Making sense of Medicare payment changes

January 13, 2014

With the new 2014 fee schedule, the temporary halt to the sustainable growth rate (SGR) cut and an interim .5 percent payment increase, Medicare physicians are understandably confused about what impact these changes will have on their practices. Below is a quick summary of the various Medicare payment changes facing physicians in 2014:

2014 Fee Schedule: While the 2014 Medicare fee schedule contains a 3.7 percent conversion factor increase, the overall fee schedule is budget neutral due to myriad relative value unit (RVU) changes. These changes will impact providers differently depending on their specialty, codes billed and geographic region. The revised 2014 fee schedule is available from California's Medicare contractor, Noridian.

Sustainable Growth Rate: Congress recently passed a law stopping the 24 percent Medicare physician payment cut called for the SGR for three months and instead provides a 0.5 percent update through March 31, 2014. The three months gives Congress time to finalize the larger Medicare payment reform legislation.

Sequestration: There is no additional sequestration cut for 2014. However, the 2 percent sequestration cut that took effect in April 2013 is still in effect. That cut is expected to remain in place until Congress adopts an alternative deficit reduction framework. As it was last year, the cut will be applied to all fee-for-service (Part A and Part B) claims after determining coinsurance, any applicable deductible and any applicable Medicare secondary payment adjustments. The cut will also be applied to Medicare Advantage plans.

E-Prescribing Penalty: Physicians and group practices who were not successful electronic prescribers under the 2012 or 2013 Medicare eRx Incentive Program will be subject to a negative payment adjustment of 2 percent in 2014 on all Medicare Part B claims paid under the physician fee schedule.

How will these changes affect me?

It is important that physicians understand how a fee schedule can affect their practice’s bottom line so that they can make informed decisions about participation. The California Medical Association (CMA) has developed a simple worksheet to help physicians analyze the impact fee schedule changes may have on their practices based on commonly billed CPT codes. CMA's Financial Impact Worksheet is available free to members in CMA's online store.

2014 Medicare participation deadline extended

Physicians have until January 31, 2014 to change their Medicare participation status for 2014. The effective date of any decision will be retroactive to January 1, 2014. For more information on physicians' Medicare participation options, see CMA On-Call document #7209, "Medicare Participation (and Nonparticipation) Options." On-Call documents are free to members in the CMA's online health law library at Health Law Library. Nonmembers can purchase documents for $2 per page.

Contact: Michele Kelly, (213) 226-0338 or mkelly@cmadocs.org.


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