United States: CMS Publishes Final Rule Updating 2017 Medicare Physician Fee Schedule Rates And Policies

Last Updated: November 23 2016
Article by Debra A. McCurdy

The Centers for Medicare & Medicaid Services (CMS) has issued its final Medicare physician fee schedule (MPFS) for calendar year (CY) 2017.  In addition to updating MPFS rates and policies, the final rule makes numerous other Medicare policy changes, including updates to Stark Law regulations related to unit-based compensation and new enrollment requirements for providers and suppliers furnishing services to Medicare Advantage (MA) enrollees.  Highlights of the rule include the following:

  • The final 2017 MPFS conversion factor (CF) is $35.8887, up slightly compared to the 2016 CF of $35.8043. This update reflects a 0.5 percent update factor specified under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which is partially offset by a -0.013 percent relative value unit (RVU) budget neutrality adjustment, a -0.07 percent adjustment resulting from implementation of a multiple procedure payment reduction policy, and a -0.18 percent "target recapture amount" because savings resulting from revising the RVUs of misvalued codes did not meet the statutory -0.5 percent target.
  • Numerous provisions in the rule address potentially misvalued services, including both valuation of specific procedures and broader policy issues.  For instance, CMS adopted values for new moderate sedation codes and established a methodology to revalue current CPT codes that include moderate sedation as an inherent part of the procedure.  CMS pared back its proposal 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). Under the final rule, CMS will only review 19 0-day global codes.  CMS also refined a policy that phases in, over two years, any decrease of 20 percent or more in total RVUs for an existing service. Under the final rule, CMS will cap second and subsequent year reductions at 19 percent. In addition, CMS finalized a plan to collect data to determine post-operative office and facility visit patterns in 10- and 90-day global codes, but CMS modified its proposal to minimize the burden on physicians. In particular, CMS will not use G-codes for this data collection; the data collection will be limited to larger practices in selected states and certain high-volume/high-cost procedures; and the mandatory reporting requirement is being delayed until July 1, 2017.
  • CMS is continuing implementation of a Protecting Access to Medicare Act of 2014 (PAMA) requirement that physicians who order advance diagnostic imaging services consult with appropriate use criteria (AUC) via a clinical decision support mechanism (CDSM).  The final rule adopts eight priority clinical areas for AUC (with changes from the proposed list), establishes CDSM requirements and the CDSM application process, and creates hardship exceptions. While PAMA mandates that CMS fully implement the AUC program by January 1, 2017, CMS confirmed that it will not meet this deadline; CMS expects that furnishing professionals will be required to begin reporting January 1, 2018.
  • The final rule implements a statutory requirement that CMS reduce by 20 percent the technical component of an X-ray service taken using film; physicians will be required to use a new "FX" modifier on claims for film X-rays effective January 1, 2017.
  • In the final rule, CMS is "re-issuing" the physician self-referral "per-click" restrictions related to arrangements involving the rental of office space or equipment.  Specifically, CMS adopted without change its proposal to add 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 states that it believes 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 June 2015). Thus, under the final rule, "per-unit of service rental charges for the rental of office space or equipment are permissible, but only in those instances 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."
  • CMS adopted its proposal to require providers and suppliers to be enrolled and have approved status in Medicare in order to render services to beneficiaries in the Medicare Advantage program. This requirement applies 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.  The rule also bars an MA organization from paying for items or services (other than emergency and urgently needed services) furnished to a Medicare enrollee by any individual or entity that is excluded or whose participation in the Medicare program has been revoked. These requirements are effective the first day of the next plan year that begins two years from the date of publication (November 15, 2016).
  • The final rule adopts numerous other policies, including:  expansion of the Diabetes Prevention Program innovation model beginning in 2018; changes to Medicare Shared Savings Program quality reporting requirements and beneficiary assignment rules; coding and payment changes intended to improve payment for care management, primary care, and cognitive services; public release of certain MA bid pricing data and MA 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.  CMS also discusses responses it received to its request for public comment on topics for potential future rulemaking related to Open Payments ("Physician Payments Sunshine Act") data reporting, but CMS did not adopt any related changes in this rulemaking.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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