SGR Cut Delayed, But Other 2012 PFS Rule Changes Go Into Effect

January 11, 2012


The payroll tax extension legislation that was passed by Congress and signed by the President on Dec. 23, 2011 delayed the 27.4% Medicare pay cut under the SGR formula for two months. It also extended the floor on the work geographic practice cost index (GPCI) and certain other policies.


However, according to the Centers for Medicare & Medicaid Services, all of the other changes that were included in the Medicare physician payment final rule for 2012 still took effect on January 1, 2012, as originally intended. This includes numerous changes in the relative value units, GPCIs, electronic prescribing and quality reporting programs, and multiple procedure payment rules for 2012.


In addition, although the payroll tax extension legislation provided for a zero percent update to the Medicare conversion factor, the CMS final rule indicated that there would be a 0.18% increase in the conversion factor for budget neutrality, and this change also became effective January 1, 2012. The budget neutrality increase is due to CMS adoption of the RVS Update Committee recommendations for misvalued codes. The 2011 conversion factor was $33.9764. The 2012 conversion factor is $34.0376.


CMS also has indicated that because Congress acted so late in 2011 to prevent the SGR cut, claims must still be held for a period of time to allow CMS time to develop the new payment rate files and the Medicare claims administration contractors time to install and test the files. CMS expects that most, if not all, contractors will be ready to process claims under the revised rates on or before January 18, 2012, which is the end of the 10-business-day claims hold period previously announced—though contractors’ time frames may differ. Contractors are expected to have the new rates posted to their web sites by January 11.


Finally, CMS published in the January 4, 2012, Federal Register a correction notice to the 2012 final rule that modifies the relative values for a number of services. The agency also posted to its web site a revised relative value file reflecting both the corrections and the legislation that stopped the 27.4% cut.