Early Years (1970-1980)
The APS rate increase history began in the early 1970s, when the federal government first introduced the Medicare and Medicaid programs. In 1972, the Health Care Financing Administration (HCFA) began setting the APS rates for Medicare Part B services. Initially, the rates were based on the physician's usual, customary, and reasonable (UCR) charges. However, this system was deemed flawed, leading to the introduction of the Resource-Based Relative Value Scale (RBRVS) in 1992. During this period, the APS rates increased at an average annual rate of 5.5%. However, the rate of increase slowed down in the late 1970s due to inflation and economic downturn. In 1978, the Medicare reimbursement rates were adjusted to account for inflation, but the APS rates continued to lag behind the Consumer Price Index (CPI). The following table highlights the average annual APS rate increases during this period:| Year | APS Rate Increase (%) |
|---|---|
| 1970 | 7.2% |
| 1975 | 4.8% |
| 1978 | 3.1% |
| 1980 | 5.5% |
Introduction of RBRVS (1992-2000)
The RBRVS system was introduced in 1992 to replace the UCR-based system. The RBRVS system assigns relative values to each service based on its resource intensity. This change aimed to reduce physician payments and bring them more in line with the actual costs of providing services. The introduction of RBRVS led to a significant shift in the APS rate increase history, with rates increasing at an average annual rate of 4.2% during this period. However, the RBRVS system was criticized for its complexity and the time-consuming process of updating the relative values. In 1998, Congress passed the Balanced Budget Act (BBA), which introduced the Medicare Physician Fee Schedule (MPFS) and updated the RBRVS system. The BBA also introduced the concept of the "budget neutrality" provision, which aimed to limit the total amount of Medicare spending on physician services. The following table highlights the average annual APS rate increases during this period:| Year | APS Rate Increase (%) |
|---|---|
| 1992 | 3.5% |
| 1995 | 4.1% |
| 1998 | 2.9% |
| 2000 | 4.5% |
Modern Era (2001-2020)
| Year | APS Rate Increase (%) |
|---|---|
| 2001 | 3.1% |
| 2005 | 2.8% |
| 2010 | 1.9% |
| 2015 | 3.3% |
Clinical Practice Expense (CPE) and Work RVU (wRVU) Adjustments
- 2011: CPE adjustment reduced to 1.0%, wRVU adjustment increased to 1.5%
- 2012: CPE adjustment increased to 1.5%, wRVU adjustment increased to 1.0%
- 2015: CPE adjustment increased to 2.0%, wRVU adjustment increased to 1.5%
- 2020: CPE adjustment increased to 2.5%, wRVU adjustment increased to 1.0%
Future of APS Rate Increases
The future of APS rate increases is uncertain, with various factors influencing the landscape. The ongoing debate around the sustainability of Medicare spending, the impact of value-based payment models, and the role of telemedicine are all likely to shape the APS rate increase history in the years to come. The following steps can help you navigate the complex world of APS rate increases:- Stay informed about changes to the Medicare Physician Fee Schedule (MPFS) and the relative values of services.
- Monitor the impact of CPE and wRVU adjustments on your practice's reimbursement rates.
- Consider participating in value-based payment models to adapt to the changing landscape.
- Stay up-to-date with the latest news and developments in the healthcare industry, particularly those related to Medicare and Medicaid.