The 2017 Medicare physician fee schedule: An overview of provisions that will affect surgical practice

New payment policy and coding and reimbursement changes set forth in the 2017 Medicare physician fee schedule (MPFS) final rule took effect January 1. The MPFS, updated annually by the Centers for Medicare & Medicaid Services (CMS), lists payment rates for services furnished under Medicare Part B and introduces or modifies other policies that affect physician reimbursement and quality measurement.

On September 6, 2016, the American College of Surgeons (ACS) submitted comments to CMS related to the MPFS proposed rule released earlier in the year. These comments provided CMS with feedback on a number of provisions that are in the final rule, which was released November 2, 2016. Although the MPFS final rule outlines important payment and policy changes that affect all physicians, this article focuses on updates that are particularly relevant to general surgery and its related medical specialties.

Collecting global codes data

CMS finalized a policy mandated in the Medicare Access and CHIP (Children’s Health Insurance Program) Reauthorization Act (MACRA) of 2015, whereby certain physicians who provide 10- and 90-day global services will be required to report information on the number of postoperative visits they provide. Starting July 1, physicians who are part of practices with 10 or more practitioners and who live in one of nine specified states—Florida, Kentucky, Louisiana, Nevada, New Jersey, North Dakota, Ohio, Oregon, and Rhode Island—will be required to report Current Procedural Terminology (CPT)* code 99024, Postoperative follow-up visit, normally included in the surgical package, to indicate that an evaluation and management service was performed during a postoperative period for a reason(s) related to the original procedure, for each postoperative visit they provide within the global period.

The nine states were selected based on size measured by the number of Medicare beneficiaries per state and Census Bureau region. Physicians in the selected states are not required to report on all 10- and 90-day global codes; rather, CMS will publish on its website a list of approximately 260 10- and 90-day global codes that are furnished by more than 100 practitioners and are either furnished more than 10,000 times or have allowed charges of more than $10 million annually. CMS estimates that these codes will describe approximately 87 percent of all furnished 10- and 90-day global services and about 77 percent of all Medicare expenditures for 10- and 90-day global services under the MPFS. This is a mandatory reporting requirement intended to allow CMS to gather enough data on postoperative visits to revalue global codes starting in 2019. MACRA gave CMS the authority to implement a 5 percent withhold in Medicare payments to encourage compliance with reporting the postoperative data; however, the agency chose not to implement this provision in the final rule.

In addition to the claims-based data collection, CMS finalized a policy to conduct a survey of Medicare practitioners to gain information about postoperative activities to supplement the claims-based data collection. CMS had not finalized the design of the survey at press time, but intends to begin surveying in mid-2017. This survey could affect physicians in all states, not just the nine selected for claims-based data reporting. The agency intends to collect global code data from Accountable Care Organizations (ACOs) but has yet to describe how it plans to collect those data or when ACO data collection will start.

The final rule on global codes data collection is a result of aggressive ACS legislative and regulatory advocacy. CMS released a drastically improved policy on collection of data from what was in the proposed rule. The proposed rule would have been impractical for surgeons in part because it would have created an unreasonable reporting burden that was not aligned with clinical workflow. When first proposed, all physicians who perform 10- and 90-day global codes in all states would have been required to report, not just those in large practices in a limited number of states. In addition, the proposed policy would have required using new Healthcare Common Procedure Coding System (HCPCS) G-codes that would have been reported in 10-minute increments, rather than submitting CPT code 99024 once for each postoperative visit. Furthermore, the proposed rule would have required reporting on all 10- and 90-day global codes, rather than the narrow list of high-volume and high-Medicare expenditure codes. Finally, the proposed rule would have required reporting to begin January 1, rather than July 1, as finalized. (See Table 1 for revisions to the proposed rule advocated by the ACS.)

ACS legislative and regulatory advocacy efforts included letters to lawmakers on Capitol Hill and to CMS staff, in-person meetings with members of Congress, participation in CMS town hall meetings, strategic meetings of the ACS Health Policy and Advocacy Group and General Surgery Coding and Reimbursement Committee, and the formation of an ACS-led Globals Coalition made up of multiple medical associations.

