Program Memorandum
Department of Health & Human Services (DHHS)
Intermediaries/Carriers
Centers for Medicare & Medicaid Services (CMS)
Transmittal AB-02-181 Date: DECEMBER 23, 2002
CHANGE REQUEST 2486
SUBJECT: Medicare Physician Fee Schedule (MPFS) Update and the 2003 Participation Enrollment Process

ATTACHMENT 2 CY 2003 Physician Fee Schedule Implementation

The Physician Fee Schedule (PFS) regulation was published on or about December 31, 2002, with a March 1, 2003, effective date. Unfortunately, under current law, the 2003 fee schedule includes a negative update. This negative update reflects a defect in the statutory formula for computing the sustainable growth rate, which has been affected by unanticipated changes in economic conditions. Regrettably, the Centers for Medicare & Medicaid Services does not have the legal authority to correct this flaw. The Administration has worked with Congress throughout 2002 to correct the provision of law, which results in the reduction in physician payments. The Administration will continue to work with Congress to make changes that could have a positive impact on physician payments in the coming years. Given this commitment, we hope that physicians/practitioners will choose to participate in the Medicare program in 2003, and into the future.

Since the publication of the final regulation was delayed past November 1, 2002, implementation plans for the CY 2003 PFS have been modified. Specifically:

• The participation enrollment period will commence on January 9, 2003, and run through February 28, 2003. The material will be released by the Part B carriers on or about January 2, 2003 to ensure delivery by January 9. Physicians/practitioners will have until February 28, 2003 to make their participation decision. Please note that this enrollment period differs from what you will see in mailed materials. This is because the enrollment materials were printed before this change.

• The CY 2003 payment rates for physician/practitioner services will be effective March 1, 2003.

• Claims for physician/practitioner services in January and February 2003 that are processed before March 1, 2003 will be paid at the CY 2002 payment rates.

• Claims for physician/practitioner services in January and February 2003 that cannot be processed before February 28, 2003, will be paid at the CY 2003 payment rates. Therefore, physicians/practitioners are encouraged to submit January and February claims to their carriers as quickly as possible.

•Beginning in July 2003, MPFS services with January and February 2003 dates of service and with 2002 HCPCS will be processed and paid at the 2002 rates. MPFS services for January and February 2003 services paid at the 2003 rates (because they were processed March 1, 2003 or later), will be automatically adjusted by Medicare carriers in July 2003. These automatic adjustments will pay the difference between what was paid and what should have been paid for January and February 2003 MPFS services based on the 2002 rates. Physicians/practitioners will be reminded about this change for July 2003 in a subsequent announcement. Further information on adjustments for changes in participation status will be forthcoming.

• Physicians/practitioners are encouraged not to use the new CY 2003 HCPCS codes for MPFS services performed during the months of January and February 2003. Those services should be submitted with the HCPCS codes used to bill them during CY 2002. If the new HCPCS codes are submitted before March 1, 2003, carriers will hold claims until March 1, 2003 and then pay the code at the 2003 rate.

(Note that fiscal intermediaries will return claims to providers for services performed in January and February 2003 that contain new 2003 HCPCS codes that are payable on the physician fee schedule. Providers are encouraged to use the HCPCS previously used in CY2002 to bill for the service furnished.)

•Physicians/practitioners should bill January and February 2003 services separately from services for other time periods. In addition, if a January or February 2003 service must be billed with a new HCPCS, it should be billed on a separate claim so that other services, with 2002 HCPCS, will not be held.

• The CY 2003 payment amounts for all other services (i.e., services not paid under the physician fee schedule) are effective January 1, 2003.