CMS Releases Proposed Rule for 2016 Medicare Physician Fee Schedule

On July 8, 2015, the Centers for Medicare and Medicaid Services (CMS) issued the proposed rule to update payment policies and payment rates for services furnished under the Medicare Physician Fee Schedule (PFS).  This is the first PFS proposed rule since the repeal of the Sustainable Growth Rate (SGR) formula. Throughout the rule, CMS beings the implementation of the new payment system for physicians and other practitioners – the Merit-Based Incentive Payment System (MIPS) – as mandated by Congress. The final rule is expected by November 1 and is effective Jan. 1, 2016.  A detailed analysis will be forthcoming. Here are the highlights:
CY 2016 PFS Proposed Rule Impact
There is no change in the estimated combined impact on total allowed charges for cardiology from 2015 to 2016 (0%).  The payment impacts reflect averages by specialty based on Medicare utilization.
Misvalued Codes
Consistent with amendments to the Affordable Care Act, in this year’s proposed rule, CMS proposes to add 118 codes to the list of potentially misvalued codes, including 78452 (heart muscle image spect mult). CMS identified these codes using the high-expenditure screen. Codes reviewed since calendar year (CY) 2010 were excluded, as are 10- and 90-day global periods.   
Misvalued Codes Target
Last year, Congress set an estimated PFS expenditure target of 1% for CY 2016 that must be met from net reductions in misvalued codes. If the target is not met, fee schedule payments will be reduced to achieve the target. CMS is proposing a methodology for implementing this provision and, based on this proposed rule, has identified changes that achieve 0.25% in net reductions. The effect of the target is not included in the proposed payments rates because CMS anticipates making further code changes in the final rule which could move net reductions closer to the 1% goal. The adjustment will be applied to the conversion factor.
Appropriate Use Criteria (AUC) Program for Advanced Diagnostic Imaging Services
The “Protecting Access to Medicare Act of 2014” establishes a program requiring adherence to AUC for advanced imaging services. Beginning Jan. 1, 2017, professionals who furnish an advanced imaging test must document the ordering professional’s consultation of appropriate use criteria to be paid for the service. The law also directs CMS to require prior authorization for ordering professionals who are outliers.  Prior to the effective date of the program, CMS is required to select AUC for the program and to deem clinical decision support tools that ordering professionals can use to consult with AUC. In this proposed rule, CMS outlines the initial component of the program and its plan for full implementation. Specifically, CMS proposes a clarifying definition for AUC and a definition provider-led entity (for the purposes of AUC development). CMS also begins to lays out the process for specifying AUC, selecting the clinical decision support system mechanisms for accessing AUC, and identifying priority clinical areas of AUC that will be used in identifying outlier ordering professionals.    
Quality Improvement Initiatives
The proposed rule proposes changes to several of the quality reporting initiatives that are associated with PFS payments – the Physician Quality Reporting System (PQRS), Medicare Electronic Health Record (EHR) Incentive Program, and the Physician Value-Based Payment Modifier. CMS is not proposing significant changes to these programs since the separate penalties tied to these programs will sunset after 2018. Beginning in 2019 adjustments to payments for quality and other factors will be made under the new MIPS. Proposed changes of note to these programs include:
  • PQRS – Group practices would be allowed to report quality measures data using a Qualified Clinical Data Registry (QCDR). The QCDR option is currently only available to individual eligible professionals.
  • Value Modifier – For the CY 2018 payment adjustment, the quality-tiering methodology would apply to all groups and solo practitioners who are successful PQRS reporters. All groups and solo physician practitioners would be subject to upward, neutral, or downward adjustments derived under the quality-tiering methodology.
  • Value Modifier – While it was anticipated that CMS would expand the value modifier to all non-physician eligible professionals for the 2018 payment year, CMS is proposing to expand application of the value modifier to groups that consist solely of non-physician eligible professionals (e.g., PAs, NPs, CNSs, CRNAs) and non-physician eligible professional solo practitioners.  
Other provisions included in the proposed rule include:
  • New separate payment and payment rate for advance care planning services
  • Changes to public reporting on Physician Compare
  • Modifications to the Medicare Shared Savings Program
  • Revisions to regulations specifying the requirements for which physicians or other practitioners can bill for incident-to services
  • Implementation of 2014 law that reduces reducing payment for the technical component (TC) (and the TC of the global fee) of the PFS service and the hospital outpatient prospective payment system payment (5% in 2016 and 15% in 2017 and subsequent years) for computed tomography services furnished using equipment that does not meet each of the attributes of the National Electrical Manufacturers Association CT equipment standard.
ASNC will submit comments on this proposed rule by the Sept. 8, 2015, deadline. 
To access a fact sheet on the proposed rule 
To view the proposed rule in its entirety