Table 1. Summary of proposed and final requirements for reporting global services

Provision Proposed Final
Start date January 1 July 1
How data are reported G-codes reported in 10-minute increments Use 99024 to report number of postoperative visits
What data are reported Pre-service and postoperative care on all 10- and 90-day global codes Just postoperative visits on only high-volume or high-expenditure 10- and 90-day global codes
Who reports the data All physicians, regardless of practice size, who provide 10- and 90-day services in all states Physicians who provide 10- and 90-day services who are:

  • In a practice of 10 or more practitioners
  • In one of the identified nine states (Florida, Kentucky, Louisiana, Nevada, New Jersey, North Dakota, Ohio, Oregon, and Rhode Island), comprising a representative sample, which was required by MACRA

Improving payment accuracy for care of people with disabilities

In the 2017 MPFS proposed rule, CMS proposed the creation of a new add-on code (G0501) to describe additional services furnished in conjunction with evaluation and management (E/M) services to beneficiaries with disabilities that impair their mobility. CMS indicated that the proposed add-on code would be reported with physician office and outpatient E/M codes (99201–99205, 99212–99215), as well as transitional care management codes (99495, 99496).

In their comments on the proposed rule, the ACS and other medical specialty associations agreed with CMS’ statement of disability disparities and perspective on the challenges that individuals with disabilities face in accessing the health care system. However, most also agreed that the root cause and scope of these issues are not well defined and suggested that CMS work with stakeholders to conduct additional studies and gain information regarding the underlying reasons for barriers to access to care and lower quality scores on certain measures.

CMS did not finalize payment for code G0501 and instead indicated the agency will engage with interested beneficiaries, advocates, and practitioners to continue to explore improvements in payment accuracy for care of people with disabilities. In addition, the agency included the code G0501 in the HCPCS code set and noted that practitioners would be able to report the code if they were so inclined.

Non-face-to-face prolonged E/M services

Public commenters have repeatedly recommended that CMS establish separate payments for many services that are currently bundled under the MPFS, including non-face-to-face prolonged E/M service codes: 99358, Prolonged evaluation and management service before and/or after direct patient care; first hour, and 99359, Prolonged evaluation and management service before and/or after direct patient care; each additional 30 minutes (List separately in addition to code for prolonged service). These non-face-to-face prolonged service codes are broadly described (although they include only time personally spent by the physician or other billing practitioner) and have a relatively high time threshold. (The time counted must be an hour or more beyond the usual service time for the primary or “companion” E/M code that also is billed.) They are not reported for time spent in care plan oversight services or other non-face-to-face services that have more specific codes and no upper time limit in the CPT code set.

In the final rule, CMS agreed that payment for 99358 and 99359 codes would provide a means to recognize the additional resource costs of physicians and other billing practitioners when they spend an extraordinary amount of time outside of an E/M visit performing work that is related to that visit and does not involve direct patient contact (such as extensive medical record review, review of diagnostic test results, or other ongoing care management work).

In addition, CMS indicated its intention to adopt the CPT code descriptors and prefatory language for reporting these services, which requires that time counted toward the codes describe services furnished during a single day directly related to a discrete face-to-face service that may be provided on a different day. One caveat is that the services must be directly related to those furnished in a face-to-face visit. CMS stressed that these codes are to be used to report extended non-face-to-face time that is spent by the billing physician or other practitioner (not clinical staff) that is not within the scope of practice of clinical staff, and that is not adequately identified or valued under existing codes or the 2017 new codes.

AUC for advanced diagnostic imaging services

Beginning January 1, 2018, physicians will be required to report appropriate use criteria (AUC) through a qualified clinical decision support mechanism (CDSM). The MPFS final rule indicated that a list of qualified CDSMs will be published by June 30, 2017, at which time some providers will be able to begin reporting AUC.

The College encouraged CMS to allow physicians more time to select a CDSM and recommended that AUC reporting be implemented gradually in the initial years of the program, to allow for transparency and input from specialty societies. CMS considered the College’s comments and delayed the requirement for providers to consult CDSMs from its original January 1, 2017 deadline. The agency said it will direct qualified provider-led entities to post AUC—along with the process used to develop and modify AUC—online to allow for stakeholder review.

