CMS Proposes Changes to 2018 Medicare Fee Schedule

Medicare fee scheduleThe Centers for Medicare and Medicaid Services (CMS) has issued a proposed rule that will update Medicare payment and policies for doctors and other healthcare providers that the agency says “reflect a broader strategy to relieve regulatory burdens for providers; support the patient-doctor relationship in healthcare; and promote transparency, flexibility, and innovation in the delivery of care.”

Most notably, CMS is moving to cut payments for most services provided by off-campus locations of hospitals by 50 percent. CMS currently pays for these services under the Physician Fee Schedule (PFS) based on a percentage of the Outpatient Prospective Payment System

(OPPS) payment rate. The proposal would change the PFS payment rates for these services from 50 percent of the OPPS payment rate to 25 percent of the OPPS rate.

CMS reasons that the adjustment “will encourage fairer competition between hospitals and physician practices by promoting greater payment alignment.”

At least two hospital groups, including the American Hospital Association, have come out against this proposal.

As telemedicine’s popularity increases, CMS is proposing adding a number of codes to the list of telehealth services, including:

  • HCPCS code G0296 (visit to determine low dose computed tomography (LDCT) eligibility);
  • CPT code 90785 (Interactive Complexity);
  • CPT codes 96160 and 96161 (Health Risk Assessment);
  • HCPCS code G0506 (Care Planning for Chronic Care Management); and
  • CPT codes 90839 and 90840 (Psychotherapy for Crisis).

CMS also wants to eliminate the required reporting of the telehealth modifier for professional claims as a way to reduce administrative burden for practitioners.

In a highly controversial move, CMS proposed changes to the 340B program. The agency proposes paying hospitals 22.5 percent less than the average sales price for drugs acquired under the 340B program.

The 340B program requires pharmaceutical manufacturers to provide outpatient drugs at reduced rates to qualifying hospitals and clinics. Medicare currently reimburses hospitals the average sales price, plus 6 percent, under OPPS.

For physicians who find themselves burdened by reporting requirements, CMS proposes changing the current Physician Quality Reporting System (PQRS) program policy that requires the reporting of nine measures across three National Quality Strategy domains to only require reporting of six measures for the PQRS.

It also proposes similar changes to the clinical reporting requirements under the Medicare Electronic Health Record Incentive Program for eligible professionals.

CMS is not looking to change the previously finalized requirements for CQM reporting in 2016 for eligible hospitals and CAHs; or the previously finalized requirements for EPs who chose to report CQMs through attestation in 2016 for the Medicare EHR Incentive Program.

CMS is proposing a number of modifications to the rules for accountable care organizations (ACOs) that participate in the Medicare Shared Savings Program. CMS notes the proposed modifications are designed to reduce burden and streamline program operations.

They include:

  • Revisions to the assignment methodology to reflect the requirement under section 17007 of the 21st Century Cures Act, that for performance years beginning on or after January 1, 2019, the Secretary determine an appropriate method to assign Medicare FFS beneficiaries to an ACO based on their utilization of services furnished by rural health clinics (RHCs) or federally qualified health centers (FQHCs).
  • The addition of three new chronic care management codes (CCM) and behavioral health integration (BHI) codes to the definition of primary care services used in the ACO assignment methodology.
  • Reduction of burden for stakeholders submitting an initial Shared Savings Program application and the application for use of the skilled nursing facility (SNF) 3-Day Rule Waiver.

To better align incentives and provide a smoother transition to the new Merit-based Incentive Payment System (MIPS) under the Quality Payment Program, CMS is proposing the following changes to previously-finalized policies for the 2018 Value Modifier:

  • Reducing the automatic downward payment adjustment for not meeting minimum quality reporting requirements from negative four percent to negative two percent (-2.0 percent) for groups of ten or more clinicians; and from negative two percent to negative one percent (-1.0 percent) for physician and non-physician solo practitioners and groups of two to nine clinicians;
  • Holding harmless all physician groups and solo practitioners who met minimum quality reporting requirements from downward payment adjustments for performance under quality-tiering for the last year of the program; and
  • Aligning the maximum upward adjustment amount to 2 times the adjustment factor for all physician groups and solo practitioners.

In addition to the many proposals, CMS is seeking comment from stakeholders on the following:

What changes need to be taken to update guidelines to reduce the associated burden, and to better align Evaluation and Management coding and documentation with the current practice of medicine. It is especially seeking comment on how to focus on initial changes to the guidelines for history and exam, because CMS believes documentation for these elements may be significantly outdated.

Whether emergency department visits are undervalued due to increasing heterogeneity of the settings under which emergency department visits are furnished and changes to the patient population.

What applicable laboratories and reporting entities have to say about their experience with the first data collection and reporting periods under the new private payer rate-based Clinical Laboratory Fee Schedule (CLFS). Comments will be used to inform CMS about potential refinement to the CLFS for future data collection and reporting periods.

What effect its payment policy has had based on experience with the United States’ biosimilar product marketplace since the regulations went into effect on January 1, 2016. CMS is particularly interested in new or updated material, such as market analyses or research articles that provide evidence which supports positions expressed in comments.

Comments on the proposed rule are due by September 11.

There is a lot to digest, the proposal is more than 800 pages, far too many to fully address here. If you have any questions or concerns about changes coming down the pike, call us at 305-358-4500 or send an email to and let’s discuss how we might be able to assist you.

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It is not intended as professional advice and should not be construed as such.