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Written by: Bob Habasevich, PT on Friday, May 18, 2012 Posted in: Outpatient Rehab

Fee for service payment in the Medicare program is cited for its contribution to the spiraling costs of healthcare in the United States. Payment for delivering care has been the traditional reimbursement mechanism for physicians, therapists and clinicians participating in the Medicare program since its inception. Providers have argued the equity and fairness of this method, as it never seems to reflect the costs of clinical practice and too often favors one clinician type over another. The methods used to set Medicare payment rates and sources of data upon which these decisions are made often top the provider’s list of objections, prompting a group of physicians to sue the government in the attempt to force an end to these practices.

A few weeks ago U.S. District Judge William Nickerson ruled in favor of the government to dismiss the lawsuit naming former CMS Administrator Dr. Donald Berwick and HHS Secretary Kathleen Sebelius as defendants. He noted in his opinion that Congress has not only banned judicial review of the financial value and amounts that the CMS determines a physician’s work is worth, “but also the method by which those values and units are generated.”
Nickerson upheld the constitutionality of excluding judicial review since physicians know ahead of time how much they will be paid for their services before deciding to participate in the Medicare program, and therefore their due process rights are not violated. “Once they choose to become a participating physician or choose to treat Medicare patients, they have no legitimate expectation to be compensated at any rate other than that set forth in the PFS,” Nickerson wrote.

The Judge acknowledges the physician’s claim that the current fee determination structure favors the over utilization of high cost procedures creating a “devastating effect upon the nations health and healthcare spending.” However, the physician fee schedule will remain immune from the threat of judicial consequences and legality as it would appear that congress has positioned the process to be solely the purview of CMS. Fixing this problem will not be resolved in the courts but rather in Congress. How does this fare for other CMS payment issues, like the continuing debate on therapy caps? It would also appear that CMS has the authority and ability to set rates as it deems appropriate and providers retain their right to refuse to participate. There will be more to come on this topic later this summer.

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