On July 11, 2014, the Centers for Medicare and Medicaid Services ("CMS") published in the Federal Register a proposed rule revising the Medicare physician fee schedule ("PFS") and other Medicare Part B payment policies.  These changes would be applicable to services furnished on or after January 1, 2015, but will also have effects beginning in later years.  This proposed rule is subject to a comment period, which ends on September 2, 2014 at 5:00 P.M.  All comments must be received by CMS no later than that time.  The full text of the proposed rule can be found here. The summary below addresses several provisions of the proposed rule, but is not exhaustive.

Payment Impacts

The most significant payment impact of the proposed rule falls on radiation therapy centers and radiation oncology.  CMS has proposed reductions of 8% and 4%, respectively.  These reductions are due in part to reclassifying certain expenses as indirect rather than a direct practice expense.

Potentially Misvalued Codes

CMS has proposed modifying the process for establishing values for new, revised, and potentially misvalued codes.  A number of commenters expressed concerns that even though misvalued codes were being identified by CMS in proposed rulemaking, they were not being given adequate notice and opportunity to comment on the revaluing thereof.  This is due in part to CMS taking recommendations from the American Medical Association Specialty Society Relative Value Update Committee ("RUC") as part of the valuing process, and these recommendations not being widely available for comment before being adopted by CMS into interim final values.  Accordingly, CMS proposes to include proposed values for all new, revised and potentially misvalued codes for which it has complete RUC recommendations by January 15th of the preceding year.  For the calendar year 2016 rulemaking process, CMS would include in the proposed rule proposed values for all services for which it has RUC recommendations by January 15, 2015.  For those codes for which CMS does not receive the RUC recommendations by January 15th of a year, CMS would delay  revaluing the code for one year (or until CMS receive RUC recommendations for the code before January 15th of a year) and include proposed values in the following year's rule.   For new, revised, and potentially misvalued codes for which CMS does not receive RUC recommendations before January 15th of a year, CMS proposes to adopt coding policies and payment rates that conform, to the extent possible, to the policies and rates in place for the  previous year. CMS would adopt these conforming policies on an interim basis pending its consideration of the RUC recommendations and the completion of notice and comment rulemaking to establish values for the codes.  CMS has proposed adding approximately 80 codes to its list of potentially misvalued codes.

Global Surgery Codes

CMS is proposing to transition all 10-day and 90-day global surgery codes to 0-day global codes.  The 10-day global codes would be transitioned to 0-day codes in calendar year 2017, and the 90-day codes would be transitioned to 0-day codes in calendar year 2018.  Medically reasonable and necessary visits would be billed separately during the pre-and-post-operative periods outside of the day of the surgical procedures.  CMS is proposing this transition in part because of the difficulty in proper valuation.  Valuation of the global codes is based on certain assumptions about the frequency and type of services, especially post-operative services, which may result in skewed values when the actual services provided are either more or less frequent, or of a different type, than what was assumed in the valuation.  CMS believes this proposed change will result in more accurate valuation of these services.

Telehealth Services

In response to several requests, CMS proposes to add the following as covered Medicare telehealth services effective for calendar year 2015: psychoanalysis, family psychotherapy, annual wellness visits, and prolonged office visit (evaluation and management) services.  The specific CPT codes can be found on page 40358 of the proposed rule.

Adjustments to Malpractice RVUs

CMS establishes values for services provided under the Physician Fee Schedule using three relative value units ("RVUs"):  work RVUs, practice expense RVUs, and malpractice RVUs.  CMS reviews and adjusts malpractice RVUs no less often than every five years.  For calendar year 2015, CMS conducted a comprehensive review and update of malpractice RVUs and proposed new malpractice RVUs for all services.  Malpractice RVUs are based mainly on insurance premium data for $1 million/$3 million claims-made policies.

Off-campus Hospital Departments

In the proposed rule, CMS notes the growing trend toward hospital acquisition of physician practices and subsequent treatment of those locations as off-campus provider-based departments of the hospital.  CMS believes this trend raises issues in the proper valuation of practice expenses for the purpose of determining reimbursement.  In order to study this further, CMS proposes creating a HCPCS modifier to be reported with every code for physician and hospital services furnished in an off-campus provider-based department of a hospital.

