AOA President's Blog

Dear Osteopathic Family:

As most of you know, physicians participating in the Medicare program face a 21 percent cut in their payments effective March 1. If Congress fails to act the Medicare physician conversion factor will drop by 21.2 percent to $28.39. This payment rate is $10 less than it was in 2001 and $3 less than in 1992. This cut will have a devastating impact upon beneficiaries’ access to health care and your practice. I feel it is important that the AOA provide all osteopathic physicians with a fair assessment of the current policy and political environment. Additionally, we believe it is important to provide you unbiased, yet factual information, on your options as a practicing physician.

While the AOA remains confident that Congress and the Administration will take the necessary steps to prevent the implementation of the 21 percent cut prior to its implementation on March 1, we are deeply concerned that actions taken by Congress will only provide a temporary reprieve versus the desired long-term solution we have been seeking for the past decade. The AOA continues to believe that Congress must take the necessary steps to ensure that our nation’s seniors, disabled, and military families have access to physician services. To this end, we continue our advocacy efforts aimed at repealing the current sustainable growth rate (SGR) formula and replacing it with a payment formula that compensates physicians for the full cost of care provided.

For more than a year Congress has debated and advanced health care reform proposals that would expand access to affordable health coverage, increase access to physicians – especially primary care physicians – transform our delivery system to promote quality and efficiency, and lower the cost of health care. The AOA supports each of these goals and remains an active participant in this debate. However, we are both concerned and confused as to why Congress has failed to act on one element of health care reform that is widely acknowledged to be an enormous problem with an identified solution. Reform of the Medicare physician payment formula is health care reform and is sound economic policy. It is a reform that preserves access to health care for millions of our nation’s seniors, disabled, and military families. Additionally, long-term reforms are essential to preserving millions of jobs in the health care sector, advancing quality improvement, and achieving our goal of transforming our health care system through health information technology.

Over the past decade the cost of providing health care has grown more than 20 percent, yet payments to physicians for their services have remained static. In fact, physicians are paid approximately one percent more today than they were in 2001. A majority of physicians operate small businesses. In fact, more than 80 percent of physicians practice in groups of 10 or less physicians. These small businesses employ people, contribute to the tax base, and are a primary driver of local economies. No business can be expected to exist in an environment where the differential between revenues and costs is greater than 20 percent.

The current situation is further complicated by the fact that a number of other provisions affecting physician payments for certain types of services or geographic localities remain unresolved. These policies include the floor on geographic adjustments for the work portion of physician payments that expired on December 31, elimination of consult codes, as well as several that increase payments for primary care services and limit geographic adjustments in practice costs. While these issues may be addressed this year, we can not be certain.

On February 25th I sent a letter to every Member of Congress urging them to take “immediate and definitive action this week to prevent the implementation of the projected 21 percent cut in Medicare physician payments.” My letter clearly articulated the negative impact the flawed and failed SGR formula has upon Medicare beneficiaries and physician practices.

The following information is designed to clearly articulate options available to you with respect to your participation in the Medicare program. The AOA is not advising our members to take a specific action regarding your participation in the Medicare program nor offering legal advice regarding these issues. Participation decisions involve binding legal documents and all members are strongly encouraged to consult with your own legal advisors and consultants prior to making a decision on these matters. Our goal is to provide you with the necessary information, thus enabling you to make an informed decision.

The Centers for Medicare and Medicaid Services has extended the deadline for physicians to change their Medicare participation or non-participation status in 2010 to March 17, 2010. Physicians who want to continue their current status do not need to do anything to maintain their status. Those who wish to switch their status need to notify their contractor through a written communication that is received or post-marked on or before March 17, 2010. We have not received any messages from CMS regarding a further extension of this deadline. There are three Medicare contractual options for physicians:

1. Medicare Participating Physician
Physicians may sign a participation (PAR) agreement and accept Medicare’s allowed charge as payment in full for all of their Medicare patients. Participating physicians agree to accept assignment on all Medicare claims, which means that they must accept Medicare’s approved amount, which is the 80 percent that Medicare pays plus the 20 percent patient copayment, as payment in full for all covered services for the duration of the calendar year. The patient or the patient’s secondary insurer is still responsible for the 20 percent copayment, but the physician cannot bill the patient for amounts in excess of the Medicare allowance. While participating physicians must accept assignment on all Medicare claims, Medicare participation agreements do not require physicians to accept every Medicare patient who seeks treatment from them or their practice.

