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September 2008 - Volume 5 - Issue 3

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The 2009 Medicare Physician Fee Schedule More Problems for Physicians

On June 30, 2008, the Center for Medicare and Medicaid Services ("CMS"), posted its latest set of proposed updates to the Medicare Physician Fee Schedule ("MPFS"). Included was the actual physician fee schedule that was to take place beginning July 1, 2009, with its massive 5.4 percent payment decrease. This result has already been reversed by Congress, with the reversal upheld in the face of a Presidential veto.

MPFS includes several proposed modifications or additions to regulations, which would have a significant, and largely adverse, affect on group medical practices, particularly in connection with the rendering of diagnostic imaging services:

Gainsharing and Pay for Performance.

MPFS creates a Stark law exception for certain "gainsharing" and "pay for performance" plans between hospitals and physicians.

Anti-Markup.

In November 2007, CMS issued what were stated to be "final" anti-markup regulations. These regulations, which were scheduled to become effective January 1, 2008, essentially would have eliminated any markup of the technical or professional component of diagnostic tests. At the end of 2007, after professionals listened to innumerable seminars about the new law, after CMS had tried to work out the problems encountered by effected and upset clients, and after being tortured by having to read these regulations, they postponed until 2009 the effective date of the regulations, except as they apply to anatomic pathology.

CMS suggests two alternative approaches. Under the first approach (Approach #1) it would abandon the controversial concept it adopted in the 2007 regulations. Instead the anti-markup rules would apply to diagnostic tests ordered by a billing physician that are either (a) purchased from an outside provider, or (b) performed or supervised by a physician who does not "share a practice" with the billing physician or his or her physician organization. To "share a practice" under Approach #1, the performing or supervising physician would have to be employed by, or contracted with, a single physician or physician organization.

The second approach ("Approach #2) would maintain the site of service requirement, but in a modified form. Approach #2 would expand the site of service definition to require that the diagnostic test be performed in the same building where the ordering physician performs the full range of patient care services that he or she generally provides. Under Approach #2, the anti-markup rule would apply if diagnostic tests were ordered by a group physician not located in the office where the equipment sits.

IDTF Enrollment for Physician Organizations.

An independent diagnostic testing facility ("IDTF"), a facility that provides diagnostic tests and is not owned and operated by a physician practice or a hospital, is required to comply with certain quality and performance standards that do not currently apply to physician organizations performing diagnostic tests. CMS states in MPFS that it is concerned that these physician organizations may be providing these diagnostic testing services without qualified non-physician personnel.

Although not stated in MPFS, it is apparent that CMS is attempting to drive another knife into the heart of physician diagnostic ancillary services, based on its belief that physicians over-refer.

Under the MPFS proposal, physician organizations that perform diagnostic tests would be required to enroll as an IDTF. Physician entities already enrolled in Medicare would need to comply by September 30, 2009. New enrolling physician organizations would be required to comply earlier, by January 1, 2009.

Mike Segal is a partner in the statewide law firm of Broad and Cassel, in its Miami office, where he has worked since 1973. On September 19, 2008, he will be addressing the AICPA National Healthcare Industry Conference in San Diego, on the subject of "Forming a Mega Physician Group". He can be reached at (305) 373-9430 or msegal@broadandcassel.com .
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