Corrections to value-based modifier

For 2016, CMS finalized the processes through which physician groups or solo practitioners may request a correction of errors related to the value-based payment modifier (VM) calculation. The 2017 MPFS proposed rule solicited comments on how to update these VM informal review policies and establish how the quality and cost composites under the VM would be affected if unanticipated issues, such as those involving data integrity, were to arise. CMS proposed four informal review policies intended to help individual and group practitioners reduce uncertainty and better predict the outcome of their final VM adjustment.

The College urged CMS to give groups and individual practitioners the opportunity to resubmit data when errors are discovered, and requested that the agency clarify how it plans to prevent data integrity issues in the new Quality Payment Program (QPP) outlined in MACRA. CMS finalized its four informal review policies to modify physicians’ quality and cost composites based either on an informal review determination or widespread quality and cost data issues. The agency addressed the College’s comments and indicated that quality data issues will be significantly limited moving forward due to program reporting enhancements.

Starting with the 2017 performance year, the QPP will combine the existing Medicare meaningful use Physician Quality Reporting System (PQRS) and VM programs into the Merit-based Incentive Payment System (MIPS). MIPS defines four categories of eligible clinician performance (quality, advancing care information, clinical practice improvement activities, and resource use), which contribute to an annual MIPS final score to determine Medicare Part B payment adjustments. The MIPS data collection system will provide enhanced real-time support to submitters to identify VM errors in a more rapid and accurate manner than the stand-alone PQRS and VM programs.

Conversion factor

The 2017 MPFS conversion factor (CF) is $35.8887, which is slightly higher than the 2016 CF of $35.8043. The 2017 CF reflects a budget-neutral adjustment, a 0.5 percent update adjustment factor specified under section 1848 of the Social Security Act, an adjustment due to the non-budget neutral 5 percent multiple procedure payment reduction (MPPR) rule for the professional component of imaging services, and a -0.18 percent target recapture amount. (See Table 2 for details.)

The target recapture amount was specified in the Protecting Access to Medicare Act of 2014, under which CMS established an annual target for reductions in MPFS expenditures resulting from adjustments to relative values of misvalued CPT codes for 2017–2020. The Achieving a Better Life Experience Act of 2014 set a 0.5 percent target for reduced expenditures for 2017 and 2018. If the estimated net reduction in MPFS expenditures resulting from adjustments to misvalued CPT codes in 2017 is equal to or greater than the 0.5 percent target, the reduced expenditures will be redistributed within the MPFS. The amount by which such reduced expenditures exceed the target for 2017 will be treated as a reduction in expenditures for 2018 to determine whether the annual target has been met.

Table 2. Calculation of the 2017 MPFS conversion factor

Conversion factor in effect in 2016 $35.8043
Update factor 0.50 percent (1.0050)
2017 RVU budget neutrality adjustment -0.013 percent (0.99987)
2017 target recapture amount -0.18 percent (0.9982)
2017 MPPR adjustment -0.07 percent (0.9993)
2017 conversion factor $35.8887

Overall effect on surgery

The 2017 combined impact of changes to relative value units (RVU) for specific services under the misvalued code initiative, along with changes to practice expense (PE) and malpractice (MP) RVUs, was 0 percent for general surgery. Table 3 shows the estimated impact for all providers and other surgical specialties.

Table 3. 2017 MPFS estimated effect on total allowed charges for surgical specialties

Specialty Impact of work RVU changes Impact of PE RVU changes Impact of MP RVU changes Combined impact
Total—all providers

0%

0%

0%

0%

Cardiac surgery

0

0

0

0

Colon and rectal surgery

0

0

0

0

General surgery

0

0

0

0

Hand surgery

0

0

0

0

Neurosurgery

-1

0

0

-1

Obstetrics/gynecology

0

0

0

0

Ophthalmology

-1

-2

0

-2

Orthopaedic surgery

0

0

0

0

Otolaryngology

0

0

0

-1

Plastic surgery

0

0

0

0

Thoracic surgery

0

0

0

0

Urology

-1

0

0

-2

Vascular surgery

0

0

0

-1


*All specific references to CPT codes and descriptions are © 2016 American Medical Association. All rights reserved. CPT and CodeManager are registered trademarks of the American Medical Association.

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