Physician Payments May Decrease by 24.4 Percent for 2014, Per PFS Proposed Rule

An advance release of the Medicare Physician Fee Schedule (PFS) Proposed rule for calendar year (CY) 2014 was put on display by CMS on July 8, 2013, and contains proposed payment rate updates and policy changes for services furnished on or after January 1, 2014. Some of the major provisions of the Proposed rule are the new payments for primary care services that are not furnished during a face-to-face visit, quality reporting initiative changes, and more details concerning the implementation of the physician value-based payment modifier.

Under the PFS, each service is assigned a relative value unit (RVU) that reflects the amount of work, direct and indirect (overhead) practice expenses, and malpractice expenses required. The RVUs for each of these components is adjusted for the geographic area the provider is located in, and then the total RVU for each service is multiplied by the fixed-dollar conversion factor to give the payment amount. The RVUs are updated periodically to reflect changes in medical practice and the relative value of services, which changes the payment amounts.

Sustainable Growth Rate and Medicare Economic Index

Although the final figures will be provided in the Final rule, the update to the physician fee schedule was estimated to be reduced by 24.4 percent due to the Sustainable Growth Rate (SGR) methodology. Large reductions in physician payments can be avoided by an act of Congress, and which has been done every year since 2003. The Proposed rule, however, stresses the need for a long-term solution, and notes that “[CMS is] committed to [work] with the Congress to reform Medicare physician payments to provide predictable payments that incentivize quality and efficiency in a fiscally responsible way.”

The Medicare Economic Index (MEI) is used to update physician payments for inflation. Along with the SGR, this index determines total payments made each year under the PFS. The calculation of the MEI would be updated under the Proposed rule based on recommendations by the Technical Advisory Panel.

Practice Expenses Revisions

The Proposed rule contains a provision to limit the nonfacility practice expense (PE) RVUs for individual codes to the amount Medicare would pay for the same code in a facility setting, with the exception of: (1) services without separate OPPS payment rates; (2) codes that are subject to the Deficit Reduction Act (DRA) imaging cap which applies to the technical component of imaging services; (3) codes with low volume in OPPS or ASC, codes with ASC rates that are based on PFS payment rates; (4) codes paid in the facility at nonfacility PFS rates; and (5) codes with PE RVUs developed outside the PE methodology.

Further, under the Proposed rule, the geographic practice costs indices (GPCIs) that are used to reflect the local differences in practice costs (work, practice expense, and malpractice expenses) would be revised based on updated data. Also proposed is the phasing-in of new weights assigned to each GPCI over CYs 2014 and 2015.

Primary Care Management Services

The emphasis on advanced primary care continues with the proposal to pay separately for complex chronic care management services starting in 2015. Currently, separate payment is not made for non-face-to-face care management services, but is rather bundled in with payment for face-to-face visits. For beneficiaries that have multiple (two or more), significant chronic conditions, non-face-to-face services would be paid including regular physician development and plan of care revisions, communication with other treating practitioners, and medication management. However, to be eligible, beneficiaries would need to have had an annual wellness visit (or initial preventive physical examination), which would serve as the foundation for establishing a plan of care. A single practitioner would have to furnish the services for the year, at the consent of the beneficiary.

These services that would fall under complex chronic care management would include the provision of 24/7 access to the practitioner to address complex chronic care needs, continuity of care with practitioner or a member of the team to get successive routine appointments; care management for chronic conditions; management of care transitions including referrals to other physicians, visits following an emergency room visit or discharge from a hospital or other facility; coordination of home and community based service providers; and more opportunities to communicate with the provider via telephone and secured messaging, internet, etc.

Other Changes

One of the other changes proposed is a refinement to the definition of “rural” as it applies to health professional shortage areas (HPSAs) originating sites eligible for telehealth services to increase access to telehealth services in HPSAs. The proposed change would mean that HPSAs located in rural census tracts of urban areas as determined by the Office of Rural Health Policy (rather than based on Metropolitan Statistical Area (MSA) designations as is typical now) would be considered eligible for telehealth services.

Also proposed are the following: (1) certain codes that may be misvalued would be identified pursuant to the Affordable Care Act (ACA) (P.L. 111-148); and (2) based on the changes to the caps on outpatient therapy services made by the American Taxpayers Relief Act (ATRA) (P.L. 112-240), the outpatient therapy limits would apply to critical access hospitals (CAHs) starting on January 1, 2014.

Value-Based Payment Modifier

The ACA requirement that differential payments be given to providers based on the quality of care provided to Medicare beneficiaries requires that a value-based payment modifier apply to some providers starting in 2015, and to all in 2017. The Proposed rule provides revisions to existing value-based payment modifier policies, such as (1) proposing a performance period of CY 2015 that will apply in CY 2017; (2) lowering the group size threshold to groups of physicians with 10 or more EPs for 2016; (3) proposing to set the value-based payment modifier adjustment based on whether the group of physicians satisfactorily participated in the PQRS; (4) increase the downward adjustment from 1.0 percent in CY 2015 to 2.0 percent in CY 2016; (5) proposing to include the Medicare Spending per Beneficiary measure as an additional measure of the modifier starting in CY 2016; (6) proposing to refine the current peer group (benchmark) methodology to account for a mix in physician specialties; and (7) proposing to continue use of the annual Quality and Resource Use Reports to explain how the modifier will affect payments.

Quality Reporting

Under the Physician Quality Reporting System (PQRS), incentive payments are provided to eligible professionals (EPs) who report on quality measures through 2014. However, starting in 2015, EPs would see their payments adjusted downward if they fail to report on those measures. Under the Proposed rule, 47 new individual measures were proposed, as well as 3 measures groups. Further, if EPs and practice groups meet certain criteria for the 2014 incentive, they could avoid the downward payment adjustment for 2016.

Among the electronic health records (EHR) incentive program, new options for reporting clinical quality measures starting in 2014 are also proposed including the option of submitting information through a qualified clinical data registry and via group reporting for the Comprehensive Primary Care Initiative (CPCI). EPs reporting clinical quality measures electronically would have to use the most recent version of the electronic specifications and have certified EHR technology that is tested and certified, otherwise EPs would have to report the data to CMS by attestation.

The Proposed rule is scheduled to be published in the Federal Register on July 19 2013. CMS requires comments to the Proposed rule to be submitted by September 6, 2013, to be addressed in the Final rule, which will be issued on or about November 1, 2013.