In 2012, CMS began a process of reducing payment for therapy services based on multiple procedures performed during the same visit. This is termed the Multiple Procedure Payment Reduction (MPPR). Despite APTA’s and others' best efforts to get this removed, CMS began a 20% reduction policy on the second and subsequent procedure of each day. This is in effect for all therapy services provided on a single day. So, if the patient received OT on the same day as PT, CMS would pay the highest value procedure at 100% and reduce all subsequent procedures that day by 20% of the practice expense component. Overall, the average visit with around 3.7 units would have its payment reduced about 6%–7%. For the first quarter of 2013, CMS continued the 20% reduction policy. However, they’ve since switched to a 50% reduction.

2.) When?

The changes took effect April 1, 2013, so expect to see smaller checks from Medicare. The 50% reduction in the practice expense is significant because the practice expense typically accounts for about half of the total payment for each code.

One can determine Medicare allowed amounts by multiplying the conversion factor times the geographic pricing cost index (GPCI), then times the relative value unit (RVU) for each of the three components of “Work,” “Practice Expense,” and “Malpractice Expense.” See the chart below for an example:

Locality:

03102 00 Arizona

Conversion Factor:

$34.023

Code:

97110

Work

GPCI

1.000

0.978

1.015

RVU

0.45

0.48

0.01

Total

Calculated Amount

$15.31

$15.97

$0.35

$31.63

48.4%

50.5%

1.1%

3.) How Much?

The reductions are larger than you may think. If you practice in Arizona and typically bill for four (4) units (for example, 97530, 97110, 97110, and 97140), the payment dropped $13.98 or 11.8% compared to what you received for services rendered the first quarter of 2013. However, current payment rates at the 50% MPPR level are a whopping $23.29 or 18.3% below the allowed amount (what we are supposed to get paid).

Compared to 2012 payment levels, this represents a decrease of $9.50 or 8.4%. So, this year you get paid less than you did last year for the same services. Did anyone’s labor cost or rent go down? (Please contact me if you would like to know the specifics for your Medicare locality.)

4.) Now What?

That’s the question that we all face. Do we stop treating Medicare patients? Do we just accept it? Do we mobilize our Medicare patients to descend upon Washington? Do we change the way we treat?

These are difficult questions to answer. In my discussions with practice owners around the country, I hear frustration and resignation. CMS is demanding more and more from us: PQRS, functional limitation reporting, onerous documentation standards, and post-treatment audits. Many are considering dropping Medicare patients. Most want to continue to treat this needy population, but are concerned about the fiscal and frustration implications.

For arguments sake, let’s assume your practice is 100% Medicare and you are able to fill all treatment slots. From a purely financial standpoint you would be better off treating each Medicare patient for only one (1) unit, or 15 minutes, so that the MPPR does not take effect. This is probably not practical as our patients need more than 15 minutes and the compliance side would be just too much. Additionally, it would be inconvenient for the patient and would require many more visits to get a successful outcome.

The next best financial option would be to perform 30 minutes, or two (2) units, of treatment coupled with some appropriate group activities allowing you to use the 97150 code. This would allow more time with the patient, some in a shared setting. In a 100% Medicare population, this could add nearly $300 in revenue during an eight-hour treatment day per licensee.

In any case, in order to truly determine how this reduction affects your practice and what changes you’ll make, you must consider Medicare patient’s needs, the percentage of Medicare patients in your practice, staffing, and the culture of your practice.