CMS Releases Final 2012 Physician Fee Schedule - November 8, 2011

On Nov. 1, the Centers for Medicare & Medicaid Services (CMS) released a final rule updating the Medicare Physician Fee Schedule (MPFS) for calendar year (CY) 2012. Providers face steep across-the-board reductions in payment rates based on the current formula, which is the sustainable growth rate (SGR). As a result, unless Congress and the president enact an SGR “fix,” payment rates under the MPFS will be reduced by 27.4 percent for CY 2012. This percentage is lower than previous estimates by CMS, as Medicare cost growth has been lower than expected. This payment cut is the 11th one resulting from the SGR formula, although previous cuts for all but CY 2002 have been averted through legislation.

In the final rule, CMS also expanded the potentially misvalued code initiative in an effort to allow CMS closer management of the payment system and ensure that Medicare is reimbursing providers accurately. In addition, CMS is changing how it adjusts payment for geographic variation in the cost of practice. CMS is replacing some of the data sources, such as using data from the American Community Survey in place of the U.S. Department of Housing and Urban Development rental data. Consistent with the Institute of Medicine’s recommendation, CMS is also adjusting its payments for the full range of occupations employed in physicians’ offices and making other adjustments called for in prior year public comments.