2014 Physician Fee Schedule: Cuts and Quality and Data! Oh My!

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The Centers for Medicare and Medicaid Services (CMS) recently released the calendar year 2014 Physician Fee Schedule Proposed Rule (Proposed Rule). The Proposed Rule highlights CMS's (and Congress's) continued focus on the principles of high-quality care, exceptional patient experience and affordability that has only increased since the passage of the Patient Protection and Affordable Care Act (ACA) in 2010. In fact, almost all of the provisions of the Proposed Rule are directly or indirectly related to statutory provisions in the ACA.

The Proposed Rule would revise adjustments to the geographic practice cost indices to increase the weight of work expenses and reduce the weight of practice expenses and revisions to the calculation of the Medicare Economic Index, which is used to update physician payments for inflation in the same manner. As is customary, the Proposed Rule does not include revisions to the sustainable growth rate (SGR) formula because these calculations are statutory in nature. If Congress fails to take action on the SGR before the end of the year, physician reimbursement rates may be cut by nearly 25 percent.

CMS's proposal also introduced significant payment adjustments to more than 200 codes that currently are reimbursed at higher rates in the office setting than in either a hospital outpatient department or an ambulatory surgery center. CMS's authority for these adjustments is based on the "misvalued codes" principle introduced in the ACA. The procedures that would be affected comprise a variety of specialties, including vascular surgery, pathology, radiology and gastroenterology. With limited exceptions, the Proposed Rule would impose a fee cap such that if the nonfacility practice expense relative-value units (RVUs) for a code would result in a higher payment than the corresponding outpatient prospective payment or ambulatory surgery center payment rate and physician fee schedule facility practice expense RVUs (when applicable) for the same code, the nonfacility practice expense RVU rate would be reduced so that the total nonfacility payment does not exceed the total Medicare payment made for the service in the facility setting. CMS identified more than 200 codes that would be subject to this fee limitation, resulting in reimbursement cuts of 50 percent or more for some procedures.

The Proposed Rule contains a number of revisions to CMS payment policies. For example, CMS proposed that beginning in 2015, physicians may use two new G-codes that would provide separate payment for non-face-to-face complex chronic care management services provided to beneficiaries with multiple chronic conditions that are expected to last at least 12 months or until the death of the patient and that place the patient at significant risk of death, acute exacerbation/decompensation or functional decline. A number of practice requirements would need to be met in order to bill for these new codes. The Proposed Rule also includes significant changes to the regulations regarding Medicare coverage of investigational devices and routine items and services provided to beneficiaries during clinical studies or trials, including a proposal to create a centralized review process for coverage rather than relying on local Medicare contractors. CMS further proposed to amend the telehealth regulations to add health professional shortage areas located in rural census tracts of urban areas as eligible telehealth originating sites.

This annual rulemaking also addressed several payment incentives related to quality reporting initiatives, including the Physician Quality Reporting System (PQRS), the Group Practice Reporting Option (GPRO), the Value-Based Payment Modifier and the Medicare Electronic Health Record (EHR) Incentive program. Additionally, CMS proposed that all measures collected through the GPRO web interface would be reported publicly in 2014 on the Medicare Physician Compare website, provided that only measures with a sample size of 20 patients would be reported. Group practices would be given a 30-day preview period to review the data before it is published on the website under the requirements of the ACA. CMS further outlined its future roll-out of the Physician Compare website, including the addition of GPRO data reported through registries and EHRs, data reported by accountable care organizations participating in the Shared Savings Program, reporting of patient experience of care measures collected through the GPRO and performance on patient experience survey-based measures from the Consumer Assessment of Healthcare Providers and Systems. CMS further proposed that quality measures for individual eligible practitioners who participate in the PQRS could be published as early as 2015.