CMS Proposed Medicare Physician Fee Schedule for 2015

On July 3rd, the Centers for Medicare and Medicaid Services publicized its proposed changes for the 2015 Medicare Physician Fee Schedule (PFS). The proposed rule addresses changes to the physician fee schedule, and other Medicare Part B payment policies.

CMS sets values for each medical procedure through the use of Relative Value Units (RVUs) which are then multiplied by a Conversion Factor (CF) along with some minor adjustments to account for geographic differences (GPCI) to determine how much CMS will pay for a medical procedure. This rule explains CMS’ methodology for determining each component of the RVUs.

CMS provides a preliminary assessment of the SGR related cut that will be required in the subsequent calendar year should Congress fail to prevent that cut. Because the current SGR “fix” carries over into 2015 (it expires March 31st) CMS has postponed any announcement on potential SGR related cuts until later this year.

A RVU for a medical procedure consists of three components: physician work, physician expense and malpractice expense. CMS uses a formula that combines the three components into one unit which is multiplied by a conversion factor to determine how much money Medicare will pay for a procedure.

A few of the provisions addressed are:

• A new payment code for primary care providers for non-face-to-face services for patients with two or more chronic conditions. This code can be billed once per month per patient. CMS will pay $41.92 for this code.

• CMS is required to identify codes it believes may be misvalued in the PFS. CMS identifies 80 potentially misvalued codes in the 2015 PFS.

• The PFS reclassifies medical equipment infrastructure costs for radiation therapy as indirect expenses as opposed to the previous classification as a direct expenses. This will result in an 8% reduction in the allowable charges for radiation therapy center and a 4% reduction in radiation oncology. Radiology itself would be reduced by 2%.

• The PFS also announces CMS’ intent to not finalize any revalued codes until a public comment period has been held and completed on the potentially misvalued codes being revalued. CMS plans to have this process in place by 2016.

• Under the misvalued code initiative, CMS proposes to transform all 10 and 90-day global codes to 0-day global codes beginning in 2017.

• As statutorily required, CMS will begin implementing the value-based payment modifier (Value Modifier) on January 1, 2015. It will be phased in and applied to all eligible professionals (EPs) by 2017. CMS also increases the max positive payment adjustment from 2% to 4% and decreases the max negative payment adjustment from -2% to -4%.



CMS EHR Changes for Meaningful Use II

laptopOn Tuesday, May 20, 2014, CMS released a proposed rule that would make changes to the current Certified EHR Technologies (CEHRT) requirements and formally extend Stage II of Meaningful Use through 2016.

The proposed rule would let eligible providers (EPs) and hospitals use the 2011 Edition CEHRT or a combination of 2011 and 2014 Edition CEHRT for the EHR reporting period in 2014 for the Medicare and Medicaid EHR Incentive Programs.

Beginning in 2015, all EPs and hospitals would still be required to report using 2014 Edition CEHRT.

According to the explanatory statement accompanying the proposed revisions, CMS is making these changes due to overwhelming industry input that the amount of time available in which to make the required coding changes after the publication of the Stage 2 final was much too short.

CMS also notes this proposed change is due to an unexpected backlog and delay of certifying many EHRs.

The proposed rule includes a provision that would formalize CMS and ONC’s previously stated intention to extend Stage 2 of Meaningful Use through 2016 and begin Stage 3 of Meaningful Use in 2017.

Under the current timeline, an EP that first became a meaningful user in 2011 or 2012 would not be required to begin Stage 3 until January 1, 2016.   An eligible hospital or CAH that first became a meaningful user in 2011 or 2012 would not be required to begin Stage 3 until October 1, 2015.

However, CMS is hoping to analyze the meaningful use Stage 2 data to inform its development of the criteria for Stage 3 of meaningful use. website similar car rental


With only minutes to spare, the United States Senate joined the House of Representatives in passing legislation, the Preventing Access to Medicare Act of 2014, to prevent a 24% reduction in physician fee schedule payments slated to occur on April 1, 2014.  In lieu of this draconian cut, the Congress approved a one-year extension of the current Medicare Conversion Factor (CF) through March 31, 2015.  This means that Medicare will continue to pay for physician services through the remainder of 2014 what it has been paying for services for the first three months of 2014.

Up until the very end, many held out hope that the Congress would approve a permanent fix to the SGR problem but coming to an agreement on how to pay for the SGR fix remained elusive.  Earlier in March, the House and Senate leadership had reached agreement on new policies for replacing the SGR but they were unable to reach agreement on how to save the $130 – $180 Billion necessary to fix the SGR and other Medicare policies in need of correction.

