CMS Proposes Policy and Payment Changes for the CY 2014 Medicare Physician Fee Schedule

by Baker Donelson

On July 8, 2013, CMS issued a proposed rule setting forth a range of program changes and initiatives relating to the Medicare Physician Fee Schedule (PFS) for Calendar Year (CY) 2014. Most notably, the proposed rule announces CMS’s plan to provide for a separate payment to physicians for managing certain chronic care needs beginning in 2015. This is intended to support the provision of primary care, as Medicare currently only pays for primary care management services as part of a face-to-face visit. The proposed rule, which may be viewed here [PDF], is expected to be published in the July 19, 2013, Federal Register, with comments due on September 6, 2013.

CMS anticipates that, without changes to current law, the Sustainable Growth Rate (SGR) adjustment to physician reimbursement will result in an approximate decrease of 24.4 percent in payment rates for 2014. Historically, however, this adjustment has been reversed through congressional intervention.

The proposed rule includes the following provisions:

Primary Care and Complex Chronic Management

To further promote primary care, CMS proposes to pay for complex chronic care management services beginning in 2015. Specifically, payment will be provided for Medicare beneficiaries who have multiple, significant chronic conditions (two or more). To be eligible for these payments, a single practitioner must furnish these services, the beneficiary must consent to receiving services over the course of a year, and the beneficiary must have had an Annual Wellness Visit. To support payments for these services, CMS intends to establish practice standards involving access to Electronic Health Records (EHR) and written protocols for aspects of care management implementation. In addition, CMS intends to recognize a patient-centered medical home (PCMH) designation by private organizations as a means for a practice to establish that it has met the required practice standards.

Telehealth Services

CMS proposes to modify regulations governing eligible telehealth originating sites to include health professional shortage areas located in rural census tracts of urban areas as determined by the Office of Rural Health Policy.

Revisions to the Practice Expense Geographic Adjustment

The geographic practice cost indices (GPCIs) defining the work, practice expense, and malpractice cost components of physicians’ services under the PFS will be revised and expanded. Among other things, the weights assigned to each GPCI (work, PE and malpractice) will be modified in accordance with the recommendations of the Medicare Economic Index (MEI) Technical Advisor Panel to increase the weight of the work and reduce the weight of the practice expense.

Medicare Economic Index (MEI)

CMS aims to revise the calculation of the MEI, which is the price index used to update physician payments for inflation, in response to recommendations by a Technical Advisory Panel that met during CY 2012. The proposal is to redistribute a measure of payment from the practice expense component to the work component.

Misvalued Codes

There is a proposal to adjust the payment rates for more than 200 codes where Medicare pays more for services provided in an office than in an outpatient hospital department or ambulatory surgery center (ASC). CMS is proposing to cap the PFS payment in these situations to the total payment that Medicare would make to the practitioner and the facility when the service is furnished in a hospital outpatient department or ASC.

Application of Therapy Caps to Critical Access Hospitals (CAHs)

CMS proposes to apply the therapy cap limitations and policies to outpatient therapy services furnished in a CAH beginning on January 1, 2014, in accordance with the American Taxpayers Relief Act.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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