The Centers for Medicare and Medicaid Services (CMS) issued a proposed rule that would implement Medicaid payment for primary care services furnished by certain physicians in calendar years (CYs) 2013 and 2014 at rates not less than the Medicare rates in effect in those CYs or, if greater, the payment rates that would be applicable in those CYs using the CY09 Medicare physician fee schedule conversion factor (CF). The proposal, implementing requirements mandated by the Affordable Care Act (ACA), would also provide for a 100 percent federal matching rate for any increase in payment above the amounts that would be due for these services under the provisions of the state plan as of July 1, 2009.

CMS estimates that these changes will increase physician payments by more than $11 billion.

Additionally, the proposal would update the interim regional maximum fees that providers may charge for the administration of pediatric vaccines to federally vaccine-eligible children under the Pediatric Immunization Distribution Program, more commonly known as the Vaccines for Children (VFC) program.

CMS says that this proposed rule is necessary to promote access to primary care services in the Medicaid program before and during the expansion of coverage that begins in 2014. 

Payments to Physicians for Primary Care Services

Primary care for any population is critical to ensuring continuity of care, as well as to providing necessary preventive care, which improves overall health and can reduce healthcare costs.

The availability of primary care is particularly important for Medicaid enrollees to establish a regular source of care and to provide care to a population that is more prone to chronic health conditions that can be appropriately managed by primary care physicians. As we move towards CY14and the expansion of Medicaid eligibility, it is critical that a sufficient number of primary care physicians participate in the program. Section 1902(a)(13) of the Social Security Act (the Act) will encourage primary care physicians to participate in Medicaid by increasing payment rates.   

Section 1902(a)(13)(C) of the Act specifies that physicians with a specialty designation of family medicine, general internal medicine, and pediatric medicine qualify as primary care providers for purposes of increased payment. Under the proposed rule, services provided by subspecialists   related to the primary care specialists designated in the statute would also qualify for higher payment. All subspecialists within the specialty designations of family medicine, general internal medicine, and pediatric medicine as recognized by the American Board of Medical Specialties would be eligible for increased payment. A physician would be required to attest that he or she is within one of the eligible specialties or subspecialties.

States would be required to establish a system to require physicians to identify to the Medicaid agency their specialty or subspecialty before an increased payment is made. For program integrity purposes, the state will be required to confirm the self-attestation of the physician before paying claims from that provider at the higher Medicare rate. This would be done either by verifying that the physician is board-certified in an eligible specialty or subspecialty or through a review of physician's practice characteristics. For a physician who attests that he or she is an eligible primary care specialist or subspecialist but who is not board-certified (including those who are board-eligible, but not certified), a review of the physician's billing history must be performed by the Medicaid agency. CMS proposes that at least 60 percent of the codes billed by the physician for all of CY12 must be for the evaluation and management (E&M) codes and vaccine administration codes specified in the proposed rule.

For a new physician who enrolls during either CY13 or CY14 who attests that he or she is within one of the eligible specialties or subspecialties, and who is not board-certified, CMS proposes that following the end of the CY in which enrollment occurs, the state would review the physician's billing history to confirm that 60 percent of codes billed during the CY of enrollment were for primary care services eligible for payment under sections 1902(a)(13)(C) and 1902(jj) of the Act. CMS clarifies that physician services mean any service delivered under the physicians' services benefit at 1905(a)(5)(A) of the Act and Medicaid regulations at 42 CFR 440.50, which defines ''physician services'' as services provided by or under the personal supervision of a physician.

Increased payment would not be available for services provided by a physician delivering services under any other benefit under section 1905(a) of the Act such as, but not limited to, the federally qualified health center (FQHC) and rural health clinic (RHC) benefits because, in those instances, payment is made on a facility basis and is not specific to the physician's services. In Medicaid, ''physician services'' is a distinct benefit from other benefits such as the FQHC, RHC, or clinic benefits. CMS believes that the statute limits payment to physicians who, if Medicare providers, would be reimbursed using the Medicare physician fee schedule (MPFS). The MPFS is not used to reimburse physicians in settings such as this, and it believes that enhanced payment should not be extended to physicians under other Medicaid benefit categories.

Eligible Primary Care Services
CMS proposes that Healthcare Common Procedure Coding System (HCPCS) E&M codes 99201 through 99499 and vaccine administration codes 90460, 90461, 90471, 90472, 90473, and 90474 or their successors would be eligible for higher payment and federal financial participation (FFP). These codes are specified by the statute and include those primary care E&M codes not reimbursed by Medicare. CMS notes that it believes that non-Medicare covered primary care services should be included because these services represent a core component of services commonly delivered in the Medicaid program. Specifically, CMS is proposing to include as primary care services the following E&M codes that are not reimbursed by Medicare: 

  • New Patient/Initial Comprehensive Preventive Medicine--codes 99381 through 99387
  • Established Patient/Periodic Comprehensive Preventive Medicine--codes 99391 through 99397
  • Counseling Risk Factor Reduction and Behavior Change Intervention--codes 99401 through 99404, 99408, 99409, 99411, 99412, 99420, and 99429
  • E&M/Non Face-to-Face physician Service--codes 99441 through 9944

Amount of Required Minimum Payments
Section 1902(a)(13)(C) of the Act requires payment not less than the amount that applies under the MPFS in CY13 and CY14 or, if greater, the payment rate that would be applicable if the 2009 CF were used to calculate the MPFS.