For this reason, the Congress was forced to approve an SGR patch for the 17th time in the last 12 years in order to prevent steep cuts in Medicare physician fee schedule payments.  The total cost of patching the SGR for one year and extending the various programs is approximately $21 Billion.

The Protecting Access to Medicare Act of 2014 would:

(1)        Extend the .5% update to the Conversion Factor that has been in place since January, 2014, through the remainder of calendar year of 2014, and

(2)        Freeze the update to the single conversion factor at 0.00% for January 1, 2015, through March 31, 2015.

In addition to the temporary SGR fix, Congress also approved an extension of various Medicare programs scheduled to expire at Midnight, March 31.  Included among these so-called extenders were:

  • Extends Medicare work Geographic Practice Cost Index (GPCI) floor for 1 year
  • Extends Medicare therapy cap exception process for 1 year
  • Extends Medicare ambulance add-on payments for 1 year
  • Extends Medicare adjustment for Low-Volume hospitals for 1 year
  • Extends Medicare-dependent Hospital (MDH) program for 1 year
  • Extends Medicare Advantage Special Needs Plan for 1 year
  • Extends Medicare Reasonable Cost Contracts for 1 year

In order to “pay for” this legislation, Congress approved a series of changes in the Medicare program intended to save approximately $21 Billion over the next 10 years.  These included:

  • Establish a value-based purchasing program for Skilled Nursing Facilities (-$2 Billion)
  • Reform Medicare Payment policy for Clinical Diagnostic Laboratory tests (-$2.5 Billion)
  • Quality Incentives for developing Appropriate Use and Clinical Decision Making tools for Advanced Medical Imaging (- $200 Million)
  • Medicare misvalued code revaluation (-$4 Billion)
  • Changing the Medicaid Disproportionate Share program (-$4.4 Billion)
  • Revise and Realign Medicare Sequester (-$7.2 Billion)
  • Revise Medicare ESRD Prospective Payment Program (-$1.8 Billion)

The legislation also directs the Secretary of Health and Human Services (HHS) to continue through June 2015, and with a specified limitation, certain medical review activities related to the so-called two-midnight rule.  The two-midnight rule allows Medicare inpatient coverage of hospital stays for which a physician admits a beneficiary to a hospital and where the beneficiary is expected to require care that crosses two midnights.  If the care does NOT cross two midnights, Medicare will generally deny inpatient coverage of the care and instead, pay for the care on an outpatient basis.

The failure to complete action on permanent SGR repeal/replace legislation by the April 1 deadline does not necessarily mean all action on reaching a compromise on a permanent fix will end immediately.  Congress is further along in their efforts to reach a bi-partisan/bicameral solution than at any time in the history of the SGR.





government_400In December, Congress passed a sort term fix to the Sustainable Growth Rate (SGR) that is set to expire on March 31st. The short term fix was passed in order to give Congress additional time in finding a permanent fix to the SGR and to ultimately avoid a 24 percent reduction to the Medicare Physician Fee Schedule (MFPS). The short term fix also provided a .5 percent increase to the MFPS which took effect on on January 1st and was the first increase in 4 years.

Congressional leaders are currently in the process of consolidating three bills to repeal and replace the current Medicare SGR. The House Energy and Commerce, House Ways and Means, and the Senate Finance are the committees that have jurisdiction over the SGR reform. The committees have approved bills to repeal and replace the SGR but must reconcile the bills differences before moving forward.

Though there is a bi-partisan consensus that the SGR should be repealed, and also an emerging consensus on what type of system should replace the SGR, the question of how to pay for the “fix”, remains unanswered. Finding offsets is proving to be the real challenge for lawmakers. Committee staff is currently working through lists containing many options for potential offsets, but currently none have been endorsed.

The Congressional Budge Office (CBO) weighed in on just how much the SGR initiatives will cost. The House Ways and Means Committee approved bill is estimated to cost $121.1 billion over 10 years. The Senate Finance Committee bill is estimated to cost $150.4 billion over 10 years. The cost of each bill is less that originally anticipated. “Extenders” to the Finance bill is the reason for it being higher than the Ways and Means bill that didn’t include any “extenders”. The Extenders being:

  • Repeal the therapy cap after 2014 and replace it with a new medical review program.
  • Permanently codify (with modification) the work GPCI floor.
  • Extend ambulance add-ons for five years. New data collection requirements with 5% penalty for failure to provide data.
  • Permanently extend but modify the Medicare-dependent hospital (MDH) and low –volume hospital programs.

