MPFS in Crisis: Holding of Claims for Services Paid Under the 2010 Medicare Physician Fee Schedule

Days of Future Passed (or: deja vu all over again). 

Late Friday, after business hours, CMS pushed the following announcement via its physician information listserv:

The Centers for Medicare & Medicaid Services (CMS) is working with Congress, health care providers, and the beneficiary community to avoid disruption in the delivery of health care services and payment of claims for physicians, non-physician practitioners, and other providers of services paid under the Medicare physician fee schedule. As you are aware, the Department of Defense Appropriations Act of 2010 provided a zero percent (0%) update to the 2010 MPFS effective for dates of service January 1, 2010, through February 28, 2010. 

We believe Congress is working to avoid the negative update that will take effect March 1.  Consequently, CMS has instructed its contractors to hold claims containing services paid under the MPFS for the first 10 business days of March. The holding of MPFS claims will only affect claims with dates of service March 1, 2010, and forward.  This hold should have a minimum impact on provider cash flow because, under current law, clean electronic claims are not paid any sooner than 14 calendar days (29 for paper claims) after the date of receipt.  Be on the alert for more information about the 2010 Medicare Physician Fee Schedule Update.

It's exhausting already, but CMS published a rule requiring a 21.5% 2010 MPFS cut and Congress dutifully rolled back the damage — but only for two months.  The cut is effective March 1, which is why CMS had to step in as outlined above, basically giving Congress a week to do something.

Why such a high cut?  As I've written earlier:

That's because Congress has overridden every other cut mandated by the law since 2002, yet has not taken the time to rethink it — even though it called for a review in 2005's DRA, and MedPAC obliged in 2007.  To cut to the chase, MedPAC recommended that Congress either (a) come up with another cockamamie formula or (b) repeal the SGR and develop incentives for providers to provide higher quality care at lower cost.  Yes, they've done a fine job so far . . . .

CMS has had to take the last-minute administrative approach in the past, to give Congress time to offer another band-aid, or temporary fix.  Here's hoping that some comprehensive fix can be worked through per MedPAC's 2007 recommendations. 

Update 3/3/10:  The latest band-aid: a one-month extension of the delay of the cuts with no comprehensive approach to the SGR formula-driven MPFS cuts.  This issue gets bigger by the minute, but Congress is loathe to wrap it into the larger health reform debate, because doing so would kick the health reform package over the magic $1 trillion mark.  

David Harlow
The Harlow Group LLC
Health Care Law and Consulting