PRACTICE RESOURCES > Regulation/AUA Positions, Letters, and Talking Points > Revisions to Payment Policies Under the Physician Fee Schedule for Year 2003

Revisions to Payment Policies Under the Physician Fee Schedule for Year 2003

August 27, 2002

Thomas A. Scully Administrator
Centers for Medicare and Medicaid Services
Department of Health and Human Services
Attention: CMS-1204-P
P.O. Box 8013
Baltimore, MD 21244-8013

Re: CMS-1204-P – Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule for Calendar Year 2003.

Dear Mr. Scully:

The American Urological Association (AUA), which represents more than 10,000 practicing urologists in the United States, is pleased to provide comments on proposed revisions to the Medicare physician fee schedule for 2003. We appreciate that CMS made an effort in this proposed rule to improve certain aspects of the fee schedule, particularly the proposal to change the physician productivity adjustment in the Medicare economic index (MEI). Although some changes in the rule would be beneficial, they are unfortunately inadequate to address the extensive challenges faced today by Medicare-participating physicians. In light of looming multiple-year conversion factor decreases, skyrocketing medical liability premiums and unfunded mandates, CMS should address ways to make broader improvements to the fee schedule. We will discuss many of these items below.

I. Medicare Economic Index (MEI) Productivity Adjustment

We applaud CMS's proposal to change the methodology for adjusting for productivity in the MEI by using economy-wide multifactor productivity instead of the current labor productivity adjuster. Previously, CMS assumed overstated productivity gains in the physician services industry, meaning that the MEI understated increases in the cost of practicing medicine. Use of a multi-factor productivity adjuster will produce a more equitable and realistic adjustment that better reflects actual changes in practice costs.

However, we urge CMS to ensure that the MEI also takes into account the skyrocketing costs of medical liability insurance. According to the proposed rule, professional liability insurance expenses account for 3.2 percent of the MEI, and these expenses are forecasted to increase by 11.3 percent in calendar year 2003. However, for many physicians, liability premiums are increasing at a rate much higher than 11.3 percent, with increases reaching crisis proportion in some areas of the country and for some medical specialties.

The current crisis in physician liability insurance significantly affects urologists and the impact of this crisis was recently highlighted in an electronic survey of AUA members and their practices. The results showed an astounding average increase of 25.57 percent for the most recent premium year. While most areas reported increases, the highest reported premiums for each coverage level were reported in Washington, D.C., Florida and Louisiana. When asked what changes in behavior the premium increases had caused, AUA members indicated that such premium increases were discouraging them from doing some surgeries, forcing them to refer some cases that they did not previously refer and causing them to perform more tests to minimize their risks.

Therefore, we urge CMS to ensure that the 2003 MEI appropriately reflects the actual cost increases experienced by physicians.

II. Sustainable Growth Rate

A. Including the Costs of Drugs in the SGR

In the rule, CMS proposes to account for drug price growth using a refined methodology that uses growth in drug prices instead of the MEI as a proxy. This change appears to benefit physicians slightly by changing the 2003 update adjustment factor from -13.1 percent to -12.8 percent. However, because drugs do not fall under the definition of physician services, CMS should remove the cost of drugs from the sustainable growth rate (SGR) altogether.

The statute requires that the SGR formula factor in the Secretary's estimate of weighted average percentage increase in fees for all physicians' services. Medicare expenditures for drugs are growing more rapidly than spending on physician services. Thus, including the cost of drugs in this formula effectively finances the costs of drug spending by lowering how much spending on physician services can grow without exceeding the target rate of growth.

This is especially frustrating if you consider that many government policies-including increases in appropriations to federal research institutes, a streamlined FDA drug approval process and new Medicare screening benefits-are contributing to the increased spending on drugs. By including drugs in the SGR, the government is sending a mixed message on the importance of finding new therapies and technologies that can benefit Medicare beneficiaries by actually punishing physicians for then using the new technologies.

According to an analysis by the American Medical Association that is based on CMS actuarial projections of Medicare spending for drugs, if drugs are removed from the SGR, actual spending would be fairly close to the SGR targets. However, if drugs remain in the spending pool, spending growth would exceed the target and updates would be reduced by about half a percentage point each year. The AUA supports the AMA and Medicare Payment Advisory Commission in the belief that continued reductions in physician payments will jeopardize access to care for Medicare beneficiaries and therefore strongly urges CMS to exercise its authority to remove drugs from the SGR pool, rather than attempt to finance their cost through reduced payments to physicians.

B. Projection Errors in the SGR

CMS should revise projection errors made in estimating the percent growth in real gross domestic product (GDP) per capita and the percentage change in the number of Medicare part B (fee-for-service) enrollees for calculation of the 1998 and 1999 SGRs. Because the SGR system is cumulative in that the previous year's SGR is used to determine the next year's SGR, the underestimates in these projections will be carried forward permanently unless CMS corrects these projection errors.

III. Practice Expense Inputs for Thermotherapy Procedures

Thermotherapy treatments are a promising new area of technology for less invasive treatment of obstructive prostate disease, which was previously treated mainly with traditional surgery. Like many new technologies, these therapies offer Medicare beneficiaries broader treatment choices and greater convenience.

In April 1999, at the second meeting of the American Medical Association (AMA) Practice Expense Advisory Committee (PEAC), the AUA presented practice expense inputs for three thermotherapy procedures:

We asked the PEAC to review these codes due to serious reimbursement questions about their proper practice expense values, which were originally assigned by CMS using a crosswalk from CPT® code 52601, Transurethral electrosurgical resection of prostate (TURP). This was not a valid comparison because these heat therapies have entirely different costs than TURP and represent a very different technology. Also, at that time, none of these procedures had non-facility practice expense relative value units (RVUs) assigned to them, even though they were meant for office use.

