Medicare’s 2018 Physician Fee Schedule Final Rule

The Centers for Medicare and Medicaid Services (CMS) released the CY 2018 final payment rule for the Medicare Physician Fee Schedule on November 2, 2017.

The following is a summary of the final rule.  TOA’s summary of the CY 2018 proposed rule, which was released this summer, can be found following this summary.

Appropriate Use Criteria Mandate for Imaging
The final rule extends the AUC mandate for advanced imaging (MRI, CT, etc.) to January 1, 2020. The summer proposal called for a 2019 start date.

Key considerations:

  • The Medicare AUC program will begin with an educational and operations testing year in 2020. As a result, physicians will be required to start using AUCs and reporting the information on their claims.
  • CMS will pay claims for advanced diagnostic imaging services regardless of whether they correctly contain information on the required AUC consultation.
  • CMS posted newly qualified provider-led entities and clinical decision support mechanisms in July 2017.
  • “In addition, by having qualified clinical decision support mechanisms available (some of which are free of charge) clinicians may use one of these mechanisms to earn credit under the [MIPS] program as an improvement activity.  This improvement activity was included in the 2018 Quality Payment Program final rule.”
  • CMS will further evaluate hardship exceptions.

Physician Employment: Off-campus Provider-based Departments:
“CMS believes that this adjustment will provide a more level playing field for competition between hospitals and physician practices by promoting greater payment alignment.”
Hospital stakeholders have expressed strong opposition to the provision in the final rule that will cut payments to certain off-campus outpatient provider-based hospital departments.

To review: Some physician services are paid at a higher rate if they are affiliated with a hospital (“off-campus provider-based departments”). The Medicare Payment Advisory Commission (MedPAC) has been discussing the concept of site neutral payments, which is a concept in which a service is paid the same amount, no matter the site of service.  For example, if a cardiology service is being paid at a higher rate than in a physician’s office because the cardiology practice is affialited with a hospital, a site neutral payment policy would pay the hospital-based service at the physician office rate.

The Bipartisan Budget Act of 2015 addressed the concept of hospitals acquiring physician practices and turning them into outpatient departments.  Existing off-campus hospital outpatient departments were grandfathered in when the bill was signed into law: November 2, 2015. As a result, they will continue to be paid at the higher rate. Any new acquisitions after that were acquired after November 2, 2015 are now subject to the lower payments, which caused great opposition from hospital stakeholders.

Last year’s 21st Century Cures Act, which was signed into law, exempted hospital outpatient departments that were in development when the site-neutral law went into effect on November 2, 2015. For off-campus sites that were not mid-build, Medicare paid half of hospital outpatient rates in 2017.

This summer, CMS proposed to pay 25 percent of hospital rates for its 2018 rule.  However, the final rule indicated that it will pay 40 percent of hospital outpatient rates in 2018.

America’s Essential Hospitals President and CEO Bruce Siegel responded to the CY 2018 final rule:

We are deeply disappointed by today’s final rule on the 2018 Medicare Physician Fee Schedule (PFS), which aggravates already damaging cuts to support for clinics and other outpatient services in the nation’s most underserved communities. In these health care deserts, essential hospitals work to overcome practitioner shortages by extending primary and specialty care services to off-campus clinics in their communities. But today’s final rule puts expansion of services further out of reach for these communities and threatens access to care where access is needed most.

AMA’s RUC  Recommendations
CMS announced that it will accept many of the American Medical Association’s Medicare Association-Relative Value Scale Update Committee (RUC) recommendations. 

Telehealth – Therapy
Telehealth opportunities specific to musculoskeletal care remain somewhat limited in Medicare.  The new codes for 2018 in the physician fee schedule will expand telehealth to: determine low dose computed tomography eligibility, interactive complexity, health risk assessments, care planning for chronic care management, and psychotherapy for crisis.

There was extensive discussion regarding telehealth for therapy.  However, that will remain limited.  Per CMS (on page 141):

Comment: Several commenters disagreed with our decision not to add various physical and occupational therapy, and speech language pathology services to the Medicare telehealth list.

