Physicians soon will begin receiving pay for some of the activities necessary to help patients transition smoothly from hospitals to community settings. The Centers for Medicare & Medicaid Services (CMS) has announced it will bridge this missing link in physician payment policy in the hope that it can improve care for Medicare beneficiaries and save money by avoiding costly hospital readmissions.

On Nov. 1, the CMS accepted the American Medical Association’s (AMA) recommendations to compensate primary care physicians for transitional care management, moving a step closer to implementing key provisions of the Affordable Care Act emphasizing the importance of the patient-centered medical home.

Barbara Levy, M.D., a Washington OB/GYN and vice president of health policy for the American Congress of Obstetricians and Gynecologists, said for the first time the CMS has recognized and agreed to pay for practices designed to keep recently discharged hospital patients healthy. Levy said that actions like medication reconciliation, appointment reminders and other patient interactions make care transitions more seamless.

Levy explained that primary care physicians will provide that coordination in the first 30 days after discharge, offering support for medication management, answering patient and family questions, and coordinating follow-up appointments and visits with other specialists, so that care can be delivered as seamlessly as possible. 

“Many Medicare beneficiary families are stuck and unable to help, so CMS is saying the primary care physician practice is taking on that champion role, not just as traffic cop directing care, but also offering a support structure,” Levy said.

AMA payment experts hope the move to reimburse primary care physicians for coordinating Medicare patients’ care after hospital discharge will lead to fewer hospital readmissions and emergency room visits, thereby improving patient outcomes while saving Medicare money.

The change in CPT codes reallocates nearly $600 million toward improving care transitions from the redistribution of about $2.5 billion in other physician reimbursements.

On Nov. 14, more than 1,000 medical coders, physicians and consultants gathered in Chicago for the AMA’s “CPT and RBRVS (Resource Based Relative Value Scale) 2013 Annual Symposium.” Symposium speakers detailed the nearly 600 code changes going into effect on Jan. 1, 2013. Speakers from the AMA specialty organizations that created the new codes and a CMS official translated the code sets from an alphabet soup of acronyms.

CPT codes are revised annually and take effect Jan. 1 of each year, and are used to bill Medicare and other payers for physician and provider services. The CPT changes must be budget-neutral, particularly from bundled service codes that were overvalued or valued differently.

Levy said the CMS’ acceptance of the AMA’s work is recognition of the medical benefits attributable to improved care transitions. Levy, who chairs the AMA Specialty Society’s Relative Value Scale Update Committee (RUC)—one of the AMA sections that recommended values used to create the new CPT codes—said after discharge from a hospital or nursing home that “many patients feel they’ve fallen through Alice in Wonderland’s hole into a nether world.”

“We do an outstanding job of providing medication and pages of document and instructions, but the support and follow up has not previously been acknowledged as a necessary service,” she said. “So the recognition by the Obama administration that transition of care and care coordination are important is a big thing.”

She called the CMS’ acceptance “an incremental step towards a fully integrated medical home model.”

By ensuring better continuity of care for patients after discharge from a hospital or a skilled nursing facility, community physicians and practitioners will play a critical role in achieving better health for patients and lower health expenditures overall, a CMS spokesperson said in a statement. 

She added, “The final 2013 physician fee schedule rule supports this work, with a new policy to pay a practitioner to coordinate a patient’s care in the 30 days following a hospital or skilled nursing facility stay.”

“The changes in care coordination payment and other changes in the rule are expected to increase payment to family practitioners by 7 percent, and other primary care practitioners between 3 percent and 4 percent if Congress averts the statutorily required reduction in Medicare’s physician fee schedule” due to the Sustainable Growth Rate.

An AMA staff official said the new CPT codes and reimbursements also should mean that primary care physicians will have additional resources to hire nurses and staff to help manage patients after discharge.

She said many physicians lack the infrastructure to effectuate follow-up care, especially when they are not paid for it. In many cases, the CPT changes mean that physicians who had been performing these services already will now be paid for the work.

“Hopefully, we will see improvements in care,” she said.

The code changes relate to telephone calls physicians must make to patients within two days of hospital discharge. They also must see patients within seven or 14 days, depending upon patient condition acuity.

The AMA staff official explained that patients often visit emergency rooms or are rehospitalized because of confusion over their medications. And because so many hospitals are employing hospitalist physicians, primary care physicians frequently don’t even learn of their patients’ hospitalizations.

“The phone calls within two business days should incentivize hospitals to improve that notification,” she said.

In addition to the transitional care reimbursements, the CMS also said it would consider adopting AMA-recommended CPT changes to improve care coordination for patients with complex chronic care issues.

“The newest edition of the CPT code set is a good example of how the AMA and organized medicine are working jointly in summarizing complicated medical services with a simple five-digit numeric code,” said AMA President Jeremy Lazarus, M.D., in a statement. 

The book of new CPT code changes was released in September, but the CMS did not announce its adoption of the transition care codes until Nov. 1.

In addition to the new transition care codes, the 2013 CPT edition includes 116 new codes for molecular biology, reflecting an advanced understanding of the molecular basis of disease gleaned from the Human Genome Project. The new edition includes more than 550 changes: 186 new codes were added; 119 obsolete codes were deleted; and 263 codes were revised. Many of the new code changes reveal practice changes, technological and pharmacological innovations or the latest evidence-based science. The code changes were created with input from more than 100 medical specialty societies, physicians and allied health professionals.

Peter Hollmann, M.D, who chairs the AMA’s CPT Editorial Panel, said there is near unanimous agreement that care coordination services beyond face-to-face visits are very important.

“These codes were specially created with the goals of both recognizing practice expenses and providing payment for those services to staff up offices,” said Hollmann, a geriatric medicine specialist and the associate chief medical officer for Blue Cross & Blue Shield of Rhode Island. “I think this will improve access to care,” Hollmann predicted.

Some argue that the the CPT code changes will mean little to physicians treating Medicare patients if Congress does not stop the Sustaintable Growth Rate (SGR) cuts slated to go into effect on Jan. 1, 2013. Those cuts would reduce Medicare payments to physicians by nearly 27 percent and the scheduled sequestration—the congressionally imposed ‘fiscal cliff’ cuts—would trim another 2 percent of Medicare physcian payments.

“Doing this alone won’t solve the Medicare cost crisis,” said Dr. Stephen Levinson, a  former ear, nose and throat specialist and founder of the quality and compliance consulting firm ASA, based in Easton, Conn.

While Levinson said that CMS’ intent is good, he added: “Medicare already pays far too little for their services, 20 percent to 25 percent of what it should be paying. These CPT code changes are an attempt to address reimbursement discrepancies to ‘sink the Titanic equally.’ And now they (the CMS) are trying to tweak that.”