Summary of the CY 2011 Medicare Physician Fee Schedule

The CY 2011 final rule for the Medicare physician fee schedule was put on public display on November 2, 2010 and is scheduled to be published in the November 29, 2010 issue of the Federal Register.

Over the past several years, the Academy strongly advocated for several policy changes which were finalized by CMS in this final rule beginning January 1, 2011 including:

  • Separate payment for Canalith repositioning procedure.
  • Physician work and Practice Expense (PE) values (providing a set payment for these procedures in the office setting) for
    • 3 new Nasal/sinus endoscopy codes procedure codes and
    • 1 stereotactic computer-assisted (navigational) procedure code
  • Continued use of the Physician Practice Information Survey (PPIS) data, which results in overall higher PE values and payment for office-based procedures.

A summary of these policies and other issues of importance are below. Note: Unless Congress acts by December 1, 2010, for CY 2011, CMS projects a conversion factor of $25.5217 compared to the current $36.8729. Stat tuned to the Academy’s website and News for the most up-to-date information regarding Congressional action on the sustainable growth rate (SGR).

I. CMS Finalizes Policies Supported by AAO-HNS in Proposed Rule Comments

Canalith Repositioning
CMS finalizes its proposal to pay separately for canalith repositioning (CPT 95992), at the RUC’s previously recommended work RVUs (0.75) and PE inputs, effective January 1, 2011. Because CPT 95992 can be furnished by physicians or therapists as therapy services under a therapy plan of care or by physicians as physicians’ services outside of a therapy plan of care, the agency will add CPT 95992 to the “sometimes therapy” list. Medicare will not reimburse audiologists for performing canalith repositioning because it is not a diagnostic test.

Establishment of Interim Final RVUs for CY 2011
The AMA RUC provided work RVU recommendations for 291 CPT codes. Of the 291, CMS accepts 207 (71 percent) of the AMA RUC-recommended values and provides alternative values for the remaining 84 (29 percent). Over the last several years the rate of acceptance of the AMA RUC recommendations has been higher, at 90 percent or greater. However, in response to concerns expressed by MedPAC, the Congress, and other stakeholders regarding the accurate valuation of services under the PFS, CMS has intensified its scrutiny of the work valuations of new, revised, and potentially misvalued codes. The final RVUs for the new balloon dilation and stereotactic computer assisted procedure codes are (CMS accepted the AMA RUC’s values for these codes):

  • 31295  Nasal/sinus endoscopy, surgical; with dilation of maxillary sinus ostium (eg, balloon dilation), transnasal or via canine fossa   - work RVU 2.70; non facility PE RVU 57.07
  • 31296  with dilation of frontal sinus ostium (eg, balloon dilation) - work RVU 3.29; non facility PE RVU 108.70
  • 31297  with dilation of sphenoid sinus ostium (eg, balloon dilation) - work RVU 2.64; non facility PE RVU 108.37
  • 61782 Sterotactic computer-assisted (navigational) procedure: cranial, extradural (List separately in addition to code for primary procedure - work RVU 3.18; facility PE RVU 1.81

You may view the rest of the final values for CY 2011 in addendum B of the final rule.

Resource-Based Practice Expense (PE) Relative Value Units (RVUs)
CY 2011 is the second year of a 4-year transition to the PE RVUs calculated using the AMA’s Physician Practice Information Survey (PPIS) data. Therefore, in general, the CY 2011 PE RVUs are a 50/50 blend of the previous PE RVUs based on the Socioeconomic Monitoring System (SMS) and supplemental survey data and the new PE RVUS developed using the newer PPIS data. CMS also clarifies that all new CY 2011 CPT codes will be paid based on the fully implemented PE RVUs in CY 2011. Additionally, existing CPT codes for which the global period has changed in CY 2011 will not be subject to the PPIS PE RVU transition.

Equipment Utilization Rate
CMS finalizes that it will apply a 75 percent utilization rate for expensive imaging equipment (i.e. equipment valued over $1 million) in a non-budget neutral process for CY 2011 based on the requirements included in the Affordable Care Act (ACA). CMS further explains that the changes to the PE RVUs will not be transitioned over a period of years. (Note: the previous rate was 90%). The CY 2011 codes (113 codes in total) that the 75 percent equipment utilization rate assumption applies are displayed in Table 3 of the final rule.

Disclosure Requirements for In-Office Ancillary Services Exception for Certain Imaging Services
Based on provisions from the Affordable Care Act (ACA), CMS finalized that the referring physician must provide written disclosure to the presenting patient stating that he or she may obtain the advanced imaging service (only MRI, CT and PET services)  from another provider. In addition, CMS is requiring this notification to the patient include a list of at least 5 suppliers (a decrease from 10 suppliers in the proposed rule) that offer imaging within a 25-mile radius of the referring physician’s practice. CMS will not require that patients sign this disclosure statement. However, CMS will require that the referring provider record proof of the patient’s acknowledgement of the disclosure in the medical record. 

