Proposed Rule for Revisions to Payment Policies under the 2007 Physician Fee Schedule, August 2006

Published Monday, August 21, 2006 7:00 am

Centers for Medicare & Medicaid Services (CMS)
Department of Health and Human Services
Room 445-G, Hubert H. Humphrey Building
200 Independence Avenue, SW
Washington, DC 20201

Dear Sir/Madam:

We are pleased to submit these comments on the proposed rule for Revisions to Payment Policies under the Physician Fee Schedule for Calendar Year 2007 on behalf of the American Association for Geriatric Psychiatry (AAGP). The AAGP is a professional membership organization dedicated to promoting the mental health and well-being of older people and improving the care of those with late-life mental disorders. Our membership consists of more than 2,000 geriatric psychiatrists as well as other health care professionals who focus on the mental health problems faced by senior citizens.

Discussion of Comments – Evaluation and Management Services

As you know, the AAGP along with a number of other physician specialty organizations recommended that the 5-year review of physician work RVUs include codes representing evaluation and management services. We believe that the current work values assigned to these codes no longer represent the physician work necessary to provide these services. As the survey data for these codes clearly documents, the work values should be increased. The AMA/Specialty Society Relative Value Scale Update Committee (RUC) devoted a considerable amount of time and energy to this critical issue. We applaud the CMS proposal to accept the RUC’s recommendations which passed with the support of more than two-thirds of the voting members who represent all the major specialties, including primary care, surgery, radiology, anesthesiology, pathology and psychiatry. Therefore, we strongly support the proposed work RVUs for the evaluation and management codes included in the 5-year review and urge you to retain them in the final rule.

Other Issues

In the preamble to the proposed rule, the Agency notes that estimated increases in outlays under the MFS -- resulting from changes in RVUs -- that exceed $20 million compared to estimated expenditures without any RVU changes require a budget neutrality adjustment. The Agency has determined that such an adjustment must be made and has indicated that there are two options for making this adjustment. First, a 10 percent across-the-board reduction in the total pool of work RVUs could assure budget neutrality. Alternatively, a 5 percent reduction to the fee schedule conversion factor would also meet the statutory budget neutrality requirement.

The Agency has proposed that the budget neutrality adjustment be applied to work RVUs. We disagree with this proposal. By imposing the full burden of budget neutrality on the pool of work values, CMS will be significantly reversing the improved accuracy of the values that have now been assigned to the evaluation and management services. This approach would undermine the effort of specialty societies, the RUC, and CMS to assure that services paid for under the fee schedule are properly valued. On the other hand, by applying the budget neutrality adjustment to the conversion factor, the Agency would be distributing the impact of this requirement on the broadest base and would minimize the adverse impact on any service. We strongly believe that adjusting the conversion factor is the most equitable policy and would preserve the progress that has been achieved in correcting the misvalued codes examined in the 5-year review.

Practice Expense Relative Value Units (PE RVUs)

The AAGP has reviewed the proposed methodology for determining PE RVUs for each service paid for under the physician fee schedule. In general, we believe that the ‘bottom up’ approach set forth in the proposed rule will more accurately and appropriately allocate direct and indirect practice expenses to individual services. However, we do have concerns regarding the proposed decreases in the PE RVUs for nursing facility services, domiciliary care services and home care services as well as concerns regarding the proposed creation of a specialty-specific indirect scaling factor (using an Indirect Practice Cost Index) and its application to the allocation of indirect practice expenses.

Nursing Facility Services, Domiciliary Care Services and Home Services

We are very concerned about the deep reductions in PE RVUs for the nursing facility services (CPT codes 99304-99318), domiciliary care services (CPT codes 99234-99337) and home services (CPT codes 99341-99350). By the end of the transition in 2010, nine of the ten codes for nursing facility services will be decreased between 4 and 14 percent and only one will remain the same. All nine of the domiciliary care services will be reduced between 9 and 23 percent and all nine of the home services codes will be reduced between 10 and 27 percent.

CMS must take steps in the final rule to prevent or minimize the proposed reductions so that Medicare beneficiaries who receive their medical care in any of these settings will continue to have access to high quality care. One option would be to place a 5 percent limit on the amount of PE reductions that could occur for any E/M services under the new methodology. Another would be to maintain the current PE RVUs for any E/M services proposed for decreased PE RVUs until their direct inputs could be carefully reviewed by CMS with the assistance of the RUC and the relevant specialty societies, including AAGP.

Indirect Practice Cost Index (PCI)

As we understand it, the proposed methodology includes a step that is intended to ensure that direct and indirect practice costs for a specialty do not exceed the total amount of practice expenses determined for a given specialty. This step in the process is intended to assure that indirect practice expense values match the available indirect practice expense values in the aggregate for a specialty. We believe the application of the PCI is a redundant step that arbitrarily penalizes specialties -- like psychiatry -- with lower than average Indirect Practice Cost Index values.

In our review of the PCI data used by CMS in the proposed notice we found that psychiatry and the primary care specialties have PCIs less than 1.000 as shown in the table below:

Specialty PCI
26-Psychiatry 0.539
01-General Practice 0.679
08-Family Practice 0.723
11-Internal Medicine 0.751
38-Geriatric Medicine 0.861

The effect of the PCIs is shown in Table 53 of the proposed rule which includes a mid-level office visit code (CPT 99213) as an example of how the new PE RVUs are calculated. The example clearly shows that the application of the PCI leads to a reduction of the indirect PE RVUs for 99213 because the PCI for the code (0.943) is less than 1.000. In the case of psychiatric services, the indirect costs for services provided predominantly by our specialty are being reduced by nearly 50 percent since our PCI is 0.539. We strongly object to this inappropriate reduction and we urge CMS to eliminate the use of PCIs in the final rule.

Thank you for this opportunity to comment on the proposed rule.


Christopher C. Colenda, MD, MPH