1. Schaum, Kathleen D. MS

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Q: I heard that Medicare changed the physician's fee schedule in February 2006. How does that impact physicians that manage chronic wounds?


A: The original 2006 conversion factor caused a 4.5% decrease in the physician's Medicare payment. After a major lobbying effort by physicians and their professional organizations, the Deficit Reduction Act signed by President Bush on February 8, 2006, erased the 4.5% pay cut. Therefore, the 2006 conversion factor is now exactly the same as it was in 2005: $37.8975.


Because many claims had already been processed by the carriers at the lower rate, the claims had to be reprocessed. The carriers are permitted to reprocess batches of these already-paid claims and cut checks to physicians on a periodic basis. The carriers had until July 1, 2006, to reprocess claims already paid under the lower conversion factor. Physicians are allowed to request the difference in copayments and deductibles from patients, but are not required if the collection is disproportionately costly to the amount owed by the patient.


Although the 2006 conversion factor is exactly the same as the 2005 conversion factor, physicians' payment for individual services and procedures may differ from 2005 payments. Factors affecting this may include:


* The American Medical Association may have changed the relative values that Medicare uses to set rates.


* Federal legislation or regulations could have increased or decreased rates.


* The geographic practice cost index in a specific physician's area may have changed.



Table 1 lists some of the most common procedures and their new 2006 payment rates. Table 2 lists the new 2006 payment rates for the new skin substitute procedure codes that were reported in the March 2006 issue of Advances in Skin & Wound Care.

Table 1 - Click to enlarge in new windowTable 1. NEW RATES FOR COMMON PROCEDURES
Table 2 - Click to enlarge in new windowTable 2. NEW 2006 PAYMENT RATES FOR NEW SKIN SUBSTITUTE PROCEDURE CODES

Q: I am the coder in a physician's office. Where can I find the Medicare rates for the skin substitutes with "J" HCPCS codes? I cannot find these rates in the Medicare Physician Fee Schedule database?


A: I frequently receive questions about this from staff at physician offices. Effective January 1, 2005, Part B covered drugs and biologics with HCPCS codes that are not paid on a cost or prospective payment basis are paid based on 106% of the average sales price (ASP). The ASP is calculated by the Centers for Medicare & Medicaid Services (CMS) based on data submitted by manufacturers on a quarterly basis. The CMS updates carrier payment allowance limits via the ASP file. Therefore, you must monitor the Medicare ASP file in addition to the Medicare Physician Fee Schedule. The next ASP update will be effective July 1, 2006, through September 30, 2006.


Q: Did any of the Medicare payment rates for skin substitute products change when the April 2006 quarterly average sales prices were released?


A: Yes. Every skin substitute's ASP changed; some increased and some decreased. Remember, ASP rates are used to pay physicians and hospital-owned outpatient wound care departments that are paid by the ambulatory payment classification system (see Table 3 for a comparison of the first quarter and second quarter 2006 ASP prices for skin substitutes with "J" codes).

Table 3 - Click to enlarge in new windowTable 3. 2006 ASP PRICE COMPARISON OF SKIN SUBSTITUTES WITH "J" CODES