Confidence is low that a permanent fix can be accomplished by March 31st deadline. Another short term fix to allow for additional time past the March 31st deadline is a strong possibility.


2014 PQRS

CMSThroughout 2013 medical providers were encouraged by the Center for Medicare and Medicaid Services (CMS) to report back what they determined to be “quality measures” to ensure eligible medical providers were providing “quality care” to their patients. Through 2013, providers were required to report back at least 3 measures derived from the PQRS manual provided by CMS, on at least 50 percent of their Medicare Part B and Railroad Medicare patients to avoid a 1.5 – 2 percent reduction to their Medicare Physician payments.

Starting in 2014, CMS released that they will now require eligible health professionals to report back 9 measures, across 3 National Quality Strategy Domains in order to qualify for the .05 percent increase. The Domains are what the National Quality Strategy research division of the Health & Human Services (HHS) identified as areas of healthcare that require “improvement”. Reporting options for PQRS measures have also changed. In 2013 providers were able to choose from four options to report back PQRS measures.

  1. At the Claim level on Part B Claims
  2. Any qualified PQRS registry
  3. Through EMR/EHR product
  4. valid PQRS data submission vendor

In 2014, reporting methods for PQRS measures depend upon which measure is being reported. As you can see in the example below, Heart Failure can not be reported on the claim level or through a Web Interface.


Measure                                                                               Reporting Option

Diabetes: Hemoglobin A1c Poor Control                        Claims, Registry, EHR, Web Interface

Heart Failure                                                                        Registry, EHR, Measures group


The same incentives and penalties from 2013 still apply in 2014, providers are just required to report more to qualify for the incentive increase. If you report 9 measures, across 3 domains on 50% or more, you receive a .05 percent increase in payments. If less than 50 percent is reported on at least 3 measures then a 1.5 to 2 percent reduction in payments will be applied to the individual provider. All requirements are based at the individual provider level not at the group/entity.

For more information on the 2014 PQRS requirements, and for a copy of the 2014 PQRS manual, visit

2014 Medicare Physician Fee Schedule Final Rule

CMSLast week, the Centers for Medicare and Medicaid Services (CMS) released the 2014 Physician Fee Schedule Final Rule which finalizes the physician and non-physician rates for 2014. A press release that accompanied the final rule said “CMS projects that total payments under the fee schedule in 2014 will be approximately $87 billion.”

Along with this announcement was the anticipated revealing of the the Medicare Conversion Factor (MCF) for the subsequent year. Typically under the Sustainable Growth Rate or SGR formula, physicians have seen reductions in the MCF. Due to Congressional intervention, most of these cuts have been avoided for 2014.

With the Final Rule, CMS calculates the CY 2014 Fee Schedule Conversion Factor will be $27.2006. This will represent a reduction of 20.1 percent from the current CF of $34.0230. While still a reduction, it is not as a dramatically reduced as earlier estimates, but still represents a significant cut in physician fee schedule payments if Congress fails to intervene. Without Congressional intervention, physicians will experience a 20.1% reduction in their fee schedule payments that is exclusively due to the SGR. The reduction could possibly be mitigated for certain specialties due to higher Relative Value Unit (RVU) scores for certain services. Meaning the actual reduction amount could be even higher for specialties where the final rule reduces the RVU for certain services.

According to CMS, certain specialties will see payment rate increases based on the new rates for 2014, with the greatest increases going to mental health providers. CMS also plans to reduce the value of certain codes based on what they consider “mis-valued”.

The final rule includes several provisions with regards to physician quality programs and the Physician Value-Based Payment Modifier. CMS is finalizing proposals to apply the Physician Value-Based Payment Modifier to physician groups with 10 or more professionals for 2016. Physicians in groups of 100 or more professionals, will also be subject to upward and downward payment adjustments based on their performance beginning 2016. However only upward adjustments will be applied based on performance for groups with professionals between 10 and 99 physicians. CMS says, at this time, physicians in “small” groups will NOT be subject to downward payment adjustments.

Physicians will be able to report quality measures through qualified clinical data registries starting January 1, 2014. Previously this option was reserved for physicians working in groups.

CMS is also planning to align quality measures across quality reporting programs so physicians and other professionals may report a measure once in order to receive credit in all quality reporting programs in which that measure is used. Data collected in 2012 for physicians reporting PQRS measures under the Group Practice Reporting Option (GPRO) will be publicly report on the CMS Physician Compare website in 2014.





Basic Health Program

government_400Part of the Affordable Care Act and Patient Protection plan provides states with a new coverage option called the “Basic Health Program”. This program is for the purpose of providing a health insurance program for citizens or lawfully present non citizens, who won’t qualify for Medicaid, the Children’s Health Insurance Program (CHIP) or other minimum essential coverage and also have an income between 133 percent and 200 percent the federal poverty level (FPL).

