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%.




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.




SGR & ICD-10

Late last night, the House Rules Committee authorized legislation to go to the floor of the House that would delay for one year, the SGR related cuts in physician fee schedule payments scheduled to take effect on April 1.  Under this legislation, those cuts would be delayed until April 1, 2015.

In addition, the bill would make a number of other changes in the Medicare program, not least of which would be a one-year delay in the ICD-10 transition.  Under this bill, the Secretary of HHS would be prohibited from mandating use of ICD-10 until October 1, 2015.

The bill would also “extend” a variety of expiring provisions previously extended by Congress.

The bill is scheduled for consideration by the House on Thursday, March 27th under “suspension” (i.e. House temporarily suspends normal rules).  In order for the House to take up this bill under “suspension,” a two-thirds (2/3) majority must agree to consider this bill.  It is not clear whether the House Leadership has the two-thirds (2/3) majority votes.

A bill brought before the House under “suspension” cannot be amended.


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 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.






government_400The SGR problem that has been an issue for over a decade, remains a high priority for senate leaders. The original SGR formula was developed during the Clinton administration and has had serious flaws. Since, a fix to the SGR problem as continued to be elusive.

A fix to the SGR is not imminent due to many factors but the House and Senate feel that a permanent fix appears achievable in 2013. Congressional Committees that have jurisdiction over Medicare Physician Payment reforms have held Hearings and gotten feedback on possible permanent solutions. Both Democratic and Republican leaders remain committed to finding a permanent solution whereas in past years, the commitment level was much much less.

Proposals have been circulated amongst various physician offices, as well as some other healthcare organizations for the purpose of feedback and reaction to proposed fixes. The Healthcare Billing and Management Association (HBMA) will meet with the Senate Finance Committee and other White House staffs to assist in finding permanent fix to the SGR problem.

If Congress fails to find a permanent solution prior to the end of 2013, the current estimate of a 24% reduction in provider payments will be necessary to comply with SGR law.

The following are concepts from discussions for the SGR fix:

  1. Repeal SGR and replace it with statutory increases (possibly 1 – 2% per year) for a period of time (3 – 5 years). Thus eliminating the 24% cut come January 1, 2014.
  2. Implement Specialty Specific Quality Measures as part of the payment formula.
  3. Payments would be a combination of “base rate” plus a variable rate that would be tied to quality/performance.
  4. A score on quality would be based upon a comparison of peers AND compared to the individual providers prior year scores AND provider participation in specialty specific clinical improvement initiatives.
  5. Providers of the same specialty would “self-identify” with a peer cohort and provide information on:
  • Identifies the peer group the provider wants to be compared to; and
  • Provides information on quality measures applicable peer group that the provider is assigned

The Health & Human Services (HHS) Secretary will be responsible for the development and methodology for assessing the performance of providers with respect to the measures and for methods of collecting data for the assessments. The Secretary is directed to develop the processes in a way that will minimize the administrative burden to ensure reliable results.

The HBMA and other healthcare organizations, continually encourge Congress to find a permanent solution to the SGR problem before January 2014.


SGR and Fiscal Cliff



On January 1st at approximately 2:00am, the United States Senate, by a vote of 89 – 8 adopted legislation that prevents most taxpayers from experiencing a tax increase; prevents the scheduled 26.5% SGR related cut in physician fee schedule payments and delays (until early March) the 2% across-the-board cut in Medicare payments due to sequestration.

In lieu of the 26.5% SGR cut, the Senate approved a one-year freeze in the Medicare conversion factor used to calculate Medicare Physician Fee Schedule payments.  The Senate also approved a one-year extension of several Medicare payment policies that were set to expire today.  Finally, the Senate approved a series of payment reductions in other provider payments as a way to “pay for” the SGR fix.

A list of the Medicare provisions “extended” is below, along with the list of payment reductions the Senate approved as “offsets”.

Last evening, the House of Representatives in a bi-partisan vote of 257 – 167, the House of Representatives voted to support the Fiscal Cliff/SGR legislation passed earlier today by the Senate.

The legislation was unchanged from the version passed by the Senate.  Therefore, it can immediately go to the President for his signature, which is expected.  To recap:

1.    The SGR cut of 26.5% is rescinded and the Conversion Factor for the physician fee schedule will be frozen for one year.
2.    The 2% sequestration cut that was to take effect later this week is been temporarily postponed until early March.  The next Congress will have to determine whether to allow sequestration to take place or replace sequestration with other cuts in federal spending or higher taxes.
Here are some of the other information regarding the passed bill.

Medicare Provider Payment provisions extended as part of the Fiscal Cliff compromise.

