Primary care physicians can expect a 2 percent bump in Medicare reimbursements in 2010, and geriatrics specialists will see a 3 percent increase, according to estimates from the Centers for Medicare and Medicaid Services.

But certain internal medicine subspecialties will not fare as well.

Cardiology stands to lose the most, with an 8 percent reduction in the coming year. All other internal medicine subspecialties will experience no more than a 1 percent increase or decrease next year.

On Oct. 30, the agency (CMS) released its 2010 Medicare physician fee schedule. The fee schedule -- or "final rule" -- came after several months of input from stakeholders, including the American College of Physicians and internal medicine subspecialty organizations, about proposed changes.

Though the fee schedule carries a different impact for different specialties, the numbers come with a caveat.

Physicians shouldn't read the allowable charge estimates as a direct pay cut or pay raise, explained Dr. Joseph Stubbs, president of the American College of Physicians and an internist from Albany, Ga. Most likely, he said, the total amount available for Medicare reimbursements will remain much the same in 2010 as this year.

The estimates represent a redistribution of the aggregate, or total amount in allowable charges for each specialty, Stubbs said. The impact on an individual physician will depend on what mix of services he or she provides, he said.

The changes result from a decision by the Medicare agency to update the data it uses to calculate the fee schedule, most significantly the "practice expense" portion, and to no longer recognize consultation service codes for payment purposes.

In determining allowable charges, the agency uses a measure called a "relative value unit," or RVU, which assigns value to a particular service. The RVU is based on three factors:

• The amount of work a physician has to do
• The practice expense (the cost for overhead, such as equipment, and staff, such as nurses or administrative workers, needed to provide the service)
• The liability insurance each service requires

Each factor is adjusted for geographic variations. The RVU for each service is then multiplied by a cost conversion factor ($36.07 in 2009) to produce the payment amount.

In calculating this year's RVU, the Medicare agency used data from a recent practice expense cost survey developed by the American Medical Association. More than 70 medical organizations, including ACP and all of the internal medicine subspecialty groups, helped fund the survey, and the Lewin Group, an independent health-care policy research and management group, also participated. The survey yielded the first comprehensive update to the practice expense since the late 1990s.

Because the practice expense accounts for about 44 percent of the RVU, and because much has changed in the last decade in the way medical care is delivered, the results of the survey are having a substantial impact on payments to several internal medicine specialties, explained an ACP expert on Medicare.

The use of new practice expense data will be phased in over four years. When the transition is complete in 2013, presuming no other modifications have been made in the intervening years, changes in allowable charges for practice expenses, according to the agency's fee schedule, will include:

• Cardiology: a 10 percent reduction
• Hematology/oncology: a 5 percent reduction
• Allergy/immunology: 1 percent reduction
• Rheumatology: 1 percent reduction
• Geriatrics: 6 percent gain
• Internal medicine: 4 percent gain
• Infectious disease: 3 percent gain
• Endocrinology: 3 percent gain
• Nephrology: 2 percent gain
• Pulmonary disease: 2 percent gain
• Gastroenterology: no net change

The changes in reimbursement were not a deliberate decision by the Medicare agency to benefit one specialty at the expense of another, Stubbs said. "When you are dealing with a fixed pie, and you create a new process for determining a significant element of the reimbursement, changes that are positive to one group are going to be negative to another group," he said. "But we all agreed to that going in."

However, ACP still encourages subspecialty organizations to continue working with the agency to address their concerns. "We want CMS to be aware and address specific concerns of any specialty organization and make adjustments as appropriate," Stubbs said.

Though the cost survey results are a major reason for changes to the fee schedule, they're not the only one. Two other factors are part of the RVU calculation as well: physician work and liability insurance.

The most significant impact to the physician work portion of the calculation was the elimination of a procedure code describing consultation services that was often used by subspecialists when called on to provide advice on complex cases.

The accuracy of physicians' billing and documenting consult services has been a point of contention between the Medicare agency and the medical community for some time.

"We have been trying to deal with CMS for a number of years to work through confusion about what constitutes a consult and what constitutes a regular office or hospital visit," Stubbs said. "It is very difficult for physicians to know what exactly is a consult." Consultations generally are billed at a higher rate than office visits.

During negotiations on drafts of the Medicare agency's proposal, ACP had agreed to support using office and hospital visit codes to bill for consults. But an ACP spokesman said that it was reassessing that position because the agency had failed to take many of the actions on which ACP's support had been based, such as paying a physician more for doing a consult in the office on a patient familiar to the physician. ACP plans to discuss next steps with the organizations representing internal medicine subspecialties, the spokesman said.

The College also plans to continue to work with the Medicare agency on how physicians should use the existing codes to compensate for the high-end cognitive activity that the consult code used to cover.

"We certainly feel that higher cognitive services related to consults should be adequately reimbursed," Stubbs said.

As for the third factor -- liability insurance -- involved in determining allowable charges, changes in liability insurance RVUs are the result of the Medicare agency using new data in its periodic review of this component.

An additional caveat that remained when the fee schedule was released may be on its way out.

All estimates and cost assumptions were based on Congress halting the scheduled 21.2 percent reduction in Medicare expenditures that was tied to what's called the "sustainable growth rate" (SGR), which had been adopted as part of the Balanced Budget Act of 1997. Using that formula, CMS had issued negative updates each year, starting in 2002. And each year Congress intervened to delay the cuts.

But the House voted Nov. 19 to repeal the formula.