The proposed rule on the Medicare Fee Schedule (MFS) for the year 2000 was published in the July 22 Federal Register. In the rule HCFA fully implements resource-based malpractice expense (RBME) relative value units in accordanec With BBA '97 mandates and continues the transition to resource-based practice expenses (RBPEs), along with a variety of other specific proposals. Included among the other issues addressed in the rule are the use of CPT modifier -25, qualifications for nurse practitioners, and supervision of diagnostic test services.

Regarding the specialty-specific impacts of the malpractice and RBPE proposals, the overall outlookis less than positive for nephrology. According to the specialty impact charts included in the rule, nephrology experiences a 1% gain due to the changes outlined in the rule, entirely due to the 1.3 % increase resulting from implementation of RBMEs. As these increases are due solely to the proposals within this specific rule, these impacts must be added to the 7 % loss for nephrology noted in the final rule for the 1999 MFS last November, resulting in nephrology having its overall loss reduced to 5.7%. As for those codes most commonly provided by nephrologists, all of the MCP code experienced gains, with the adult MCP having a 3% gain in RVUs. All of the expected losses for the inpatient, acute dialysis codes materialized, with an average loss for these codes of about 12%.

More ominously, for the first time HCFA applied to the MCP the site-of-service (SOS) differential that has been developed in the last several years as part of the effort to implement RBPEs throughout the entire fee schedule. According to the chart (table 2) published in the rule and appended to this analysis MCP services billed from, the non-facility (or "office") setting, the total payment would be $243.12)while for those services billed from the facility (or "hospital") setting the total payment would be $218.46. Presumably, these proposed payments are based on last year's conversion factor and represent national averages MASI has been in contact with HCFA staff, who admitted that it was not a conscious decision to establish separate SOS allowances for the MCP, and that issues around the MCP had not been thought out completely.

This staffer also indicated that for payment purposes the current definition of "facility' did not include dialysis facilities but only referred to hospitals, skilled nursing facilities, and ambulatory surgical centers. However, there continues to be ambiguity as to how HCPA will ultimate define "facility" as it pertains to dialysis services. MASI will be working with a subcommittee of the Health Care Payment Committee to develop a response that will persuade the Agency to utilize a single site of service for the MCP that is valued at the midpoint of the two allowances noted above. For the whole of organized medicine, one of the most significant aspects of the rule is HCFA's outright rejection of efforts by some of the procedurally oriented specialties to include costs for the physician's clinical staff services in the hospital setting in their practice cost allocations.

In the rule the Agency recites as it rationale for this decision same of the arguments outlined over the last couple of years by the evaluation and management community, primarily that: (1 ) Medicare already pays for these services under Part A, and (2) use of clinical staff in the hospital setting is not a typical practice.HCFA staff has privately advised MASI that the changes in practice expense-related impacts for all specialties were virtually entirely due to this decision, and that the magnitude of these changes surprised HCFA's analysts, who had believed that the monies redistributed from these changes would stay within their original cost pools. This analysis will describe in greater length the proposals in the rule of particular consequence to nephrology, with recomendations for possible comment where appropriate. At the end of the analysis is a list of the proposals contained in the rule that are for the most part unrelated to nephrology Board members with an interest in these issues can feel free to contact MASI for further explanation. The deadline for submitting comments to HCFA is September 20, 1999.