Medicare 2007 Physician Fee Schedule and Hospital Outpatient Rules Released

Medicare 2007 Physician Fee Schedule and Hospital Outpatient Rules were released November 1. As expected, the fee schedule includes a decrease of 5 percent for physician reimbursement. Highlights of interest to hematologists and hematologist/oncologists from the fee schedule follow. Information on the Hospital Outpatient Rule will be posted shortly. Visit the ASH Advocacy Center to urge Congress to enact legislation to prevent the 5 percent cut.

2007 Physician Fee Schedule

Fee Schedule Update
The conversion factor (CF) for CY 2007 is $35.9848 (-5.0 percent update).

Budget Neutrality (BN) Adjustment to Work RVUs
In 2007 CMS will reduce all work RVUs by 10.1 percent in order to achieve budget neutrality.

Practice Expense
CMS has finalized the provisions to practice expense that it proposed in the 2007 proposed rule. While these changes will have an overall 0 percent impact on PE RVUs, CMS believes this process is more accurate, transparent and will allow specialties to better predict the effects of proposed changes. CMS will phase in the new practice expense system over a 4 year period with the new rates fully implemented in 2010.

• Bottom-Up Method to Calculate PE — CMS will change from the “top down” to the “bottom up” method for calculating direct expenses — clinical staff, supplies and equipment. This means that the calculated direct expenses will be based on the Practice Expense Advisory Committee (PEAC) approved inputs and will no longer be tied to the specialty’s practice expense per hour derived from the AMA-SMS study. 
• Supplemental PE Surveys — CMS will use the PE/HR data from the seven surveys they previously accepted and, in addition and from the survey submitted by the National Coalition of Quality Diagnostic Imaging Services (NCQDIS).
• Indirect PE — The method for calculating indirect practice expenses will be modified in several respects.

Five Year Review
This final rule finalized the proposed changes resulting from the third Five Year Review of Work RVUs.  The work RVUs affected by this review will be effective for services furnished beginning January 1, 2007. 

This table provides a combined impact on hematology/oncology of the finalized work and PE RVUs, multiple imaging reduction, OPPS imaging cap and CY 2007 conversion factor update. The impact due to the changes in this rule will differ by CPT code; therefore, physicians who specialize in one area may experience a different impact than summarized in the table below.

Table 35: Combined CY 2007 Total Allowed Charge Impact for the Five Year Review of Work RVUs and Practice Expense Changes, Multiple Imaging Reduction, OPPS Imaging Cap, and CY 2007 Update

Payment for IVIG
CMS will continue the temporary IVIG preadministration-related services payment into CY 2007 to help ensure continued patient access to IVIG. This means that in 2007 CMS will temporarily allow a separate payment for each day of IVIG administration to physicians and hospital OPDs that administer IVIG to Medicare beneficiaries. This payment is in addition to the separate payments Medicare makes for the IVIG product itself and its administration.

• Coding and Payment Level — In 2007, the preadministration-related service payment will continue to be billed under the same HCPCS code as 2006: G0332, preadministration-related services for intravenous infusion of immunoglobulin, per infusion encounter. (This service is to be billed in conjunction with administration of immunoglobulin.) This payment will on average be about $71 per day of IVIG administration in physicians' offices.
• Ongoing Review of Payment in 2007 — CMS will continue to review IVIG access during CY 2007 as additional information becomes available, and will discontinue this temporary preadministration-related service payment during CY 2007 through rulemaking if the agency determines it is no longer warranted.

View an impact table for fee schedule services of interest to hematologists and hematologist/oncologists.

To view the 2007 final rule, visit the CMS Web site.

2007 Medicare Hospital Outpatient Prospective Payment System (HOPPS)

On November 1, 2006, the 2007 Medicare Hospital Outpatient Prospective Payment System Final Rule was put on display. 

Overall, hospital outpatient departments will receive a 3.4 percent market basket update to Medicare payment rates for services paid under the HOPPS for 2007.  The market basket increase accounts for increases in the costs of providing services. 

Hematology/Oncology Procedural-Related APCs
Below is a comparison of 2006 versus 2007 payment rates for hematology/oncology related procedural APCs.

Drugs and Biologicals

• Separate Payment
• In this final rule CMS is finalizing its proposed policy to pay separately for drugs and biologicals when the cost is $55 or more per day.  This reflects an inflation adjustment increase of $5 from the previous threshold of $50.
• Antiemetics will be excluded from the packaging threshold and will be paid separately.
• Drug Administration Coding
• CMS is accepting the August 2006 recommendation of the APC Panel to use only CPT codes for the reporting of drug administration services in the CY 2007 HOPPS. In 2007 hospitals will report the same CPT codes for drug administration used by physicians and other payors. Existing drug administration C-codes C8950-C8955 will be deleted.
• Payment Rates
  • CMS has decided not to implement the proposal to pay for drugs and biologicals at 105 percent of the average sales price (ASP) and in 2007 will continue to pay for them at 106 percent of the ASP.

Blood and Blood Products
Payment Policy

• For the CY 2007 HOPPS, CMS is finalizing its proposal to establish payment rates for blood and blood products by using hospital-specific actual cost to charge ratios (CCRs) (based on 2005 claims data) or a special methodology to simulate blood-specific CCRs if hospitals did not have such specific CCRs.
• For CY 2007 CMS is providing a payment transition for those blood products for which the difference between their CY 2006 adjusted median cost and their CY 2007 simulated median cost is greater than 25 percent.  This results in adjustment to the simulated median costs for CY 2007 for 7 of the 34 blood products.

Clinic and Emergency Visits
Coding

• CMS proposed creating 12 new HCPCS codes for visits to hospital clinics, full-time emergency departments, and critical care services.
• CMS did not implement this proposal and hospitals will continue to report clinic and emergency visits, and critical care services using current CPT codes.

View a comparison chart for HOPPS services of interest to hematologists and hematologist/oncologists.

To view the 2007 final rule, visit the CMS Web site.

The HOPPS Final Rule is expected to be published in the Federal Register on November 24, 2006. The Physician Fee Schedule Final Rule is expected to be published in the Federal Register on December 1, 2006.