2011 MPFS Conversion Factor Update

On December 15, 2010, President Obama signed into law the Medicare and Medicaid Extenders Act of 2010 (MMEA), which contains a number of provisions that modify current Medicare fee-for-service program policies. Section 101 of the MMEA prevented the 25% payment cut to the Medicare Physician Fee Schedule (MPFS) that would have been effective on January 1, 2011. The MMEA provided a zero percent update to the MPFS for claims with dates of service January 1, 2011, through December 31, 2011. As of January 11, 2011, according to staff at the Centers for Medicare and Medicaid Services (CMS) all the Medicare contractors have fully loaded, tested and stored the updated 2011 MPFS in their payment systems and will reimburse physicians with these updated rates without delay.

The 2011 RVU budget neutrality adjustment (BNA) would have increased the conversion factor (CF). However, due to the policy changes relating to the Medicare Economic Index (MEI) rebasing, the practice expense (PE) pool is higher than the old rates for PE, the weight of the PE RVUs is higher overall. CMS did not want to decrease the physician work component factor of services, so they had to adjust the payments by making the budget neutrality adjustment. Although the CF has technically gone down from $36.8729 in 2010 to $33.9764 in 2011, the PE and malpractice expense for almost all services increased.

The calculation of the CY 2011 conversion factor is illustrated in the following table:

December 2010 Conversion Factor

$36.8729

MMEA “Zero Percent Update”

0.0 percent (1.000)

CY 2011 RVU Budget Neutrality Adjustment

0.4 percent (1.0043)

CY 2011 Rescaling to Match Medicare Economic Index (MEI) Weights Budget Neutrality Adjustment

-8.3 percent (0.9175)

CY 2011 Conversion Factor

$33.9764



 

The result for physicians overall, and otolaryngologists in particular, is that those physicians who provide a lot of services with high PE (equipment, medical supplies, non-physician staff) associated with the procedures, will see an increase in Medicare payment from 2010 to 2011. However, for those physicians with a mix of services that are not involved with a high amount of PE overall, may see a decrease in Medicare payment from 2010 to 2011. View the AAO-HNS comment letter on the 2011 MPFS proposed rule

The impact table  from the 2011 MPFS final rule, as amended by technical correction, shows the average impact of all these changes on each specialty. The shifting that took place with the MEI rebase (more weight on PE), results in an overall +1% impact on otolaryngologists. For all the policy changes included in the MPFS final rule, overall, the impact on otolaryngologists from 2010 to 2011 is +3% (again depending on what mix of services are provided, this could vary).

If you have questions please contact healthpolicy@entnet.org

 

Posted on January 13, 2011
 

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