At that time, HCFA told the AUA that these codes had to have their direct cost inputs valued by the PEAC in order for CMS to develop in-office resource-based practice expense RVUs. Otherwise, the codes would have remained inappropriately valued, physicians would not have been able to recover their costs for performing these procedures and Medicare beneficiaries would have lost an opportunity to receive these minimally-invasive, cost-effective treatments. Therefore, at the PEAC, we submitted cost inputs based on data from industry and information from urologists who performed these procedures.

At the April 2001 meeting of the AMA's Relative Value Update Committee (RUC), the AUA submitted work and practice expense information for yet another new thermotherapy code, CPT® code 53853 - Transurethral destruction of prostate tissue; by water-induced thermotherapy (WIT). Once again, we submitted data based on information from industry as well as urologists who performed this procedure. In reviewing our records, some of the items that CMS proposes to add to the list of supplies for WIT were in fact included in our original WIT submission to the RUC. Thus, WIT practice expense inputs were approved by the RUC, while inputs for the other heat therapy treatments were approved by the PEAC, which means they were not examined together by the PEAC.

Therefore, we agree that the best way to handle this is to have the PEAC review direct cost inputs for all heat therapy procedures concurrently. We will request that the PEAC review these codes in time for any recommendations to be forwarded to CMS for inclusion in the 2004 fee schedule update. Meanwhile, for the final rule, CMS should maintain the proposed changes for these procedures unless it receives compelling data from urologists or manufacturers that varies from the proposed inputs.

IV. Zero Work Pool

A. Eliminating the Zero Work Pool

We agree that CMS should not eliminate the zero work pool in the absence of a change to the methodology or additional data, since it would result in large reductions in payments for some of the specialties whose services are included in the pool. However, we urge CMS to develop a solution to this as soon as possible because the zero work pool is especially problematic when there are procedures in the pool that are performed by multiple specialties that have varying opinions on whether the procedures should be taken out of the pool. Until CMS develops an alternate solution, the specialty that performs a code the majority of the time should have the final say in whether a code stays in the zero work pool, especially if removing codes from the zero work pool will not negatively impact the codes that remain in the pool.

B. Removing Codes from the Zero Work Pool

We agree with the proposal to remove the non-invasive vascular diagnostic study codes (CPT® codes 93875 to 93990) from the zero physician work pool. Urologists perform two codes in this family the majority of the time and have already asked to have them removed from the zero work pool:

CPT® Code


Long Descriptor

Percent Billed by Urology



Duplex scan of arterial inflow and venous outflow of penile vessels; complete study




Duplex scan of arterial inflow and venous outflow of penile vessels; follow-up or limited study


In addition, we reiterate our recent request to have the following procedures that urologists perform the majority of the time taken out of the zero work pool for 2003 and hope that CMS can accommodate this request.

CPT® Code


Long Descriptor

Percent Billed by Urology



Ultrasound, pelvic (nonobstetric), B-scan and/or real time with image documentation; limited or follow-up (eg, for follicles)




Echography, transrectal;




Ultrasonic guidance for needle placement (eg, biopsy, aspiration, injection, localization device), imaging supervision and interpretation




Chemotherapy administration, subcutaneous or intramuscular, with or without local anesthesia


Although these procedures are part of larger "families" of CPT® codes that are in the zero work pool, urologists bill these the majority of the time and should be reimbursed for them using the resource-based methodology and the urology practice expense per hour. Removing this small number of codes from the zero work pool should have minimal effect on the other codes in these families that remain in the pool, and we believe CMS has the authority to do this. Waiting until CMS develops an alternate method for handling codes with zero work under the top-down methodology for deriving practice expense RVUs is not an acceptable solution, as we have no idea how long that will take.

V. Endoscopic Base for Urology Codes

We agree that CMS was applying the wrong payment reduction rules to CPT® codes 52234, 52234 and 52240 because of an incorrect identifier in the Medicare Physician Fee Schedule Database. We also agree that—as of January 1 2004—CMS should apply the endoscopic reduction rules to these services rather than the multiple procedure reduction.

VI. Status Indicators Used in the Medicare Fee Schedule

We seek clarification on the process used by CMS to make a change to a status indicator for an existing HCPCS code and request that affected parties be able to provide input on such changes before they are made. For example, the status code for HCPCS code G0025, collagen skin test kit, was changed in 2002 from an A (active code) to an I (Not valid for Medicare purposes. Medicare uses another code for reporting of, and payment for, these services.) and then to a B (bundled code, payment for covered services are always bundled into payment for other services not specified). We do not understand this change, as the skin test kit was a valid practice expense that went along with providing collagen implant therapy.

Although the company that manufactures the skin test kit decided to "solve" this problem by giving the skin test kit away for free, we are still concerned by this and wonder if that solution will work in the long term. If not, this expense should be captured in the practice expense supply inputs for the CPT® code for which the skin test kit is used. However, we are also concerned with the broader implications of this change because we found out about it after the fact, were allowed no input into the decision and could not determine the reasoning behind the change even after several inquiries. This is especially frustrating, as AUA members expect us to be able to answer their questions about these types of issues, even if we have no control over the final outcome.

Thank you for considering our comments. If you have any questions or need more information, please contact Robin Hudson, AUA Manager of Regulatory Affairs, at 410-689-3762.


Winston K. Mebust, MD
American Urological Association

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