Response: As noted above, the majority of the codes requested are finished by therapy professionals over 90 percent of the time, and we believe that adding therapy services to the telehealth list are furnished by professionals not included on the statutory list of distant site practitioners could result in confusion about who is authorized to bill for these services when furnished via telehealth.  Additionally, some of the codes involve physical manipulation of the patient, which cannot be accomplished via an interactive telecommunications system.

Physical Therapy Caps
Congress is examining the concept of eliminating the therapy cap for Medicare. Meanwhile, the CY 2018 final rule will increase the Medicare therapy cap from $1,980 to $2,010 in 2018.

E/M Comment Solicitation
Per CMS:

Most physicians and other practitioners bill patient visits to the PFS under a relatively generic set of codes that distinguish level of complexity, site of care, and in some cases whether or not the patient is new or established. These codes are called Evaluation and Management (E/M) visit codes. Billing practitioners must maintain information in the medical record that documents that they have reported the appropriate level of E/M visit code. CMS maintains guidelines that specify the kind of information that is required to support Medicare payment for each level.

We agree with continued feedback from stakeholders that these guidelines are potentially outdated and need to be revised.

CMS thanks the public for the comments received in response to the proposed rule’s comment solicitation on the E/M guidelines and summarizes these comments in the final rule. Commenters suggested that we provide additional avenues for collaboration with stakeholders prior to implementing any changes. We will consider the best approaches for such collaboration, and will take the public comments into account as we consider the issues for future rulemaking.

2018 Value Modifier
Per CMS:

In order to better align incentives and provide a smoother transition to the new Merit-based Incentive Payment System under the Quality Payment Program, we are finalizing the following changes to previously-finalized policies for the 2018 Value Modifier:

  • Reducing the automatic downward payment adjustment for not meeting the criteria to avoid the PQRS adjustment from negative four percent to negative two percent (-2.0 percent) for groups of ten or more clinicians; and from negative two percent to negative one percent (-1.0 percent) for physician and non-physician solo practitioners and groups of two to nine clinicians;
  • Holding harmless all physician groups and solo practitioners who met the criteria to avoid the PQRS adjustment from downward payment adjustments for performance under quality-tiering for the last year of the program; and
  • Aligning the maximum upward adjustment amount to 2 times the adjustment factor for all physician groups and solo practitioners.
  • Given final policy changes for the Physician Quality Reporting System and the Value Modifier, we finalized that we will not report 2018 Value Modifier data in the Physician Compare downloadable database as this would be the first and only year such data would have been reported. However, to promote transparency we will continue to make available the Value Modifier public use and research identifiable files.

Physician Quality Reporting Systems (PQRS)
Per CMS:

Under the PQRS, individual eligible professionals and group practices who did not satisfactorily report data on quality measures for the CY 2016 reporting period are subject to a downward payment adjustment of 2.0 percent in 2018 to their PFS covered professional services. 2016 was the last reporting period for PQRS. The final data submission timeframe for reporting 2016 PQRS quality data to avoid the 2018 PQRS downward payment adjustment was January through March 2017. PQRS is being replaced by the Merit-based Incentive Payment System (MIPS) under the Quality Payment Program (QPP). The first MIPS performance period is January through December 2017.

CMS proposed and is finalizing a change to the current PQRS program policy that requires reporting of 9 measures across 3 National Quality Strategy domains to only require reporting of 6 measures for the PQRS with no domain requirement. We are also finalizing similar changes to the clinical quality measure reporting requirements under the Medicare Electronic Health Record Incentive Program for eligible professionals who reported electronically through the PQRS portal.

We finalized these changes based on stakeholder feedback and to better align with the MIPS data submission requirements for the quality performance category. For MIPS, eligible clinicians need only report 6 quality measures for the quality performance category, except those reporting via the Web Interface, and there is no requirement to ensure that the measures span across 3 National Quality Strategy domains.

Summary of This Summer’s Proposed Rule for 2018
The summary of the CY 2018 proposed rule that was released this summer can be found below.