Malpractice RVUs for New and Revised Services Effective Before the Next 5-Year Review
CMS will continue its approach of updating malpractice RVUs. Generally, malpractice RVUs for new and revised codes that become effective before the next 5-Year Review are determined by a direct crosswalk to a similar “source” code or a modified crosswalk to account for differences in work RVUs between the new/revised code and the source code. For the modified crosswalk approach, CMS adjusts the malpractice RVUs for the new/revised code to reflect the difference in work RVUs between the source code and the AMA RUC’s recommended work value (or the work value CMS applies as an interim final value under the PFS) for the new code. CMS accepted all source code recommendations submitted by the AMA. In Table 8 of the final rule CMS lists over 220 CY 2011 new/revised codes and their respective source codes for determining the interim final CY 2011 malpractice RVUs.

Potentially Misvalued Services under the Physician Fee Schedule
In the final rule, CMS summarizes comments in support of, and in opposition to, a formal validation process and continued reliance on the American Medical Association Specialty Society Relative Value Scale Update Committee (AMA RUC). CMS acknowledges the high cost of conducting time-motion studies and suggests that the agency might conduct an initial study of all the possible valuation methodologies currently being employed by the AMA RUC to better understand how relativity between services under the PFS has developed and been maintained over the years. In the final rule, CMS does not describe any new policies or approaches to validating RVUs.

II. CMS Finalizes Policies Generally Supported by AAO-HNS, with Continued Input and Monitoring Needed

Rebasing and Revising the Medicare Economic Index (MEI) 
The final rule rebases (using 2006 data from the AMA PPIS) and revises the Medicare Economic Index (MEI), the input price index used in determining annual updates to the physician fee schedule. Rebasing refers to moving the base year for the cost structure of an input price index, while revising describes other types of changes such as changing data sources, cost categories, or price proxies used in the input price index.

Value-based payment modifier
CMS will be develop an episode grouper, and will start publishing the cost and quality measures it intends to use in determining the payment modifier by January 1, 2012. Until a Medicare-specific episode grouping software is developed (due date Sept. 2011 for prototype), CMS plans to produce reports for Phase II of the physician feedback program that contain per capita cost information, overall and for beneficiaries with 5 common chronic diseases (diabetes, congestive heart failure, coronary artery disease, chronic obstructive pulmonary disease, and prostate cancer).

III. Other Policies of Note - Implementation of Legislation

Electronic Prescribing (eRX)
Under Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), for e-prescribers in 2011, the eRX incentive is 1 percent with 0.5 percent scheduled for 2011, 2012 and 2013. Penalties begin in 2012 at 1 percent, then increase to 1.5 and 2.0 percent for 2013 and 2014, respectively, for eligible professionals (EPs) who are not successful e-prescribers.

Geographic Practice Cost Indices (GPCIs)
ACA extended the 1.0 work GPCI floor for services furnished through December 31, 2010. CMS finalizes the sixth GPCI update using the most current data, with modifications, but does not finalize the proposed change to the GPCI cost share weights for CY 2011. The cost share weight for each GPCI component, physician work, PE and malpractice will remain the same. 

12-Month Maximum Submission Period for Medicare Claims
Another implementation of ACA, CMS finalizes to decrease the time threshold for providers to submit claims from 18-27 months after the date of service to 12 months.  Providers will need to submit claims for services performed in the last three months of 2009 by December 31, 2010. For those services furnished on or after January 1, 2010 providers must submit the claims for these services before the end of one calendar year after the date of service. CMS indicates three exceptions to this provision: when a Medicare beneficiary becomes retroactively eligible for Medicare benefits but was not entitled when the service was performed initially, dual eligible Medicare/Medicaid patients and retroactive disenrollment from Medicare Advantage plans or PACE provider organizations.

IV. CMS Finalizes Policies NOT Supported by AAO-HNS

Expansion of the Multiple Procedure Payment Reduction (MPPR) Policy
Imaging: CMS finalizes that it will apply the MPPR to the Technical Component (TC) of multiple imaging services (includes CT and CTA, MRI and MRA, and ultrasound) performed within a family of codes or across families. This will apply to the aforementioned services when performed on a patient in one session irrespective of modality and contiguity of the body parts. (Medicare will pay for the first code at a 100 percent and reimburse subsequent codes reduced by 50 percent).

Therapy Services: CMS will reduce by 50 percent the Practice Expense (PE) component for subsequent “always therapy” services performed by the same provider on patients in a single day (Medicare will fully reimburse the code with the highest RVU but will reduce the PE input for the subsequent codes by 50 percent). CMS‘s rationale for doing so is that when these services are performed during the same session, the same supplies and clinical labor are used in the intra-service work for the codes.

CY 2011 Final Rule Total Allowed Charge Estimated Impact RVU, MPPR, and MEI Rebasing Changes


Allowed Charges (mil)  Impact of Work and MP RVU Changes  Impact or PE RVU and MPPR Changes   Impact of MEI Rebasing  Combined Impact
         Full  Transition        Full  Transition  
TOTAL $81,980 0% 0% 0% 0% 0% 0%
Otolaryngology  $941 0% 3% 2% 1% 5% 3%


View our comment letter to CMS addressing the proposed rule for the CY 2011 MPFS

View the complete final rule for the CY MPFS 

Posted on November 16, 2010

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