Screening Colonoscopies

CMS recognizes that separately billed anesthesia services have been increasingly furnished with screening colonoscopies.  Accordingly, CMS has proposed extending its waiver of Part B deductibles and co-pays for screening colonoscopies to the separate anesthesia services furnished in conjunction with a screening colonoscopy.

Open Payments Program

According to CMS, it is proposing four changes in the Open Payments rule.  First, it is proposing to delete the definition of "covered device" as it is duplicative of the definition of "covered drug, device, biological or medical supply" which is already defined in regulation. Second, it is proposing to delete the Continuing Education Exclusion in its entirety.  Third, CMS is proposing to require the reporting of the marketed name of the related covered and non-covered drugs, devices, biologicals, or medical supplies, unless the payment or other transfer of value is not related to a particular covered or non-covered drug, device, biological or medical supply.  Last, CMS is proposing to require applicable manufacturers to report stocks, stock options or any other ownership interest as distinct categories, in order to enable CMS to collect more specific data regarding the forms of payment made by applicable manufacturers.

Physician Quality Reporting System

CMS has proposed an 18 cross-cutting measure set for 2015 and beyond, and seeks comments on other measures that should be included.  CMS has also proposed 28 additional measures to be included in the PQRS measure set for 2015 and beyond.  CMS has also proposed removing approximately 73 measures from PQRS reporting.  CMS further proposes changes in the way approximately 56 PQRS measures will be reported beginning in 2015.  CMS has also proposed two new PQRS measures groups for sinusitis and acute otitis media.  Also, CMS proposes removing the following measures groups for PQRS reporting beginning in 2015:  perioperative care, back pain, cardiovascular prevention, ischemic vascular disease, sleep apnea, and chronic obstructive pulmonary disease.

Medicare Shared Savings Program

CMS proposes to modify the timeframe between updates to the quality performance benchmarks, establish an additional incentive to reward ACO quality improvement, and to make several technical corrections to the regulations.  CMS proposes to update performance benchmarks every two years.  CMS also proposes adding a quality improvement measure to award bonus points for quality improvement to each of the existing four quality measure domains. For each quality measure domain, CMS would award an ACO up to two additional bonus points for quality performance improvement on the quality measures within the domain. These bonus points would be added to the total points that the ACO achieved within each of the four domains.  The technical corrections address certain cross-references, typographical errors, and clarifications.

Value-based Payment Modifier

The Affordable Care Act establishes a value-based payment modifier (Value Modifier) that provides for differential payment to a physician or group of physicians under the Medicare Physician Fee Schedule based upon the quality of care furnished to Medicare FFS beneficiaries compared to the cost of that care during a performance period. Further, the statute requires that CMS begin applying the Value Modifier on January 1, 2015, with respect to items and services furnished by specific physicians and groups of physicians (as determined by the Secretary) and to apply it to all physicians and groups of physicians beginning not later than January 1, 2017.

CMS proposes to apply the Value Modifier beginning in calendar year 2017 to physicians in groups with two or more eligible professionals (EPs) and to physicians who are solo practitioners.  CMS also proposes to increase the downward adjustment under the Value Modifier from -2.0 percent in the 2016 payment adjustment period to -4.0 percent for the 2017 payment adjustment period. That is, for 2017 payments, a -4.0 percent Value Modifier would apply to groups and solo practitioners subject to the Value Modifier that do not meet satisfactory quality reporting requirements for the PQRS.

CMS further proposes  to classify groups and solo practitioners subject to the CY 2017 Value Modifier using a two-category approach that is based on whether and how groups and solo practitioners participate in the PQRS.

Finally, beginning with the 2017 payment adjustment period, CMS proposes to apply the Value Modifier to physicians and non-physician EPs in groups with two or more EPs and to physicians and non-physician EPs who are solo practitioners that participate in the Pioneer ACO Model, the Comprehensive Primary Care (CPC) Initiative, or other similar Innovation Center models or CMS initiatives during the relevant performance period. -