Brief No. 2009-12 November 2009 www.unmc.edu/ ruprihealth Rural Primary Care Physician Payment 2006–2009: What a Difference Three Years Doesn’t Make A. Clinton MacKinney, MD, MS; Keith J. Mueller, PhD; Mary Charlton, PhD I ntroduction The Resource Based Relative Value Scale (RBRVS) is the system by which the Centers for Medicare and Medicaid Services (CMS) calculates Medicare physician payment. In brief, Medicare assigns a relative value to each Current Procedural Terminology (CPT ® ) code based on the relative value of three costs—physician work, practice expense, and malpractice insurance. Medicare adjusts each relative value unit (RVU) for geographic cost differences, and then applies a conversion factor (CF) to translate these values into dollar physician payments. Previous RUPRI Center briefs have described the RBRVS methodology in detail and Medicare physician payment policy implications. 1,2,3,4 In November 2006, CMS released the Medicare Physician Fee Schedule Final Rule for calendar year 2007, which increased the relative value of certain Evaluation and Management (E&M) physician services (defined by unique CPT codes). To maintain budget neutrality, payment increases in E&M services were offset by payment decreases in other physician services. Although many physician specialties deliver E&M services, primary care physicians (family medicine, internal medicine, pediatric, and geriatric) most frequently deliver E&M services. Rural physicians are predominantly primary care physicians. Thus, targeted E&M service payment changes are of great importance to rural physicians. RUPRI Center for Rural Health Policy Analysis Rural Policy Brief Funded by the Federal Office of Rural Health Policy, Health Resources and Services Administration, U.S. Department of Health and Human Services (Grant #U1G RH07633) RUPRI Center for Rural Health Policy Analysis, University of Nebraska Medical Center, 984350 Nebraska Medical Center, Omaha, NE 68198- 4350, (402) 559- 5260, http:/ / www.unmc.edu/ ruprihealth Key Policy I mplications • The 2007 Medicare Physician Fee Schedule Final Rule that increased compensation for cognitive (Evaluation and Management) services at a rate exceeding increases for procedural services resulted in modest increases in rural primary care physician income in a prototypical practice. • A prototypical cognitive primary care practice realized a higher percentage increase in income, but a prototypical procedural practice realized a larger dollar increase in income (due to a higher 2007 baseline income). • However, additional changes to the Medicare Physician Fee Schedule between 2006 and 2009 reduced intended primary care physician compensation increases, resulting in only minimal increases in primary care physician income when adjusted for inflation.