— From July 14, 2017 —

CMS Calls for an Overhaul of E/M Codes; CY 2018 Medicare Physician Fee Schedule Proposed Rule

The Centers for Medicare and Medicaid Services (CMS) called for an overhaul of the E/M codes in the CY 2018 Medicare Physician Fee Schedule proposed payment rule on Thursday.

Other highlights include:

  • A delay of the AUC requirement for advanced diagnostic imaging.
  • A cut to certain payments made to off-site provider-based departments, which affects physician employment.
  • Some relief for PQRS.

You are encouraged to also review TOA’s analysis of the CY 2018 HOPD/ASC proposed payment rule because many of the issues compliment each other.

The following is TOA’s overview of the issues that relate to orthopaedics.  Click here to view CMS’s fact sheet.

Telehealth and Therapy
CMS’s proposed payment adjustments for telehealth do not relate to orthopaedic services.  However, CMS does provide commentary regarding the concept of physical therapists being paid for Medicare telehealth services (beginning on page 85).

CMS indicated that because the discussed codes are furnished by therapists over 90 percent of the time, it would not be possible to reimburse therapists for the services due to the fact that they are not recognized in statute to provide Medicare telehealth services.

Incentive to Transition away from Traditional X-ray Imaging
CMS describes its proposal on page 110:

Physician Employment and PBDs
Much like with the CY 2018 HOPD/ASC proposed rule, CMS provides commentary on physician employment provisions related to higher payments for provider-based departments (PBDs) of hospitals.

In the MPFS proposal for CY 2018, CMS asks for comments regarding whether CMS should adopt a different PFS Relativity Adjuster, such as 40 percent, that represents a relative middle ground between the CY 2017 PFS Relativity Adjuster and the proposed CY 2018 PFS Relativity Adjuster.

CMS goes on to state:

Mis-valued RVUs
As always, CMS uses its annual proposal to identify potentially mis-valued codes. Some of the codes that CMS identified in the CY 2018 proposed rule include:

  • CPT code 29445 for Under Lower Extremity Application of Casts. CMS proposed to decrease the amount of labor associated with the code. (Page 149.)
  • CPT codes 64910, 64911, 64X91, and 64X92 would witness RVU changes under the proposal. (Page 184.)
  • CPT codes 73718, 73720, and 73719 were identified for adjustments.
  • Beginning on page 214, CMS provides commentary on orthotics and prosthetics.
  • The table for the proposed new RVUs can be found on page 234.
  • Physical therapy codes were not proposed to be cut.

E/M Guidelines
Beginning on page 373, CMS describes its desire to update E/M guidelines and asks for comments.

AUCs
More information regarding appropriate use criteria (AUC) for advanced diagnostic imaging can be found in TOA’s summary of the CY 2018 Medicare OPPS/ASC proposed rule.  CMS includes commentary in the MPFS proposed rule beginning on page 418.

The start date has been pushed back to January 1, 2019, and this period would be an “educational and operations testing year.”

PQRS for the 2018 PQRS Payment Adjustment
Beginning on page 439, CMS provides commentary on PQRS and 2016 data:

ACOs
CMS provides some guidance and updates to accountable care organizations (ACOs) in the proposed rule.  However, they are unlikely to affect orthopaedic surgeons.

Value-based Payment Modifier and Physician Program
According to CMS:

In order to better align incentives and provide a smoother transition to the new Merit-based Incentive Payment System under the Quality Payment Program, we are proposing the following changes to previously-finalized policies for the 2018 Value Modifier:

  • Reducing the automatic downward payment adjustment for not meeting minimum quality reporting requirements from negative four percent to negative two percent (-2.0 percent) for groups of ten or more clinicians; and from negative two percent to negative one percent (-1.0 percent) for physician and non-physician solo practitioners and groups of two to nine clinicians;
  • Holding harmless all physician groups and solo practitioners who met minimum quality reporting requirements from downward payment adjustments for performance under quality-tiering for the last year of the program; and
  • Aligning the maximum upward adjustment amount to 2 times the adjustment factor for all physician groups and solo practitioners.

Commentary on this issue begins on page 534.

MACRA Patient Relationship Categories and Codes
MACRA facilitates the attribution of patients and episodes to one or more clinicians.  Commentary on this concept begins on page 550.