The Centers for Medicare & Medicaid Services (CMS) has published its proposed rule to update the Medicare physician fee schedule (MPFS) for calendar year (CY) 2017. The proposed rule contains numerous Medicare payment and policy proposals, including consideration of potentially misvalued codes, revisions to diagnostic imaging policies, updates to Stark Law regulations, and new enrollment requirements for providers and suppliers furnishing services to Medicare Advantage enrollees. Highlights of the sweeping rule include the following:

  • Under the proposed rule, the 2017 MPFS conversion factor (CF) would be $35.7751, down slightly compared to the 2016 CF of $35.8043. This update reflects a 0.5% update factor specified under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which is offset by a -0.51% relative value unit (RVU) budget neutrality adjustment and a -0.07% adjustment resulting from implementation of a multiple procedure payment reduction policy.
  • Numerous provisions in the proposed rule address potentially misvalued services, including both valuation of specific procedures and broader policy issues. For instance, CMS proposes values for new moderate sedation codes along with a methodology to revalue current CPT codes that include moderate sedation as an inherent part of the procedure. CMS also proposes to review 83 codes for 0-day global services that typically are reported with an evaluation and management (E/M) service with modifier 25 (which allows physicians to be paid for E/M services that would otherwise be denied as bundled). In total, CMS estimates that its proposed misvalued code changes would achieve 0.51% in net expenditure reductions, which would exceed the 0.5% statutory target for net reductions in MPFS expenditures resulting from adjustments to misvalued code RVUs. If the final rule’s net reduction is less than this target, the CF would be reduced accordingly. CMS also proposes additional refinements to a policy established last year to implement a Protecting Access to Medicare Act of 2014 (PAMA) provision that phases in over two years any decrease of 20% or more in total RVUs for an existing service. In the 2016 final rule, CMS adopted a policy to phase in 19% of the reduction in value in the first year, and the remainder of the reduction in the second year; CMS now proposes to cap second and subsequent year reductions at 19%. Furthermore, CMS proposes to begin collecting data to determine post-operative office and facility visit patterns in 10 and 90 day global codes in accordance with MACRA.
  • CMS proposes to continue implementation of a PAMA requirement that physicians who order advance diagnostic imaging services consult with appropriate use criteria (AUC) via a clinical decision support mechanism (CDSM). The proposed rule proposes eight priority clinical areas for AUC, sets forth CDSM requirements and the CDSM application process, and proposes exceptions for ordering professionals for whom consultation with AUC would pose a significant hardship. Notably, while PAMA mandates that CMS fully implement the AUC program by January 1, 2017, CMS confirmed that it will not meet this deadline. According to the proposed rule, the requirement that ordering professionals begin consulting CDSMs and furnishing professionals append AUC related information to the Medicare claim will not begin earlier than January 1, 2018.
  • CMS proposes requiring providers and suppliers to be enrolled and have approved status in Medicare in order to render services to beneficiaries in the Medicare Advantage program. CMS would apply the proposed requirement to: network providers and suppliers; first-tier, downstream, and related entities; providers and suppliers in Program of All-inclusive Care for the Elderly plans; suppliers in cost health maintenance organizations and competitive medical plans; providers and suppliers participating in demonstration and pilot programs; locum tenens suppliers; and incident-to-suppliers. CMS proposes to make these requirements effective the first day of the next plan year that begins two years from the date of publication of the CY 2017 final rule.
  • The proposed rule would implement Consolidated Appropriations Act of 2016 provisions that (1) “incentivize” the transition from traditional x-ray imaging to digital radiography by reducing by 20% the MPFS payment for the technical component of film x-rays beginning in 2017 and (2) reduce from 25% to 5% the payment reduction for the professional component of multiple imaging services furnished on or after January 1, 2017
  • In the proposed rule, CMS is “re-proposing” the physician self-referral per-click restrictions related to arrangements involving the rental of office space or equipment. Specifically, CMS proposes adding a requirement that rental charges for office space or equipment may not be determined using a formula based on per-unit of service rental charges, to the extent that such charges reflect services provided to patients referred by the lessor to the lessee. CMS believes that most parties already comply with these regulatory provisions since they originally became effective in October 2009, before the D.C. Circuit struck down the ban on per-click rental charges in 2015. Thus, per-unit payments for the rental of office space or equipment will be permissible under the proposal, but only where the referral for the service to be provided in the rented office space or using the rented equipment does not come from the lessor.
  • The proposed rule includes numerous other policy provisions, including: a request for public comment on topics for potential future rulemaking related to Open Payments (“Physician Payments Sunshine Act”) data reporting; expansion of the Diabetes Prevention Program innovation model beginning in 2018; changes to Medicare Shared Savings Program measure provisions and beneficiary assignment rules; coding and payment changes intended to improve payment for care management, primary care, and behavioral health services; public release of certain Medicare Advantage bid pricing data and Medicare Advantage and Part D plan medical loss ratio data; additions to the list of services that may be furnished via telehealth; and updates to the Geographic Practice Cost Indices. Note that CMS does not propose updates to physician quality measures in the proposed rule in light of the transition to the new Merit-Based Incentive Payment System and Alternative Payment Model program under MACRA, which CMS has proposed through a separate rulemaking (although CMS does propose technical changes to the Value Modifier program, including an update to informal review policies).

CMS will accept comments on the rule until September 6, 2016.