Reflecting and looking forward on the Medicare Physician Fee Schedule

                Dr. Siegel 

By Daniel M. Siegel, MD

The hard facts are in ― the Centers for Medicare and Medicaid Services (CMS) has released its final rule for the 2014 Medicare Physician Fee Schedule and here is what you can expect in the New Year.

On Jan. 1, 2014, overall, services provided by the dermatology specialty face a 2 percent reduction in Medicare payments. The impact of that 2 percent reduction for individual practices will vary depending on the practice’s mix of services.

Additionally, payment for services that have high practice expense components will go down and services whose values are primarily based on physician work will go up under the 2014 Medicare Physician Fee Schedule. This is a result of a significant change by CMS to the weighting of practice expense and physician work in the Medicare Economic Index, a fixed-weight price index that is used to update physician payments for inflation. 

In particular, the recalculation has reduced payments for chemodenervation and photochemotherapy. The impact of these changes will affect all specialties and is separate from the AMA’s Relative Value Scale Update Committee’s (AMA RUC) activities. Read more about the final fee schedule here.

Every November, when the final Medicare fee schedule for the upcoming year surfaces, it can be hard to digest the hand that’s been dealt. So it’s important to review what we’ve done this past year so we can fully understand what we need to do as we move forward.

How did we get here?

The AMA RUC advocates for fair valuation of services under Medicare programs. The American Academy of Dermatology Association’s (AADA) advisors to the RUC include me and my colleagues, Brent Moody, MD, Mark Kaufmann, MD, and Glenn Goldman, MD. Every year, the RUC engages in a rigorous review of physician surveys to create recommendations to CMS.

For example, in the spring of 2013, a survey was sent to randomly selected AADA members to gather data about the destruction of the premalignant codes (17000-17004). The AADA presented this data to the RUC in April, where the RUC made its recommendation to CMS after reviewing the survey results. Through the 2014 Medicare Physician Fee Schedule, CMS reduced reimbursement for the destruction of premalignant lesion family of codes (CPT 17000-17004), resulting in about a 10 percent reduction in payment for the premalignant destruction codes. The cuts were based off of narrowed procedure definitions and decreases in allowed procedure time.

The AADA is concerned about all reductions to these codes and the impact such reductions may have on the specialty’s ability to provide patient care, but overall the AADA supports CMS’s acceptance of the AMA RUC’s recommended relative value units and practice expenses.

What has the AADA done?

In addition to RUC involvement in the Medicare physician fee schedule process, throughout the year the AADA actively weighed in with CMS on important provisions affecting physician payments.

  • In May, AADA representatives met with officials at CMS, discussed concerns that CMS rejected the RUC recommended work values and practice expense for a number of dermatology services in the 2013 fee schedule.
  • In September 2013, the AADA commented on the proposed rule for the 2014 Medicare fee schedule. Read the AADA comments on the proposed rule.
  • The AADA submitted comments to CMS in September expressing strong opposition to provisions in its OPPS/ASC proposed rule that would collapse outpatient evaluation and management codes. Read the AADA comments on this proposed rule.
  • The AADA also worked with the AMA and other specialty societies to convey to CMS strong opposition to the proposed policy to advance site-neutral payment policies. That proposal would have reduced payment for photochemotherapy codes by more than 40 percent.

As a result of the AADA’s advocacy efforts and those of other specialty organizations, CMS has decided to not finalize its proposed policy to advance site-neutral payment policies and move toward payment parity between hospital-based clinic settings and physician offices. CMS may address this issue again in 2014. Additionally, the AADA had raised concerns that Carrier Medical Directors identified Mohs codes as potentially misvalued codes in the proposed rule, when these codes were reviewed at the April RUC meeting. In the final rule, CMS agreed with us, and instead of finalizing them as potentially misvalued, have accepted the AMA RUC recommendations. CMS accepted these values as interim values. 

What will the AADA do moving forward?

Going forward, the AADA will continue to analyze the final rule for its impact on dermatology and will provide further updates in the Dermatology Advocate e-newsletter and on the physician payment Web pages on The AADA will submit its comments to CMS prior to the Jan. 27 deadline, and will be meeting with key CMS officials to discuss concerns about the final fee schedule.

What can we do as a specialty?

In addition to the AADA’s advocacy efforts, member engagement in valuation surveys was influential in minimizing the negative impact of the final physician fee schedule. However, there is more that we as a specialty can do.

This rule will go into effect on Jan. 1, 2014, but there is still more that physicians can do to minimize the negative impact of these cuts. With physicians facing a 24 percent cut to Medicare in January, now is the time to insist that Congress address Medicare physician payment reform and repeal the flawed sustainable growth rate (SGR) formula to preserve Medicare patients’ access to care. I strongly urge you to log on to the AADA Dermatology Advocacy Network and submit a letter urging Congress to repeal the SGR before Jan. 1, 2014.

Additionally, as AADA President Dirk Elston, MD, referenced in a President’s Alert back in August, it is up to the profession to re-affirm its commitment to the highest level of professionalism by promoting evidence-based care, appropriate utilization of services, and lifelong dedication to the ethical practice of medicine. It is up to us to preserve our ability to practice and preserve the care available for our patients as we move forward.

Daniel M. Siegel, MD, is the immediate past president of the American Academy of Dermatology, and an adviser to the Resource-Based Relative Value Scale Committee.

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