On July 11, 2014, CMS published its proposed rule to update the Medicare physician fee schedule for CY 2015. The proposed rule reflects enactment of the Protecting Access to Medicare Act (PAMA) of 2014, which provides for a 0% update to the conversion factor (CF) for MPFS services furnished between January 1, 2015 and March 31, 2015. In the Proposed Rule, CMS estimates that with the application of a budget neutrality adjustment, the CF for the first quarter of 2015 would be $35.7977 (compared to $35.8228 in 2014). Under PAMA, the CF will be adjusted on April 1, 2015 according to the Sustainable Growth Rate (SGR) formula unless Congress takes additional legislative action. CMS does not speculate on the CF that will be applicable April 1, 2015 through December 31, 2015, but CMS previously estimated that the SGR would result in about a 20.9% cut in MPFS payments for 2015 if Congress does not again intervene. There is an expectation that Congress eventually will override this payment cut, but the timing and extent of any such relief cannot be assured at this time. Other key provision in the proposed rule include the following:

  • The proposed rule includes numerous proposals to review addition codes as being potentially misvalued, and to revise the data considered by CMS in assessing the value of procedures. CMS proposes to add about 80 codes to its list of potentially misvalued codes, most of which are high-expenditure specialty services that have not been recently reviewed. CMS also discusses implementation of a PAMA provision authorizing CMS to use alternative approaches to establish practice expense (PE) relative value units (RVUs), including the use of data from other suppliers and providers of services. CMS is specifically seeking comments on the possible use of the Medicare hospital outpatient cost data in the PE valuation methodology. In addition, CMS is proposing to transform all 10- and 90-day global surgery codes to 0-day global codes. Under this provision, CMS would include in the value for these procedures all services provided on the day of surgery, and pay separately for visits and services actually furnished after the day of the procedure, effective beginning in CY 2017.
  • CMS proposes a new process intended to enhance transparency in MPFS ratesetting and ensure that all payment input revisions are subjected to public comment prior to being used for payment. In short, beginning with the MPFS proposed rule for CY 2016, CMS will include proposed values for all new, revised, and potentially misvalued codes for which it has complete American Medical Association’s Relative Value Update Committee (RUC) recommendations by January 15th of the preceding year (thus for the CY 2016 rulemaking, CMS would include in the proposed rule proposed values for services for which it has RUC recommendations by January 15, 2015). CMS would delay consideration of RUC recommendations received after January 15th of a year. For codes that describe wholly new services, CMS will work with the RUC to try to receive recommendations in time to include proposed values in the proposed rule; if not, and CMS determines that it is in the public interest for Medicare to begin using the code, CMS would establish values for the code’s initial year as under current policy. CMS is also revising how it accounts for costs associated with radiation therapy equipment and x-ray services.
  • CMS proposes numerous changes to the Physician Quality Reporting System (PQRS), including the addition of 28 new individual measures and two measure groups, and removal of 73 measures. CMS also proposes that eligible professionals who see at least one Medicare patient in a face-to-face encounter report measures from a new cross-cutting measures set in addition to other required measures. The proposed rule also includes revisions to Shared Savings Program/accountable care organization (ACO) quality requirements, including changes to the scoring strategy to recognize quality improvement, revisions to quality measure benchmarks, and revisions to individual quality measures.
  • CMS proposes changes to the Physician Value-Based Payment Modifier program, under which CMS will adjust payment to physicians based on the quality of care compared to costs. For 2017 (the last year in a three-year phase-in period), CMS proposes to apply the Value Modifier to physicians in groups with two or more eligible professionals (EPs) and to physicians who are solo practitioners. CMS also would apply the Value Modifier beginning in CY 2017 to non-physician EPs in groups with two or more EPs and to non-physician EPs who are solo practitioners. Moreover, CMS proposes a number of changes to the payment adjustment framework for 2017, increasing the potential upward and downward adjustment to +/- 4%.
  • CMS raises concerns about “operational and program integrity issues” arising from the use of substitute (locum tenens) physicians to fill staffing needs or to replace a physician who has permanently left a medical group, particularly with regard to potentially inappropriate use of the departed physician’s Provider Transaction Access Numbers (PTAN) or National Provider Identifier (NPI). CMS solicits comments on specific questions associated with substitute physician billing arrangements as the agency considers whether to adopt regulations in this area, including with regard to implications for the physician self-referral law.
  • CMS is proposing changes to its Physician Payment Sunshine Act regulations, also known as the Open Payments program. These provisions are discussed in a separate post.
  • Among many other things, the proposed rule also would: establish a revised local coverage determination (LCD) process for all new draft clinical diagnostic laboratory test LCDs published on or after January 1, 2015; require physicians (and hospitals) to report a modifier for services furnished in an off-campus provider-based department; update malpractice RVUs; revise Geographic Practice Cost Indices; reduce beneficiary cost-sharing associated for anesthesia related to screening colonoscopies; and add to the list of services that can be furnished to Medicare beneficiaries under the telehealth benefit annual wellness visits, psychoanalysis, psychotherapy, and prolonged evaluation and management services.

CMS will accept comments on the rule until September 2, 2014.