Proposed Medicare Fee Schedule Could Help Physicians

Ken Terry

July 14, 2017

The proposed Medicare Physician Fee Schedule (PFS) for 2018, while increasing rates by an average of less than one third of a percent, includes a few goodies for physicians. The Centers for Medicare & Medicaid Services (CMS) seeks to encourage fairer competition between hospitals and physician practices and to create a smoother transition to the new Merit-Based Incentive Payment System (MIPS). In addition, CMS promises to consider changes in its 20-year-old guidelines for evaluation-and-management (E&M) coding.

CMS proposes a reduction in payments to some hospital-owned, off-campus practices that would further level the playing field for independent practices. In previous years, physicians in private practices received lower Medicare payments than hospital-employed doctors who were classified as part of hospital outpatient departments that could add facility fees to their charges. But pursuant to a 2015 federal law, CMS removed some of those doctors from the Hospital Outpatient Prospective Payment System (OPPS) and began paying them under a special definition of the PFS this year. The 2018 PFS proposal would reduce Medicare payments for goods and services provided by these practices from 50% to 25% of the OPPS rate.

In a fact sheet, CMS says it believes this change would "encourage fairer competition between hospitals and physician practices by promoting greater payment alignment."

Medical societies have argued that the previous system of paying hospital-owned practices encouraged hospitals to buy up independent practices and made it difficult for the latter to compete with the health system groups. But hospitals contend that they need the extra payments to subsidize their care for the needy.

"We are deeply troubled by the Physician Fee Schedule proposed payment rate cuts for new, off-campus provider-based departments (PBDs)," said Bruce Siegel, MD, president and CEO of America's Essential Hospitals, a trade association of community and safety-net hospitals, in a statement. "CMS' proposal to pay new, off-campus PBDs only 25 percent of the OPPS rate will result in an unsustainable payment rate that will further reduce access for people in chronically underserved communities—health care deserts—and the hospitals on which they rely."

MIPS Transition

To ease physicians' transition to MIPS, CMS proposes rule changes to reduce or eliminate financial penalties from earlier CMS programs that would otherwise hit some doctors in 2018.

Under the Physician Quality Reporting System (PQRS), for example, eligible professionals and group practices that did not satisfactorily report data on quality measures in 2016 are subject to a downward payment adjustment of 2% in 2018. Starting this year, PQRS has been replaced by the quality reporting component of MIPS, which requires eligible clinicians to report on six quality measures. In the PFS proposal, CMS says it wants to retroactively reduce the number of metrics that physicians had to report on in PQRS from nine to six measures.

It is unclear how many physicians would be protected from penalties in 2018 if this proposal is adopted. But roughly 500,000 clinicians — half of them physicians — have had their Medicare payments cut this year because they didn't meet PQRS requirements in 2015.

Physicians were also supposed to submit quality data for CMS's Value Modifier in 2016. CMS proposes reducing the automatic downward payment adjustment in 2018 for not meeting these quality reporting requirements from 4% to 2% for groups of 10 or more clinicians and from 2% to 1% for physician and nonphysician solo practitioners and groups of two to nine clinicians.

CMS also proposes to exempt solo practitioners and groups who met the quality reporting requirements from downward payment adjustments under the quality-tiering component of the Value Modifier program.

E&M Coding Guidelines

In what may prove to be the most consequential portion of the 2018 PFS proposal, CMS says it wants to solicit comments on potential changes in the E&M coding guidelines, which go back to 1995.

"We agree with continued feedback from stakeholders that these guidelines are potentially outdated and need to be revised, especially the history and exam components," CMS states in the fact sheet.

"CMS is seeking comment from stakeholders on specific changes we should undertake to update the guidelines, to reduce the associated burden, and to better align E/M coding and documentation with the current practice of medicine. We are especially seeking comment on how we might focus on initial changes to the guidelines for history and exam, because we believe documentation for these elements may be more significantly outdated. "

In a press conference earlier this week, John Fleming, MD, deputy assistant secretary for health technology reform, Department of Health and Human Services, said that the E&M coding guidelines have created a stumbling block for physicians because of the difficulties they encounter in documenting the necessary elements of patient encounters in electronic health records.

Donald Rucker, MD, the new national coordinator for health IT, agreed with Dr Fleming and said that his office was working with CMS to look at how this burden on physicians might be reduced. "Part of what [CMS] is looking at is the interaction of the coding system with the provision of care and the burden of documentation," he noted.

Comments on the proposed rule are due by September 11.

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