2. Medicare Non-Participating Physician
Physicians may elect to be a non-participating (Non-PAR) physician, which permits them to make assignment decisions on a case-by-case basis and to bill patients for more than the Medicare allowance for unassigned claims. Non-participating physicians agree to accept 95 percent of the Medicare approved amounts for services provided. Non-participating physicians may charge more than the Medicare approved amount, but are limited to 115 percent of the Medicare approved amount for non-participating physicians. Since approved amounts for non-participating physicians are 95 percent of the rates for participating physicians, the 15 percent limiting charge is effectively 9.25 percent above the participating approved amount for services provided. Given the projected 21.2 percent cut in Medicare physician payments, many physicians may consider balance billing an extra 9 percent as one means of helping close the gap between 2009 and the new 2010 payment amounts.

3. Private Contracting
Physicians may become a private contracting physician, agreeing to bill patients directly and forego any payments from Medicare to their patients or themselves. Provisions in the Balanced Budget Act of 1997 afford physicians and their Medicare patients the freedom to privately contract for health care services outside the Medicare program. However, private contracting decisions may not be made on a patient-by-patient basis. To become a “private contracting physician,” a physician must first opt-out of the Medicare program. Once a physician has opted out of Medicare, they cannot submit claims to Medicare for services provided to any Medicare patients for a two-year period. To privately contract with a Medicare beneficiary, a physician must enter into a private contract that meets specific requirements. In addition to the private contract, the physician must also file an affidavit that meets certain requirements. There is a 90-day period after the effective date of the first opt-out affidavit during which physicians may revoke the opt-out and return to Medicare as if they had never opted out of the Medicare program.

A physician who has not been excluded under Sections 1128, 1156 or 1892 of the Social Security Act (SSA) may order, certify the need for, or refer a beneficiary for Medicare-covered items and services, provided the physician is not paid, directly or indirectly, for such services (except for emergency and urgent care services). For example, if a physician who has opted out of Medicare refers a beneficiary for medically necessary services, such as laboratory, DMEPOS or inpatient hospitalization, those services would be covered by Medicare.

Physicians who have opted-out of Medicare under the Medicare private contract provisions may furnish emergency care services or urgent care services to a Medicare beneficiary with whom the physician has previously entered into a private contract so long as the physician and beneficiary entered into the private contract before the onset of the emergency medical condition or urgent medical condition. These services would be furnished under the terms of the private contract.

Physicians who have opted-out of Medicare under the Medicare private contract provisions may continue to furnish emergency or urgent care services to a Medicare beneficiary with whom the physician has not previously entered into a private contract, provided the physician submits a claim to Medicare in accordance with both 42 C.F.R. part 424 (relating to conditions for Medicare payment) and Medicare instructions (including but not limited to complying with proper coding of emergency or urgent care services furnished by physicians and practitioners who have opted-out of Medicare) and collects no more than the Medicare limiting charge, in the case of a physician (or the deductible and coinsurance, in the case of a practitioner). A physician who has been excluded from Medicare must comply with Medicare regulations relating to scope and effect of the exclusion (42 C.F.R. § 1001.1901) when the physician furnishes emergency services to beneficiaries, and the physician may not bill and be paid for urgent care services.


Again, any physician who wishes to change their status from PAR to Non-PAR or vice versa are required to do so on or before March 17, 2010. The decision will be retroactive to January 1. Unless CMS reopens the enrollment period, once made, the decision is binding throughout the calendar year except where the physician’s practice situation has changed significantly, such as relocation to a different geographic area or a different group practice. To become a private contractor, physicians must give 30 days notice before the first day of the quarter the contract takes effect. Prior to making a determination of a change in participation status, all osteopathic physicians should review all contracts with hospitals, health plans, or other entities to verify that they are not required to be a Medicare participating physician as a condition of their contract.

In closing, I urge each of you to continue to voice your concerns with current Medicare payment policies to your elected officials. The AOA has numerous vehicles by which you can communicate with your Representatives and Senators on this issue. You may use the AOA’s Legislative Hotline – (877) 262-9400 to call your elected officials or you can send a letter via the AOA’s Advocacy Website – www.capwiz.com/aoa-aoia.

The AOA, through our Department of Government Relations, continues to advocate for fair and equitable payment policies on your behalf. I assure you that we are deploying all available resources to protect your ability to provide quality health care to your patients. Again, I urge you to join our advocacy efforts by expressing your concerns to your elected officials today.


Fraternally,

Larry A. Wickless, DO
President