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CMS Conversion Factor a Neutral Change (at least for the most part)

Posted by Marty Hudson on Jan 11, 2011 7:36:50 AM

Recent reports have come out that state “even though Congress approved a zero percent update for Medicare physician fees in 2011, the CMS calculation for the 2011 conversion factor represents a 7.8554 percent cut.”  Those reports are somewhat misleading if you don’t do your homework and make sure you understand the reason for the adjustment.  The reduction in the conversion factor is necessary due to a rescaling of the RVUs to line up with the Medicare Economic Index. 

In other words RVUs actually increased in certain areas; therefore requiring the decrease in the conversion factor to make the fee schedule neutral.  Here is an example for CPT 99213, established office visit:

                                                            2011      2010     Change

Work RVU                                            0.97       0.97            -0-

Non-fac Practice Exp RVU                   1.05        0.88          (0.17)

Malpractice RVU                                  0.07       0.05           (0.02)

Total                                                    2.09       1.90           (0.19)

Conversion Factor                          33.9764   36.8729    (2.8965)

Fee (w/o Geo Index)                         $71.01   $70.06          $0.95

So, in this example of CPT 99213, the unadjusted fee actually increases from 2010 to 2011 by nearly a dollar.  If you take a look at your most commonly used codes you will discover a lot of ups and downs between the two years, but I have not seen anything significant. 

Of course, you should review your fee schedule every year, compare to CMS and make appropriate changes.  Using the Geographic Index for your area will also make a difference, as they also have changes, both ups and downs.

You can read the CMS Transmission here: http://bit.ly/hWh0Kg

Once you have done your review and analysis, I think you’ll find the changes in the CMS Conversion Factor a Neutral Change (at least for the most part).

--- Marty Hudson

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