Little-Known Medicare Pay Code Change Will Hurt Specialists

While the theatrics of the reform debate hold the nation in suspense, another dramatic policy change—with potentially tragic ramifications—has crept into next year's Medicare physician pay schedule with astonishingly little fanfare.

But specialty providers who are now becoming aware of the plan say it will have dire consequences for care far into the future, especially for rural communities where specialty doctors are in heavy demand.

"When these doctors find out about this, they are going to go ballistic," says Larry deGhetaldi, MD, administrator of the Palo Alto Medical Foundation, a multi-specialty group practice with 900 physicians in Santa Cruz, CA.

He adds that if it weren't for the complexity and anxiety over health reform, "this would have been the major freak-out issue."

As of Jan. 1, the Centers for Medicare and Medicaid Services plans to eliminate a series of five-digit CPT codes that specialist physicians, such as cardiologists, oncologists, and surgeons, use to bill for medical or surgical consults. These consults occur at the request of a practitioner who wants a specialist's opinion regarding his or her patient.

For example, an internist may want his patient seen by a vascular surgeon. Or a family practitioner may want her patient seen by an endocrinologist or pulmonologist.

Under current CMS rules, the CPT code for consultation calls for reimbursement that is between $20 and $50 higher than for a comparable office visit.

But by eliminating the CPT codes, those specialists will be forced to bill under a different payment code bracket, which covers for a simple office visit.

The rule change could have an impact on some specialists' willingness to be available for specialty referral care, either in the hospital or in their office practices, says Ted Mazer, MD, a San Diego area otolaryngologist.

"The potential impact on already endangered ER call panels should have been considered as well. The devaluation of the consultants' services may adversely impact access in both city and rural settings," Mazer says, especially in areas where there is already a shortage of some specialists.

Consultation services are important and time consuming, Mazer explains.

First, the patient's condition must have added complexity or it wouldn't have needed referral.

Second, the specialist performs an independent physical and often gets a separate history of the patient, spending as much as an hour to set a correct diagnosis and course of care. And third, reimbursement policy requires the specialist physician to return to the referring physician a written report of the findings and course of care in the outpatient setting.

All of that takes time and expertise, argues Mazer, who says the specialists' skill and knowledge should be appropriately compensated.

When this change takes effect, he worries that the confusion in what codes Medicare will accept and delays in payment will result in cash flow problems for specialty physicians as well, he says.

The policy change has come about in part because of a desire on the part of the Obama Administration to increase reimbursement to primary care physicians, who are increasingly in short supply. But such redistribution may tend to worsen the schism between those groups and specialists.

But it also has come about because of overutilization, seen by maps that show many areas of the country use specialty consultations far more than in others, deGhetaldi says.

"Patients in certain parts of the country who undergo a routine hospital admission will have 10 consults," deGhetaldi says. "If they force this new patient code, that will control some of these costs."

Physicians acknowledge that overutilization of consultants is largely to blame for the change. And that belief was documented last week by a report in the Archives of Internal Medicine study "Is It Time to Eliminate Consultation Codes?" by Joel I. Shalowitz, MD, of the Kellogg School of Management at Northwestern University in Evanston, IL.

Shalowitz reviewed 500 claims for consultation services over a 13-month period ending this July and discovered 32.4% were in error. The report concluded that changing ambulatory consultation codes to those for new patient visits would save Medicare $534.5 million per year.

"With the growing needs for cost savings as well as encouraging payment parity for cognitive services for primary care physicians, it is time these codes are reevaluated," Shalowitz wrote.

Mazer, however, says that's not the right answer to the problem. "Do we throw away an entire system of coding rather than address the educational needs for proper use of the codes?" he asks.

"There is legitimate value in consults, which often require a higher level of expertise for a more complex problem, which is why the consult was requested to begin with," Mazer says.

The American Medical Association has written CMS expressing its objections, especially about the speed at which the change seems to have been pushed into place. "While there may be advantages and disadvantages to this proposal, the AMA has strong concerns about moving forward with the consultation code proposal on Jan. 1, 2010," according to a letter from AMA Executive Vice President and CEO Michael Maves, MD.

"It would be impossible to educate all physicians who currently report consultation codes in such a short period of time, which means there would be a flood of claim denials and appeals," he wrote.

"Further, at a time when the President and Congress are seeking administrative simplification as part of healthcare reform, this new policy would undermine this goal by setting up different standards for Medicare versus other payers that will still be using consultation codes."

The California Medical Association is drafting a similar letter of objection.

Ned Bentley, MD, a Northern California gastroenterologist, also had harsh words for the policy change. Eliminating these codes, "threatens to undermine the CPT Editorial Panel process and a well-established system to describe and report physician work," he wrote in a briefing paper.

Elimination of the consult codes is said to already be final, although CMS is still accepting comments at www.regulations.gov/search/Regs/home.html.

However, AMA officials say they expect the pay change is, regrettably, final, and fear that physicians will be overwhelmed with fighting denials when they unknowingly turn in old CPT codes for reimbursement.

"While policymakers are looking for ways to improve coordination of care, it seems counter-intuitive that CMS would move forward with this proposal without understanding the implications for the impact on care coordination," Maves wrote.