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Medicare Payments to Physicians – Proposed Rule for 2012

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It’s doc season again, that time of year when the sustainable growth rate rules are trotted out, and physicians are informed that they will face catastrophic rate reductions courtesy of Medicare (29.5%, effective January 1, 2012, per the July 1 announcement).  There will be much breast beating about how we’ve gotten into this fine mess, and what we should cut instead in order to maintain physician reimbursement levels (suggestions I’ve seen range from cutting the defense budget to eliminating Medicare coverage for dialysis).  Docs will say they’ve had enough and are opting out of Medicare. 

We can look back to MedPAC recommendations on how to fix this so we don’t need an annual doc fix, or look forward to a permanent fix, for which Don Berwick made an impassioned plea, even as he announced the publication of the proposed rule.  See the presser for more, including:

Other changes in the proposed rule include:

  • CMS is also proposing to expand its multiple procedure payment reduction to the professional interpretation of advance imaging services to recognize the overlapping activities that go into valuing these services.
  • CMS is proposing criteria for a health risk assessment (HRA) to be used in conjunction with Annual Wellness Visits (AWVs), for which coverage began Jan. 1, 2011 under the Affordable Care Act.  This proposal is intended to support a systematic approach to patient wellness and to provide the basis for a personalized prevention plan. 
  • CMS is proposing to expand the list of services that can be furnished through telehealth to include smoking cessation services.  CMS is also proposing to change the way additional services are added to the telehealth list that would focus on the clinical benefit of making the service available through telehealth.  If adopted, this change would affect services proposed for the telehealth list in CY 2013.
  • The proposed rule would update a number of physician incentive programs including the Physician Quality Reporting System, the ePrescribing Incentive Program and the Electronic Health Records Incentive Program.
  • The proposed rule also includes proposed quality and cost measures that would be used in establishing a new value-based modifier that would reward physicians for providing higher quality and more efficient care.  The Affordable Care Act requires CMS to begin making payment adjustments to certain physicians and physician groups on Jan. 1, 2015, and to apply the modifier to all physicians by Jan. 1, 2017.  CMS intends to work closely with physicians to ensure that efforts to improve the quality, safety, and efficiency of care do not diminish patient access to care.  CMS is proposing to use CY 2013 as the initial performance year for purposes of adjusting payments in CY 2015.
  • The proposed rule would implement the third year of a 4-year transition to new practice expense relative value units, based on data from the Physician Practice Information Survey that was adopted in the MPFS CY 2010 final rule.

Wanna place bets on the timing of the Congressional band-aid this year, or does anyone think we’ll get a permanent doc fix?

David Harlow
The Harlow Group LLC
Health Care Law and Consulting


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About author
DAVID HARLOW is Principal of The Harlow Group LLC, a health care law and consulting firm based in the Hub of the Universe, Boston, MA. His thirty years’ experience in the public and private sectors affords him a unique perspective on legal, policy and business issues facing the health care community. David is adept at assisting clients in developing new paradigms for their business organizations, relationships and processes so as to maximize the realization of organizational goals in a highly regulated environment, in realms ranging from health data privacy and security to digital health strategy to physician-hospital relationships to the avoidance of fraud and abuse. He's been called "an expert on HIPAA and other health-related law issues [who] knows more than virtually anyone on those topics.” ( His award-winning blog, HealthBlawg, is highly regarded in both the legal and health policy blogging worlds. David is a charter member of the external Advisory Board of the Mayo Clinic Social Media Network and has served as the Public Policy Chair of the Society for Participatory Medicine, on the Health Law Section Council of the Massachusetts Bar Association and on the Advisory Board of FierceHealthIT. He speaks regularly before health care and legal industry groups on business, policy and legal matters. You should follow him on Twitter.
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