ICD-10 delayed for 1 year, Medicare fee cut

Washington, DC-Congress has approved legislation delaying for 1 year a massive 24% Medicare fee cut, which had been scheduled to take effect April 1, as well as implementation of the ICD-10-CM coding system.

The Senate approved the Protecting Access to Medicare Act (H.R. 4302) on a 64-35 vote Monday night (March 31), following approval on a voice vote in the House of Representatives last Thursday (March 27).

Instead of a pay cut, as required under Medicare's Sustainable Growth Rate (SGR) fee-setting formula, the legislation grants Medicare physicians a 0.5% pay increase through March 31, 2015. Medicare carriers will hold off on processing claims filed during the first 10 days of April to allow time for enactment of the legislation and necessary system changes.

ICD-10-CM coding will now be required for diagnoses on all public- and private-sector insurance plan claims beginning October 1, 2015, instead of the same date this year.

The legislation is the latest in a series of 17 temporary “doc fix” bills enacted since 2002 to spare physicians Medicare pay cuts required under the SGR fee-setting formula. It comes as a disappointment to healthcare provider organizations, including the American Academy of Ophthalmology (AAO), which hoped Congress would permanently remove the SGR from the Medicare fee formula this year.

"Congress has punted for the seventeenth time, opting to pass a temporary solution to the extreme Medicare physician pay cut caused by the faulty sustainable growth rate formula," said David W. Parke II, MD, chief executive officer of the AAO. "Lawmakers have walked away from efforts to pass meaningful payment reform legislation that includes permanent repeal of the SGR formula. Instead, Congress has chosen a fiscally irresponsible $20 billion short-term solution, taking away funding mechanisms that could have been used to offset the cost of permanent SGR repeal.

“Congress' inclusion of a provision requiring the review of physician payment codes will result in $4 billion in physician cuts, compromising patients' access to surgical and specialty care,” Dr. Parke continued.

As late as Monday afternoon, Senate Finance Committee Chairman Ron Wyden (D-Ore.) was hoping to win approval of a comprehensive Medicare payment reform bill, The SGR Repeal and Medicare Payment Modernization Act (S. 2000, HR 4015), which would have guaranteed a 0.5 percent increase in physician reimbursements through 2018.

That comprehensive Medicare reform package was praised as a rare example of bipartisan cooperation, when it was jointly released by the House Ways and Means, House Energy and Commerce, and Senate Finance committees on Feb. 6.

However, House Republicans added a provision delaying the Affordable Care Act's (ACA) individual insurance mandate before passing the bill earlier this month. Democratic leaders in the Senate promptly announced they would not consider the amended legislation and the White House announced President Obama would not sign it.

House members then quickly formulated and passed the temporary doc fix bill, including, to the surprise of some observers, a delay in the ICD-10-CM deadline.

ICD-9-CM codes are designed to provide much more specific reporting of diagnoses than the now-used ICD-9-CM code set. There are approximately 70,000 ICD-10-CM codes, compared with approximately 14,000 ICD-9-CM codes. Implementation is considered a challenge by some practitioners. The U.S. Centers for Medicare & Medicaid Services (CMS) recommends health care practice phase-in use of the ICD-10 codes over at least a nine-month period.

Under the SGR fee-setting formula, Medicare physicians were to see reimbursements cut 24 percent on January 1, 2014. However, Congress late last year passed a temporary “pay patch” bill, providing a 0.5% increase through March 31.

The SGR was added to the Medicare fee-setting formula under the federal Balanced Budget Act of 1997 in an effort to curb growing Medicare costs. The statistic is used to tie Medicare cost increases to the Gross Domestic Product. However, instead of limiting annual Medicare Part B reimbursements, the revised formula has prompted the U. S. Centers for Medicare and Medicaid Services (CMS) to annually propose increasingly steep reimbursements cuts. During all but 1 year, Congress has intervened at the last minute to either freeze or nominally increase Medicare pay rates.

The SGR repeal would cost $138 billion over the next 10 years, according to the Congressional Budget Office (CBO). House Republicans had hoped to partially offset that cost by delaying the ACA individual mandate, a step that would save about $9 billion over the same period, according to the CBO. Sen Wyden   proposed covering the cost with savings in military spending as the U.S. draws down forces in Afghanistan.

The new doc fix bill now give lawmakers another year to find funding to cover permanent repeal of the SGR.

Bob Pieper, a former senior editor at the American Optometric Association, is a longtime writer in optometry. Reach him at rfpieper@outlook.com.