The Basic Health Program (BHP) was to be up and running by January 1st, 2014. CMS has issued a proposed rule for establishing the standards for BHP. Through this process, administration and the HHS have determined that it will not meet the January 1st, 2014 deadline and hope to have the program up and running by January 1st, 2015.

The purpose of BHP is to provide states with an option to establish health benefit programs for low-income individuals who would otherwise be eligible to purchase health insurance coverage through the Health Insurance Marketplace. The proposed rule establishes the framework for eligibility and enrollment, benefits, delivery of health care services, transfer of funds to participating states, administration and federal oversight.

The BHP benefits will include the ten essential benefits specified in the Affordable Care Act. Individuals eligible for the BHP will not be required to pay premium costs that will exceed what an eligible individual would be required to pay when receiving benefits through a Qualified Health Plan (QHP) through the Market Place. States that offer BHPs will qualify for federal funding equal to 95 percent of the amount of the premium tax credits and cost sharing reductions that would be provided to a eligible individual enrolled in a QHP through the Marketplace.

The rule proposes:

(1)        The procedures for certification of a state-submitted Basic Health Program blueprint, and standards for state administration of the Basic Health Program consistent with that blueprint;

(2)        Eligibility and enrollment requirements for standard health plan coverage offered                          through the Basic Health Program;

(3)        The benefits covered by such standard health plans as well as requirements of the              plans;

(4)        Federal funding of certified state Basic Health Programs;

(5)        The purposes for which states can use such federal funding;

(6)        The parameters for enrollee financial participation; and

(7)        Federal oversight of Basic Health Program funds.

The Rule establishes that eligibility determinations must be performed by government agencies. It uses the same criteria using most standards to those of the Internal Revenue Service when determining advance premium tax credits and cost sharing reductions. The rule also proposes the minimum benefit standard and makes provisions for additional benefits. It also establishes cost-sharing standards consistent with the Marketplace including the prohibition of cost sharing for preventive health services.


Government Shutdown on Medicare

government_400The governments fiscal year begins from October 1st and runs through September 30th meaning the 2014 fiscal year begins on Tuesday, October 1st, 2013. Typically during that time,  Congress is required to pass and the President sign appropriations bills that will release funds needed for the federal government to operate.

As of today, none of the 12 appropriations bills that will fund the government for the 2014 fiscal year, have been signed into law. What this means as of now, and at midnight tonight, that the government has no funds available to pay salaries of federal employees, grants, and other utilities for government operations. Congress is debating approving what is called the “Continuing Resolution” or CR. It is a legislation that will extend the 2013 fiscal year for a length of time agreed upon by Congress and the President to continue operations. Currently the length of time for a CR is unspecified. It can be one day or a CR can be extended up to a full year.

There is a possibility that Congress and the President will not reach a resolution on the adoption of the Continuing Resolution by midnight. If Congress and the President fail to reach a resolution, the result will be that all “non essential” federal employees will be told not to show up for work tomorrow, October 1, 2013.

Questions were raised that If a government shutdown occurs, will this also effect Medicare processing claims for payment for anything sent after October 1? The answer to that question is – “No”. The funds appropriated for Medicare benefits are not subject to the appropriations process because it is an entitlement program instead of a discretionary program, and processing of Medicare claims is considered “essential”. The Center for Medicare and Medicaid Services (CMS) announced that there should be no disruption of Medicare claims processing and all CMS activities will continue regardless of a delay in the appropriations process.





Prolonged Services

1314902_medical_doctorAll evaluation and management (E-M) service codes have a time value in conjunction with expanded problem focused history and medical complexity decision making. But occasionally providers will spend longer periods of time with patients but that extra time doesn’t justify coding to a higher level E-M code. To code a higher level E-M, not only does the time of a face-to-face encounter have to increase, but the complexity of medical decision making, problem focused history and counseling of care level must also increase.

The CPT manual shows two categories of codes that can be used as add-on codes to E-M codes when face-to-face time with a patient goes beyond the normal specified time values for each E-M code. The categories are outpatient/office for your typical clinic setting and inpatient/observation for hospital/Skilled Nursing Facility (SNF) patients.

99354 – 99355 – Outpatient/office

99356 – 99357 – Inpatient/Facility

Encounter Time –

Understanding what the CPT manual specifies as encounter time will help with knowing how to use and assign the prolonged visit codes. In an office/clinic setting, the encounter time is defined as face-to-face spent with the patient by the provider or practitioner. This time includes time spent on history review, obtaining records, performing the exam and counseling the patient. Activities performed before and after the face-to-face time are not included as part of the face-to-face time.

