I was in the middle of re-stating these facts when I realized that Linda Walsh said it as well as I could:

As you know, CMS once again implemented its work adjuster to allow for Medicare budget neutrality in light of the increases from the last Five-Year Review.

For 2008, the adjustment factor increased to 0.8806. CMS will adjust the work RVUs on each code submitted by this factor prior to payment of Medicare claims. Non-Medicare payers may or may not follow suit.

Two important points from this:

1. Because the PE portion of many codes continues to rise as a result of changes made two years ago (e.g., E&M codes received a significant boost), the total value of each code is offset by a growing reduction to the Work portion. This is required because of CMS's "budget neutrality" rules which require them to maintain a constant budget. In English...CMS raised the values of a lot of codes, but in order to keep the total they pay out constant, they also lowered everything at the same time. Following this? I'll run some numbers in a week or two predicting the impact on pediatricians, but it will be slight.
2. Much more important is this line: "Non-Medicare payers may or may not follow suit." There is absolutely no valid reason, of which I am aware, that a private payer should be making "budget neutrality" adjustments to their payments. It's patently absurd and unethical, imo. Those adjustments are purely for Medicare legal reasons and are not part of the RBRVS valuation system. I know of some MCOs are that making this adjustment and some who aren't. Fight this, bitterly.

In a few weeks, I will update PCC's RVU calculators to reflect the 2008 data but will not be including the adjustment factor above.