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In Practice: More Death By A Thousand Cuts: Neurology in the Crosshairs as CMS Seeks to Slash Reimbursement for ‘Bread and Butter’ Codes



Two years ago, Neurology Today predicted that by 2015, the financial demands of keeping up with regulatory requirements and the looming salary decline due to loss of consultation codes, among other cuts, could be too much for neurologists who practice in groups, and certainly for those practicing solo, to bear. [See “The Demise of Private Practice Neurology: Death by a Thousand Cuts,”]

Today, adding to the anticipated economic and regulatory burdens that triggered this statement — which included the mandated physician quality reporting system, adoption of electronic health records with meaningful use standards, and transition to the use of ICD-10 — is an ongoing endeavor by the Centers for Medicare and Medicaid Services (CMS) to slash procedure code reimbursements. Whether employed in academic medicine or private practice, if your responsibilities include the performance of tests, listen up. What you are about to read may be the worst news yet for neurologists.

Poised squarely in the crosshairs are what CMS dubs as “potentially misvalued services” — codes and families of codes for which there has been fast growth, or technologic changes that may lower physician costs, and codes that are frequently billed together on the same day as a single service. So it's perhaps not surprising that among 70 Current Procedural Terminology (CPT) codes that CMS has referred to the American Medical Association (AMA) Relative (Value) Update Committee (RUC) for review in August 2011 were electromyography (EMG), nerve conduction studies (NCS), electroencephalography (EEG), and neuroimaging codes.


Before considering the impact that cuts on these neurology “bread-and-butter” codes may have, it's important to understand how they are valued. Since the establishment of the RUC as an independent expert consulting panel to CMS, its proceedings have been cloaked in secrecy. Its 29 physician members, including one neurologist (and an alternate), meet several times a year and cast confidential votes to recommend how CMS should value each service, and those recommendations help Medicare to determine how much it pays for it. In up to four consecutive days of often mind-numbing deliberations that can drag on for more than 12 hours a day, the committee grinds through dozens of services.

By considering the time and intensity of physician work, direct and indirect practice expenses, and malpractice costs, the RUC places a value on evaluation and management (E&M) services as well as procedures. Because Medicare's physician payment budget is fixed, raising rates for some procedures means lowering rates for others in order to maintain a budget neutral result. RUC decisions also trickle down to private carriers, who use the Medicare fee schedule as a guideline for setting their own payment schedules.


One reason services get picked up by the CMS radar is a rise in utilization. Sleep testing had been initially identified as one of the ten highest growth service categories by a December 2008 RAND report to the US Department of Health and Human Services (HHS); use of polysomnography codes had reportedly skyrocketed 422 percent between 2000 and 2006 while nerve conduction test coding had risen 256 percent.

A year later, the HHS Office of the Inspector General noted that the cost of diagnostic sleep testing had increased from $62 million in 2001 to $235 million in 2009, and CMS requested that the RUC revalue these procedures. Compared to valuation in the mid-1990s, RUC surveys in 2010 found that polysomnography had become less expensive to perform. Technologists were now monitoring two patients per night as opposed to one when the testing was new, computerized equipment had become much less expensive, and doctors interpreted the studies in less time. RUC consequently recommended substantially lower physician values for polysomnography. In 2011, when CMS adopted the RUC recommendations, physician reimbursement for polysomnography interpretation fell approximately 25 percent from 2010 levels and technical fees were targeted for a drop of about 20 percent over a four-year period.

The impact of these cuts were felt perhaps most acutely in Massachusetts where there was a concomitant decision by two of the three major non-government payers to require prior authorization for sleep studies, along with an enormous push towards home sleep testing.


said cuts to reimbursement for polysomnography — compounded by the decision by two of the three major non-government payers in Massachusetts to require prior authorization for sleep studies and an enormous push towards home sleep testing — have resulted in a reduction of at least 30 percent of sleep lab studies at Sleep HealthCenters, one of the largest sleep practices in the country.

“The end result has been a reduction of at least 30 percent of our sleep lab studies over the past year,” said neurologist Douglas Kirsch, MD, regional medical director (Greater Boston) of Sleep HealthCenters, one of the largest sleep practices in the country. The reason is pure economics: while an in-lab test costs the payer around $800-$900, a home test only costs about $200.

“It was the perfect storm,” recalled Dr. Kirsch, who, as a result of this catastrophic impact on the bottom line, had to close two of the companies' 24 facilities and let go of a large number of employees. Dr. Kirsch predicts that like other payer trends that have begun in Massachusetts, these changes are bound to spread to the rest of the country.

