. The proposed notice includes substantial increases for “evaluation and management” services, that is, time and effort that physicians spend with patients in evaluating their conditions, and advising and assisting them in managing their health. The changes reflect the recommendations of the Relative Value Update Committee (RUC) of the American Medical Association. 

“It’s time to increase Medicare’s payment rates for physicians to spend time with their patients,” said CMS Administrator Mark McClellan, MD, PhD. “We expect that improved payments for evaluation and management services will result in better outcomes, because physicians will get financial support for giving patients the help they need to manage illnesses more effectively.”

The proposed notice addresses two components of physician payments under the MPFS: (1) a comprehensive review of physician work relative value units (RVUs), as well as (2) a proposed change in the methodology for calculating practice expenses. Other changes in physician payment policy will be addressed in a separate proposed rule to be published at a later date. CMS will respond to public comments on both sets of proposals and announce final policies in a rule to be issued in early November. The changes will apply to payments for services furnished to Medicare beneficiaries beginning with 2007.
 
The proposed notice will appear in the June 29 Federal Register. Comments will be accepted until August 21, 2006. CMS responses to public comments on the proposals in this notice will be combined with those for the upcoming MPFS notice of proposed rulemaking in a final MPFS rule scheduled for publication this fall. If adopted, the RVU revisions in this proposed notice would be fully implemented for services to Medicare beneficiaries on or after January 1, 2007, while the practice expense revisions would be phased in over a 4-year period.