12-21-06
How 2007 Medicare Part B Changes Will Affect You
[Note: On December 7, 2006, after significant lobbying efforts by the American Occupational Therapy Association (AOTA), the therapy community, and other stakeholders, the therapy cap exception process was extended to apply from January 1, 2007-December 31, 2007, through a provision in H.R. 6111, the Tax Relief and Health Care Act of 2006. This law also will have a positive affect on the rate amounts discussed in this article, which was written before the legislation was enacted. At this time, we do not know the extent of the changes on the payment amounts. The policy discussed below is correct, but you can expect the payment rates to increase from those presented in the charts, after the Centers for Medicare& Medicaid Services (CMS) publishes new regulations based on H.R. 6111.]
The following is a summary of the provisions of the current CMS-published notice (November 1, 2006) that will have a major impact on payment for occupational therapy services in 2007. Please see the Cap Action Center to see how you can advocate with your congressional representatives.
The 2007 Revisions to Payment Policies Under the Physician Fee Schedule can be viewed on the Centers for Medicare & Medicaid Services (CMS) Web site.
Publication in the Federal Register was expected on December 1, 2006, with an effective date of January 1, 2007.
Changes to Components of the Fee Schedule Formula
[Note: With the passage of H.R. 6111, the combined decreases to the physical medicine and rehabilitation (PM&R) rates will not be as severe as the -10% originally projected. Until CMS publishes a revised rule, the actual dollar amounts and percent differentials from 2006 are unknown. We have indicated below where the effect on the rates can be inferred.]
The significant decreases (estimated at -10% for physical medicine and rehabilitation [PM&R]) in projected rates for 2007 codes result from the following changes in the fee schedule computation.
- Decrease in the Conversion Factor (CF) due to methodology for computing the sustainable growth rate (SGR): Based on an estimated 10% increase in Medicare spending for physicians' services from 2004 to 2005, the CF will decrease 5.0% (from $37.8975 in 2006 to $35.9848 in 2007). [According to H.R. 6111, the 2007 CF will be "frozen" at the 2006 rate of $37.8975, which eliminates the 5% decrease due to the SGR.]
- Application of a Budget Neutrality Adjustment (BNA): All CPT code rates have been decreased due to the application of a budget neutrality adjustment (BNA). The BNA is a variable that is applied under law when significant changes to work values result in an expenditure difference of more than $20 million from the preceding year. Work value increases have resulted in an anticipated increase of about $4 billion in Medicare expenditures in 2007. To implement this requirement, CMS has added a BNA that reduces the work relative values by 10.1% across the board.
- Reductions to Geographic Practice Cost Indices (GPCIs) in specific locations: The GPCIs consist of index factors that reflect the geographic differences in the costs of work, practice expense, and malpractice expense compared to the national average costs of each of these components. Previous legislation (section 412 of the MMA amended section 1848[e][1] of the Act) temporarily adjusted the work GPCIs to bring all indices up to a minimum level. This temporary fix expires December 31, 2006. For many payment localities this change has no impact on payment; however, the rates for a number of payment localities will be reduced due to this change. [Note: the GPCI floor of 1.0 has been extended through December 31, 2007.]
- Changes to the Practice Expense (PE) Methodology: For the calendar year (CY) 2007 fee schedule rates, CMS will begin transitioning to a new "bottom-up" method to determine PE relative value units (RVUs). The change in PE methodology yields lower PE values in some codes that occupational therapists report and higher values in others, with a combined increase of 1% in 2007. If no further changes in the PE "bottom-up" methodology are forthcoming, the full implementation of the PE changes will result in an overall increase of 6% in 2010. The source of direct practice expense data and the methodology is described in the notice. Transition will be over a 4-year period, with the full impact of the PE changes effective beginning CY 2010. During the transition, the PE RVUs will be calculated based on a blend of the current RVUs (which use a "top-down" approach) and RVUs calculated using the proposed methodology (i.e., 25% in CY 2007, 50% in CY 2008, 75% in 2009, and 100% starting in CY 2010).
- CY 2007 Physician Fee Schedule Formula
The new formula for computing the fee schedule rates for 2007 is for each CPT code:
$$ = [(RVUwork x .8994BNA x GPCIwork) + (RVUPE x GPCIPE) + (RVUmal x GPCImal)] x CF
Where:
RVU = relative value unit
BNA = budget neutrality adjustment
PE = practice expense
Mal = malpractice expense
GPCI = Geographic Practice Cost Index
CF = conversion factor (the dollar amount computed by CMS to assure budget neutrality)
The following are examples of the impact of work, PE, and BN changes on specific codes (does not include GPCI adjustments).[Note: The 2007 amounts will increase somewhat as a result of H.R. 6111.]
|
CPT Code |
2006 Payment Rate |
2007 Payment Rate |
|
97003 |
$81.10 |
$71.94 |
|
97535 |
$29.94 |
$27.16 |
|
97760 |
$31.08 |
$28.60 |
|
97110 |
$28.04 |
$25.36 |
The following are examples of the impact on rates for code 97535 (Self-care/home management training) in specific geographic payment areas (i.e., includes GPCI adjustment). These rates are actual amounts that will be paid for services beginning January 1, 2007.
|
Area |
2006 Payment Rate |
2007 Payment Rate |
|
Chicago |
$32.27 |
$29.39 |
|
Arizona |
$29.87 |
$26.91 |
|
Rural Illinois |
$28.41 |
$25.30 |
|
Rural Georgia |
$28.33 |
$25.29 |
|
Iowa |
$28.13 |
$24.92 |
Caps on Therapy Services
The two annual therapy caps, which are required by section 1833(g)(1) of the Social Security Act, will continue in 2007 with an increase to $1,780 for both the occupational therapy limitation and physical therapy/speech-language pathology combined cap.
[Note: The exceptions process will continue through December 31, 2007. CMS will reissue a policy memorandum reiterating the rules for applying for exceptions to the caps.]
Other Issues in the Fee Schedule Notice
CMS discusses comments on a number of policy issues that may affect or be of interest to occupational therapists. Please read the original notice to determine all of the issues discussed and to better understand the topics highlighted below.
- CMS will continue to pay separately for splint and cast supplies using HCPCS Q-codes, when billing the following CPT codes.
- 29000 through 29750
- 24500 through 24685
- 25500 through 25695
- 26600 through 26785
- 27500 through 27566
- 27750 through 27848
- 28400 through 28675
- CMS declined to allow physical therapy, speech-language pathology, audiology, and nursing facility services to be added to the Medicare-covered list of telehealth services. According to the agency, "the statute permits only a physician, as defined by section 1861(r) of the Act or a practitioner as described in section 1842(b)(18)(C) of the Act (CNS, NP, PA, nurse midwife, clinical psychologist, clinical social worker, registered dietitian or other nutrition professional), to furnish Medicare telehealth services." Because speech-language pathologists, audiologists, and physical therapists are not permitted under the statute, it can be assumed that occupational therapists also would not meet CMS's interpretation of the statute on telehealth services at this time.
- CMS will continue to study the issues related to the "in-office ancillary" exception created under Stark II regulations as applied to "physician-owned" diagnostic testing arrangements. Precedents set when final rules are promulgated may have implications for CMS's treatment of physician-owned therapy clinics.