“All practitioners of sleep medicine need to look at Massachusetts as a cautionary tale,” Dr. Kirsch advised. He recommends that neurologists who specialize in sleep prepare themselves for the transition to home studies and make sure that their center is operating at maximal productivity and efficiency. “This also includes a close examination of your technologist-to-patient ratios and consideration of the use of nurse practitioners to build your practice,” he added. All neurologists who perform procedures should heed this advice, Dr. Kirsch stressed. “If you do EMGs two to three afternoons a week, for example, and the experience is similar to sleep from a revenue perspective, be prepared to face some tough business decisions.”


: “The government is looking for ways to reduce waste or duplication in the Medicare fee schedule as well as to correct existing bad assumptions.”


Indeed, CMS has reviewed billing practices for EMG and NCV and requested revaluation. For 2012, there are new EMG “add-on” codes approved by the AMA CPT panel and valued by the RUC. These new codes are used to report EMG when NCS is performed on the same day, while older codes are used to report EMG when done as a stand-alone procedure. According to the Federal Register, CMS expects the CPT, RUC, and the specialty societies to bring forward a more comprehensive coding solution which bundles services commonly performed together for calendar year 2013. Although the RUC process is confidential and ongoing subjects cannot be discussed, it will undoubtedly include these codes.

“The government is looking for ways to reduce waste or duplication in the Medicare fee schedule as well as to correct existing bad assumptions,” explained Marc R. Nuwer, MD, PhD, director of clinical neurophysiology at the David Geffen School of Medicine at the University of California, Los Angeles. For example, when a patient gets MRI scans of the pelvis and abdomen on the same day, the physician reviews medical records only once and prepares only one interpretation report. Because these two codes had been billed together very frequently, CPT developed a new CPT code for performance of both pelvis and abdomen MRIs on the same day, and RUC valued the new combined code at a figure below the sum of each MRI separately. By a similar analysis, EMG codes, when performed on the same day as nerve conduction studies, were reassessed last year, and motor and sensory codes are being scrutinized now.

Karolina Wanielista, senior health policy analyst for the AAN, projects that if the reimbursement for EMG codes drops 25 percent — a practice in which neurodiagnostic testing comprises 25 percent of its services — will experience a 6.25 percent reduction in gross revenue. If the reimbursement declines by 50 percent, a practice for which it comprises 50 percent of total services will experience a 25 percent reduction in gross revenue. Neurologists must lower overhead aggressively, or our take-home pay will be drop by an even higher percentage. [For more projections, see “How Will Your Practice Fare.”]


How Will Your Practice Fare?


Some experts are hopeful about the RUC review, however. “The Academy has always been honest when it comes to those assessments compared with some of our colleagues in other fields, so I think we'll be protected to a greater extent than others,” Dr. Nuwer, who serves as an AAN advisor to CPT, speculated. Because this is a physician fee schedule budget-neutral process, every time they squeeze ten million dollars out here, and twenty million out there, that money returns into the pool for everyone, Dr. Nuwer said. “It does not go back to the government, but rather travels from one small group of physicians to all physicians, raising the tide a tiny bit for all of us.”

The AAN typically sends four physicians and a senior staff member to each RUC meeting, and two physicians and another senior staff member to each CPT meeting, in order to participate vigorously as these debates impact the fee schedules. Marc Raphaelson, MD, the AAN senior representative at the RUC, noted: “The fee schedule has to be reshaped to reward E&M services adequately, and to get there, payment for procedures has to decline. A neurologist seeing patients all day long probably ought to be paid similarly to the one doing procedures all day long.”

In fact, soon, there may be a shift in that direction. As proceduralists fight for their share of the pie, the American Academy of Family Physicians (AAFP) has become increasingly vocal in calling for significant changes in the RUC composition, and some of its constituents are lobbying to withdraw entirely from the RUC. On Feb. 1, the AAFP had its first success when two additional seats devoted to primary care were added to the RUC: the American Geriatrics Society will now have a permanent seat and a rotating seat will go to an actively practicing primary care physician.

The AAN is currently planning RUC surveys for a number of our specialty procedures. Drs. Nuwer and Raphaelson encourage AAN members to take time out to participate in RUC surveys, when asked. And all members should pay attention to the new coding rules that take effect Jan. 1 when they come out each October. “Right now, if you are seeing EMG denials, it may be because the old EMG codes are not recognized,” Dr. Nuwer said. You need to pay attention so you can let your back office know when codes change, he added.

To understand more about the evolving practice environment, and learn strategies to sustain your practice, enroll in the AAN Fall Regional Practice Management series, Oct. 26 and 27, 2012.