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Hold on payment of claims for providers paid under the Medicare Physician Fee Schedule

April 6, 2010

The Patient Protection and Affordable Care Act (H.R. 3590), signed into law on March 24, 2010, did not repeal or revise the Sustainable Growth Rate (SGR) methodology for establishing Medicare reimbursement to physicians and other providers. Neither did the Health Care and Education Reconciliation Act of 2010 (H.R. 4872), and unfortunately, the SGR Temporary Extension Act of 2010 expired March 31, 2010, resulting in a 21.2 percent reduction of allowable rates.

The SGR mechanism for setting rates was implemented in 1998 with aims to control spending on physicians' services provided under Part B of Medicare. There is an overall target amount of spending on certain supplies and services provided under Part B. The target is based on estimated changes in physicians' fees, estimated change in average number of Medicare fee-for-service beneficiaries, estimated change in real per capita GDP and estimated change in expenditures due to regulatory changes. Payment rates are adjusted annually to reflect differences between the actual spending and the spending target. The payment adjustment is upward if spending is below the target and downward if spending is above the target. Over the years, the number of new beneficiaries has increased the spending of Medicare to reflect downward trends in the rate. There have been several attempts to change this methodology. However, no permanent changes have been adopted--only a congressional vote each year to not implement the SGR methodology for the current year.

In a Medicare update published Friday, March 26, 2010, on the CMS website and distributed through the listserve, CMS announced a hold on payment of claims for providers paid under the Medicare Physician Fee Schedule (MPFS). This hold began on April 1, 2010, and lasts for 10 business days ending April 14, 2010.

"CMS believes Congress is working to avert the negative update that will take effect April 1. Consequently, CMS has instructed its contractors to hold claims containing services paid under the MPFS (including anesthesia services) for the first 10 business days of April. This hold will only affect claims with dates of service April 1, 2010, and forward. In addition, the hold should have minimum impact on provider cash flow, because under the current law, clean electronic claims are not paid any sooner than 14 calendar days (29 for paper claims) after the date of receipt."

To help mitigate risks of cash flow problems, practices should work diligently to submit claims as quickly as possible for dates of service through March 31, 2010, as these will continue to be paid during this hold. Practices should also continue to submit claims as usual during the hold period to avoid the 14-day delay that would occur if claims were to be submitted after the hold.

If you have any questions about this issue or if you would like more information about HORNE's Health Care Services, please contact Jennifer Lott at jennifer.lott@horne-llp.com or by phone at 601.268.1040.