For example, a patient seen in a office/outpatient setting, a provider spends 15 minutes reviewing medical records and history, the spends 30 minutes face-to-face time with the patient, then spends another 20 minutes coordinating care with staff or other providers. The encounter time here is the 30 minutes that was spent face-to-face with the patient. The additional 35 minutes is not counted towards the actual encounter time.

When services are provided in an inpatient/facility setting, encounter time is defined as the time the physician/practitioner is present on the patients facility unit and at the patients bedside rendering services for that patient. This time also includes, medical record review, examining patient, encounter documentation, orders, communication with other professionals and patients family.

The additional time that must be spent with a patient in order to use the prolonged visit add on codes is 30 minutes. If a professional spends 25 additional minutes with the patient, then they cannot use the add on codes. The minimum time spent to qualify for the add on codes is 30 minutes and extends to 60 minutes. If the encounter time surpasses 75 minutes, a second add on code can be used. The encounter time for the prolonged visit codes is the same for both the outpatient/office setting and inpatient/facility setting.


Setting                               First Hour                    Add’l 30 minutes

Office/outpatient …………. 99354 ……………………. 99355

Inpatient/facility …………… 99356 ……………………. 99357

The encounter time does not have to be continuous. Blocks of time can be added together to account for the total encounter time. For example, a physician or practitioner spends time with a patient, goes to see another patient, then returns to the first patient, those separate times with the first patient can be added together for the total encounter time. However this time does not include staff time. Time is only counted by the physician/practitioners face-to-face time with the patient.

The prolonged visit add on codes are to be used in addition to the traditional E-M codes. The E-M codes are still the primary codes used for exams. So an example of the prolonged visit codes in conjunction with the E-M codes would work like this,

A provider sees an established patient in an office setting and determines the exam uses low medical decision making complexity and a problem focused history which supports a E-M code of 99213. A encounter lasts a total of 55 minutes and is not dominated by counseling or coordination of care. The CPT manual specifies encounter time of 15 minutes for a 99213, so the encounter has gone 40 minutes longer than the specified 15 minutes for the 99213. So the physician can add on the prolonged visit code of 99354 to be billed with the 99213. The same example can be used with the inpatient/facility setting using the corresponding E-M facility codes.

The prolonged service codes can be used in conjunction with all the typical E-M codes. The times will just need to be adjusted to qualify for the add on. So for a 99214, the CPT manual specifies 25 minutes for encounter time. So the total time will have to reach 55 minutes to use the add on codes.

Documentation –

Patients medical records must indicate the duration of the prolonged service. It must also show that the physician/practitioner personally provided the time specified in the code definition. The medical record should also show the total encounter time of the visit. Total time can represent the total face-to-face time in minutes, or the start and stop time of the visit. It should also be notated as to why the encounter was prolonged.

Prolonged services can provide providers with additional reimbursement for lengthy encounters but should be documented appropriately to show total time and reasoning for the prolonged service so as to withstand audit or review.



Expanding Payment Channels

DollarsAs the industry grows and changes at a rapid pace, more and more provider offices are becoming increasingly  concerned at the increase in patient responsibility. Employers are continually looking for ways to save money on increasing healthcare costs. In order to save and still offer employees healthcare coverage, many employers are moving to higher deductible plans leaving patients to pay more out of pocket. As patient responsibly continues to rise, patients are having more influence in the payment process to providers. By expanding payment channels, providers will be able to collect more payments effectively.

83 percent of providers surveyed said it took longer than 30 days to collect payments from patients after insurance carriers paid claims.

Patient Interaction – A key factor in facilitating payments is to make attempts to collect payments at any interaction point with patients. When scheduling appointments, calling for prescription refills, diagnosis followups, lab results etc., notify patients they have outstanding payments due and begin the process of collecting.

Technology – 72 percent of patients prefer to pay bills online. It is estimated in 2016 consumers will spend $300 billion online. The ability to take payments online is another key factor in increasing payment collection from patients. Website and online access give patients a 24/7 ability to go online and make payments without the need for staff interaction.

Cultural – Training staff to prepare and enable them to collect payments more frequently is another factor in increasing revenue. implementing tools and policies such as prompt pay discounts, staff incentive programs, minimum payment requirements, and scripts to assist them when interacting with patients are other effective ways to collect revenue.

Expanding payment channels will assist with better management in revenue cycle and lowering the aging of accounts.