2012 Medicare Payment Rules

By July 28, 2011Commentary

The characteristic that strikes one most when reading the Center for Medicare and Medicaid Service’s annual proposed reimbursement rules is their length and complexity; each one is hundreds of single-spaced Federal Register pages and contains a myriad of details which must be complied with by providers and often reported on.  The costs of compliance across the country must be staggering, billions of dollars, and it is easy to wonder if we wouldn’t be better off dropping all this stuff and just going to a health plan based system under which the health plans and providers sort this all out.  Certainly these rules are a clear example of a centralized bureaucracy gone amok, however good the intentions.   And just as certainly, everything CMS has done hasn’t made much of an impact on national health care spending or quality.  But we digress, what is actually in the 2012 proposed rules for the two biggest categories of service–hospital and physician?

The proposed rules are found at the following links.  If history is a guide, they will be finalized with few changes.   (Hosp. Outpt. Rule) (Phys. Rule) (Hosp. Inpatient) The physician rule perpetuates the universally disregarded myth that the SGR formula still has a bearing on physician compensation.  If it were followed, doctors would see a 30% pay cut in 2012.  It won’t be and the only question is whether Congress finally comes up with a permanent fix or continues to deal with this every year.  A permanent fix would make the already horrendous future deficits several hundred billion dollars worse.  The hospital outpatient rule discusses changes to the methodology, which occur every year, and to the classifications of services, and ends up with a very modest increase in overall payments. The hospital inpatient rule similarly details methodological issues, which in the case of hospitals, often involve adjustments to account for hospitals continue attempts to use coding to obtain higher reimbursement.  CMS actually deserves credit for discounting payment due to these games.

A lot of time in each rule is spend on quality reporting and the associated reimbursement incentives or penalties.  CMS claims to be trying to make these programs and their measures consistent across providers, but they have a way to go to achieve that objective.  CMS also is trying to harmonize general quality reporting, e-prescribing incentives and meaningful use requirements, to minimize the provider burden.  One clear direction is to move away from measures requiring chart extraction to use of registries or EMR-derived data and to have all reporting be web-based.  As reimbursement is squeezed elsewhere, providers who perform well can get some additional compensation from these programs.  But again, the overall impression from reading these rules is that you wouldn’t want to be the employee responsible for having to implement them.

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