Work Geographic Adjustment. This provision extends the existing 1.0 floor on the “physician work” index through December 31, 2013.

Payment for Outpatient Therapy Services. This provision extends the exception process through December 31, 2013. The provision also extends the cap to services received in hospital outpatient departments only through December 31, 2013.

Ambulance Add-On Payments. This provision extends the add-on payment for ground including in super rural areas, through December 31, 2013, and the air ambulance add-on until June 30, 2013.

Extension of Medicare inpatient hospital payment adjustment for low volume hospitals. This provision extends the payment adjustment until December 31, 2013.

Extension of the Medicare-Dependent hospital (MDH) program. This provision extends
the MDH program until October 1, 2013.

Other Health Provisions used to offset the cost of a temporary SGR fix.

Documentation and Coding (DCI) adjustment. This provision will phase in the recoupment of past
overpayments to hospitals made as a result of the transition to Medicare Severity Diagnosis Related
Groups (MS-DRGs). Savings: $10.5 billion.

Rebase End Stage Renal Disease (ESRD) payments. This provision incorporates recommendations from the General Accountability Office by re-pricing the bundled payment to take into account changes in behavior and utilization of drugs for dialysis. Savings: $4.9 billion.

Therapy Multiple Procedure Payment reduction. This provision further reduces payment for
subsequent therapies when therapies are provided on the same day. Savings: $1.8 billion.

Payment for Certain Radiology Services. This provision would equalize payments for stereotactic
radiosurgery services provided under Medicare hospital outpatient payment system. Savings: $0.3

Adjustment of Equipment Utilization Rate for Advance Imagining Services. This policy would increase the utilization factor used in the setting of payment for imaging services in Medicare from 75% to 90%. Savings: $0.8 billion.

Competitive Prices for Diabetic Supplies. This proposal would apply competitive bidding to diabetic test strips purchased at retail pharmacies. Savings: $0.6 billion.

Adjust Payment Adjustment for Non-Emergency Ambulance Transports For ESRD Beneficiaries. This provision reduces the payment rates for ambulance services by 10% for individuals with ESRD obtaining non-emergency basic life support services involving transport, based on a recent General Accountability Office report. Savings: $0.3 billion

Increase statute of limitations for recovering overpayments. This provision increases the statute of
limitations to recover overpayments from three to five years, based on recommendations from the
Office of Inspector General at the Department of Health and Human Services. Savings: $0.5 billion.

Medicare Improvement Fund. This provision eliminates funding for the Medicare Improvement Fund. Savings: $1.7 billion.

Rebase Medicaid Disproportionate Share Hospital (DSH) payments to extend the changes from the Affordable Care Act (ACA) for an additional year. This proposal rebases DSH allotments to maintain the level of changes achieved in the ACA, and determines future allotments off of the rebased level using current law methodology. Savings: $4.2 billion.

Repeal of Class Program. The provision repeals the Community Living Assistance Services and Supports (CLASS) program established by the Affordable Care Act. This provision has no scoring implications.

Coding Intensity Adjustment. Under current law, Medicare Advantage plans receive risk-adjustment
payments that are further adjustment to reflect differences in coding practices between Medicare fee-for- service and Medicare Advantage. This provision increases this coding intensity adjustment. Savings: $2 billion.

Consumer Operated and Oriented Plan (CO-OP). This provision will rescind all unobligated CO-OP funds under section 1332(g) of the Affordable Care Act. This provision also creates a contingency fund of 10 percent of the current unobligated funds to be used to further assist currently approved co-ops that have already been created. The provision does not take away any obligated CO-OP funds. Savings: $2.3 billion

Sustainable Growth Rate (SGR) Update


Attention Health Professionals:  Information Regarding the 2013 Medicare Physician Fee Schedule

The negative update of 27% under current law for the 2013 Medicare Physician Fee Schedule is scheduled to take effect on January 1, 2013.

Medicare Physician Fee Schedule claims for services rendered on or before December 31, 2012, are unaffected by the 2013 payment cut and will be processed and paid under normal procedures and time frames.

The Administration is disappointed that Congress has failed to pass a solution to eliminate the sustainable growth rate (SGR) formula-driven cuts, and has put payments for health care for Medicare beneficiaries at risk. We continue to urge Congress to take action to ensure these cuts do not take effect. Given the current progress with the legislation, CMS must take steps to implement the negative update.

Under current law, clean electronic claims are not paid sooner than 14 calendar days (29 days for paper claims) after the date of receipt. CMS will notify you on or before January 11, 2013, with more information about the status of Congressional action to avert the negative update and next steps.   is site down peta dunia satelit .