CMS proposes that states be required to use the MPFS rate applicable to the site of service and geographic location of the service at issue because it believes these are integral to the MPFS payment system.

For services reimbursed by Medicaid but not Medicare, CMS proposes that payment would be made under a fee schedule developed by CMS and issued prior to the beginning of CY13 and CY14. CMS proposes that rates for non-Medicare reimbursed services would be established using the Medicare CF in effect in CY13 and CY14 (or the CY09 CF, if higher) and the RVUs recommended by the American Medical Association's Specialty Society Relative Value Update Committee and published by CMS for CY13 and CY14.

State Plan RequirementsUnder the proposed rule, states would be required to submit a state plan amendment to reflect the fee schedule rate increases for eligible primary care physicians under section 1902(a)(13)(A) of the Act. The purpose of this proposed requirement is to assure that when states make the increased reimbursement to physicians, they have state plan authority to do so and they have notified physicians of the change in reimbursement as required by federal regulations.

Federal Funding for Increased Payments for Vaccine Administration

On October 3, 1994, CMS published a notice with comment period that set forth, by state, the interim regional maximum charges for the VFC program. These charges represented the maximum amount that a provider in a state could charge for the administration of qualified pediatric vaccines to federally vaccine-eligible children under the VFC Program. The proposed rule announces updates to those fees for use on an interim basis. Providers can bill the families of those children at the state's regional maximum rate for the administration of a vaccine. Therefore, if the proposed updated rates were to become effective, those families could be billed at the published rate for that state.

CMS is proposing in §441.500 to state that physicians participating in the VFC program can charge federally vaccine-eligible children who are not enrolled in Medicaid the maximum administration fee (if that fee reflects the provider's cost of administration) regardless of whether the state has established a lower administration fee under the Medicaid program.

The maximum updated administration fee would be effective with the publication of a final notice or regulation. CMS requests comments on the methodology used to calculate the administration fee update and will consider revisions to the regional maximum fees in response to public comments. The proposed updated maximum fees are set forth in Table 2 of the proposal.

Primary Care Service Payments Made by Managed Care Plans, and Enhanced Federal Match
As amended by the ACA, section 1932(f) of the Act requires that managed care plans pay physicians at the applicable Medicare rates. CMS proposes to implement the managed care requirements through a state-by-state review of managed care contracts and applicable procedures. CMS notes that it would review each state's proposed methodology for identifying the discrete amount paid for each of the eligible primary care services that qualifies for 100 percent FFP. Both the managed care contracts and the state's methodology for identifying payment amounts made for each primary care service must be submitted to CMS for review prior to the start of CY13. CMS acknowledges the diversity of payment arrangements between managed care plans and primary care physicians, and will not require that managed care plans modify the terms of their payments to eligible primary care physicians beyond the increase in payments for primary care services required by the statute.

Regulatory Impact Analysis
The aggregate economic impact of this proposed rule is an estimated $5.52 billion in CY13 and $5.66 billion in CY14. In CY13, the federal cost is approximately $5.74 billion with $225 million in state savings. In CY14, the federal cost is approximately $5.96 billion with $300 million in state savings. This aggregate economic impact estimate includes the requirement that states reimburse specified physicians for vaccine administration at the lesser of the Medicare rate or the VFC regional maximum during CY13 and CY14, which is estimated at $970 million in federal costs. The federal costs for funding that increase in state payments during CY13 and CY14 are estimated at $490 million and $480 million, respectively.

Overall, the estimated economic impacts are a result of this proposed rule providing states the ability to increase payment for primary care services without incurring additional costs. CMS anticipates higher payment will result in greater participation by primary care physicians-including primary care subspecialists-in Medicaid, thereby helping to promote overall access to care. At this time it is not known whether states will be willing or have the ability to sustain this level of payment to providers beyond CY14.

For managed care plans, this proposed rule would require documentation of the primary care services that are provided in order for states to claim 100 percent FFP. Currently, many states do not receive complete data on individual services provided by managed care plans. CMS believes, however, that as a result of this proposed rule, there will be improved documentation and reporting of primary care services provided by managed care plans. This, in turn, may serve to inform future managed care rate setting.

More Information
Comments on the proposed rule are due June 11, 2012.

The proposed rule is published in the May 11, 2012, Federal Register.

Publication Date: Friday, June 08, 2012

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