Revenue Cycle Management Blog | GroupOne Health Source

2014 Medicare Physician Fee Schedule Final Rule Impact

Written by Keith Lage | December 4, 2013

Last Wednesday, while most of us were stuffing the turkey and preparing for a long weekend, the Centers for Medicare and Medicaid Services (CMS) finalized payment rates and policies for 2014 in the Physician Fee Schedule (PFS) Final Rule.  Care management outside of the routine office visit and policies to promote high quality care and efficiency in Medicare were a major focus in the proposal.  The final rule sets payment rates for physicians and non-physician practitioners paid under the Medicare Physician Fee Schedule for 2014 and addresses the policies included in the proposed rule issued in July. CMS projects that total payments under the fee schedule in 2014 will be approximately $87 billion.

Beginning in 2015, CMS is establishing separate payments for managing a patient’s care outside of a face-to-face visit for practices equipped to provide these services.

2014 Payment Rates

One of the most anticipated announcements in the final rule is the Medicare Conversion Factor (CF) for 2014.  CMS calculates the CY 2014 Physician Fee Schedule Conversion Factor to be $27.2006.

This represents a reduction of 20.1% from the current CF of $34.0230.  While these figures are less severe than earlier estimates, it is a significant cut in physician fee schedule payments if Congress fails to intervene.  It is important to note that the CF is only one of several factors in the formula that determines the actual payment a physician will receive for services rendered to Medicare beneficiaries.

2014 payment rates will increase payments for many medical specialties such as psychiatry, clinical psychologists, and chiropractic.  However, some specialties will see a significant decrease. 

For 2014, CMS has published the specialty specific impact it anticipates (Page 1285, Table 93). These numbers are in the aggregate and the individual code impact within these specialties may not necessarily reflect these percentage changes.  Here are the largest percentage decreases by specialty and the largest percentage increases by specialty, as well as some select specialties.  Most Specialties will see some change in the way of non-SGR increases or decreases in 2014. 

These overall Specialty adjustments may not be reflective of payment changes in individual procedure (CPT/HCPCS) payments.  CMS has provided a chart of the CPT/HCPCS changes for 2014 (page 128, Table 94).  You are encouraged to review the Final Rule to ascertain the code specific changes being proposed. These changes - up or down - are independent of anything that is occurring with regard to the Sustainable Growth Rate adjustment or Sequestration.

The 20.1% reduction in the CF could be partially mitigated for some specialties due to higher RVUs for certain services but the amount of the actual reduction per specialty could also be more in the instances where the final rule reduces the RVU for certain services. 

For Calendar Year 2014, the productivity adjusted Medicare Economic Increase (MEI) for 2014 should have been an across-the-board increase of .8%.  However, because the growth in Medicare Part B spending continued to increase more than had been budgeted and the accumulated SGR related fix "pay for" has yet to be addressed, the MEI increase is eliminated.

According to CMS, absent the SGR related cut, the 2014 payment rates will increase for some medical specialties/procedures.  Some of the greatest increases are going to providers of mental health services. However, CMS is also reducing the value of certain codes that they have deemed “misvalued”.  Click here to read more on the “misvalued” codes.


Quality Measures and Quality Reporting

Physician Quality programs and the Physician Value-Based Payment Modifier are also included in the final rule.  CMS is finalizing its proposals for 2016 to apply the Physician Value-Based Payment Modifier to physician groups with 10 or more eligible professionals (EPs).  Beginning in 2016 physicians in large groups (100 or more EPs) will be subject to upward and downward payment adjustments based on performance.  The smaller groups (between 10 and 99 EPs) will only see upward adjustments based on performance.  Downward payment adjustments will not be applied to physicians in these “small” groups at this time.

Reporting quality measures through qualified clinical data registries in 2014 will be an option for individual eligible professionals beginning in 2014.  While this option was previously only available to physicians working in groups, individual EPs can now take advantage of the opportunity.

CMS is also going to align quality measures across quality reporting programs meaning less stress on EPs for reporting these measures to multiple programs.  Physicians and other EPs may report a measure once to receive credit in all quality reporting programs in which that measure is used.  Certain data that was collected in 2012 for groups reporting certain PQRS measures under the Group Practice Reporting Option (GPRO) will be publicly reported on the CMS Physician Compare website in 2014. What is the Physician Compare Initiative? Click here to learn more

“Aligning measures across quality programs focuses providers on the most important measures and makes it easier to participate in programs like PQRS, which are designed to emphasize quality for Medicare beneficiaries,” said Dr. Patrick Conway, CMS Deputy Administrator for Innovation and Quality and CMS Chief Medical Officer. “PQRS and value-based purchasing, along with demonstration projects taking place through the Innovation Center, are transforming our health system to achieve better outcomes for patients and spend dollars more wisely.”

The final rule is on display at the Federal Register and will be published on December 10, 2013. For more information on the final rule please click here

In addition, this final rule includes discussions and/or policy changes regarding:

  • Telehealth Services
  • Applying Therapy Caps to Outpatient Therapy Services Furnished by CAHs
  • Requiring Compliance with State law as a Condition of Payment for Services furnished "Incident to" Physician and Other Practitioner Services
  • Revising the MEI
  • Updating the Ambulance Fee Schedule regulations
  • Adjusting the Clinical Laboratory Fee Schedule based on technological changes
  • Updating the:
    • Physician Compare Website
    • Physician Quality Reporting System
    • Electronic Prescribing (eRx) Incentive Program
    • Medicare Shared Savings Program
    • Electronic Health Record (EHR) Incentive Program
    • Physician Value-Based Payment Modifier and the Physician Feedback Reporting