2015 Medicare fee schedule: How the changes will affect surgical practice

New payment policy and coding and reimbursement changes set forth in the calendar year (CY) 2015 Medicare physician fee schedule (MPFS) final rule took effect January 1, 2015. The MPFS, updated annually by the Centers for Medicare & Medicaid Services (CMS), lists payment rates for Medicare Part B services. On September 2, 2014, the American College of Surgeons (ACS) submitted comments related to the MPFS proposed rule. These comments provided feedback to CMS on a number of policies that ultimately were included in the final rule, which was released in November 2014. Although the MPFS final rule introduces important payment and policy changes that affect all physicians, this article focuses on updates that are particularly relevant to surgery and related specialties.

CY 2015 conversion factor

The MPFS final rule calls for reducing physician payments by 21.2 percent in CY 2015 due to use of the controversial sustainable growth rate (SGR) formula. The pay cut would take effect April 1, 2015, because the Protecting Access to Medicare Act of 2014, signed into law April 1, 2014, provides for a 0 percent change in MPFS payments for services furnished between January 1 and March 31, 2015. Without additional congressional action, the 21.2 percent SGR cut in physician payment will be applied to payment for Medicare physician services furnished on or after April 1, 2015.

Practice expense RVUs

The MPFS proposed rule solicited comments on possible uses of hospital outpatient department (HOPD) cost data as a means to ensure accuracy and maintain relativity in developing practice expense (PE) values and payments for services rendered in physician offices. The ACS weighed in on this issue, urging CMS not to use HOPD cost data to evaluate PE relative value units (RVUs). The ACS’ comments to CMS noted that the American Medical Association (AMA) Relative Value Scale Update Committee (RUC) has a process for determining PE inputs that is comprehensive and data-driven, is produced by a team that has a history of expertise in this area, uses dedicated and extensive resources to improve the reliability of the PE methodology, and employs a bottom-up approach that involves a review of 100 percent of the PE inputs for all codes.

The ACS’ comments also cited differences in economies of scale, cost center structures, sites of service, maintenance of relativity, and the evaluation of direct and indirect costs, concluding that HOPD cost data and PE cost data are not comparable. CMS did not finalize any policies in the final rule, but indicated that the agency would continue to consider if and how HOPD cost data might be useful in addressing concerns regarding PE payments under the MPFS.

POS Code 22

To collect better data on off-campus versus on-campus provider-based HOPDs, the MPFS final rule states that CMS will remove Place of Service (POS) code 22, Outpatient Hospital: A portion of a hospital which provides diagnostic, therapeutic (both surgical and nonsurgical), and rehabilitation services to sick or injured persons who do not require hospitalization or institutionalization.* CMS will instead create two new POS codes—one to identify outpatient services furnished in on-campus, remote, or satellite locations of a hospital, and another to identify outpatient services furnished in off-campus locations that are not remote or satellite locations of a hospital or a hospital emergency department. CMS states that it expects the two new POS codes to be available after July 1, 2015, at which time physicians will be required to record these POS codes, as appropriate, on their professional claim forms. There will be no payment adjustments for services rendered in the off-campus HOPD setting; this change is solely for data collection purposes.

This change stems from CMS’ desire to better understand the growing trend toward hospital acquisitions of physician offices and the treatment of these offices as off-campus, provider-based HOPDs from a payment perspective. Currently, Medicare pays a separate facility fee to account for a portion of PEs incurred by the hospital, often resulting in inappropriate payments made to off-campus, provider-based HOPDs.

Valuing codes

Valuing new, revised, and potentially misvalued Current Procedural Terminology (CPT) codes is a part of maintaining the MPFS. Under the current process, CMS issues “interim final” values for most of these codes in the MPFS final rule. These values are implemented for the following year but are subject to public feedback before being finalized at the end of the year. The MPFS final rule revised this process, and going forward values will be part of the MPFS proposed rule, affording stakeholders an opportunity to provide feedback on proposed values in advance of implementation. Final values will be incorporated into the annual MPFS final rule a few months later. The transition to this revised process is set to begin in CY 2016, with full implementation taking place in CY 2017.

CMS proposed modifying this process to support a growing public demand for increased transparency and time to prepare for payment changes. The ACS supported CMS’ proposal overall and specifically supported including values for new, revised, and potentially misvalued CPT codes in the annual proposed rule. CMS considered ACS’ comments and changed its policies to follow this process, which eliminates the need for most “interim final” values.

Global codes

One of the most significant changes in the MPFS final rule calls for transitioning all 10- and 90-day global codes to 0-day global codes. The transition for 10-day global codes will begin in CY 2017, and the transition for 90-day global codes will begin in CY 2018. CMS has yet to develop a methodology for making this transition. CMS set forth a number of reasons as to why the agency believes this transition is necessary, including the following: to increase the accuracy of MPFS payment by basing payment rates more closely on the typical resources used, to avoid duplicative payments when a patient receives postoperative care from a different provider, and to facilitate the availability of more accurate data for new payment models and quality research.

Prior to the release of the final rule, the ACS submitted detailed comments to CMS stressing that the agency should refrain from moving forward with this proposal until a comprehensive analysis was conducted to determine its effects on the provision of surgical care. Because this wide-ranging proposal will affect more than one-third of all CPT codes, the ACS asserted that CMS should delay its implementation until stakeholders have had sufficient time to understand the effects and provide meaningful comments about this policy.

The ACS comment letter also offered recommendations on a number of issues that CMS must resolve before moving forward with the proposed policy. The letter addressed CMS’ concern that the number and level of postoperative services included in the value of 10- and 90-day global services fall short of accurately reflecting the postoperative services that surgeons actually provide. The ACS questioned whether this policy would result in patients not seeking follow-up care if they had to make a co-payment for each follow-up visit rather than one larger co-payment for the entire 10- or 90-day global service.

The ACS also raised implementation concerns with transitioning 10- and 90-day to 0-day global codes. For example, the ACS expressed concern about evaluation and management (E/M) services that are currently included in 10- and 90-day global codes, which are different from E/M services that are separately billable outside of the global period. If surgeons are expected to substitute separately billable E/M services, they will not receive reimbursement for all the services that were previously included in the 10- and 90-day global period.

Open Payments

The Physician Payments Sunshine Act, also known as Open Payments, requires applicable manufacturers (AMs) of drugs, medical devices, and biologicals to track payments and other transfers of value to physicians and teaching hospitals and then report these payments to CMS annually. Financial disclosures from the 2013 reporting year were made available to the public on September 30, 2014, and data for subsequent years will be available by June 30.

The MPFS final rule eliminates an exemption for reporting transfers of value made to physicians who speak at accredited continuing medical education (CME) program events. The ACS submitted comments to CMS firmly opposing the elimination of this “bright line” CME exemption, as it is definitive and feasible to implement. The ACS comments also discussed the unintended consequences of this proposal, such as physicians abstaining from presenting at CME events and thereby withholding their expertise on ways to improve the quality and cost of health care and increasing the administrative burden on physicians to track each transfer of value made to them at accredited CME events. Unfortunately, CMS has chosen to eliminate this exemption and will instead apply a separate exemption for physician speakers at accredited CME events when a transfer of value is made and the AM is unaware of the identity of the physician during that reporting year and for the first half of the following year.


The Physician Quality Reporting System (PQRS) is a Medicare quality pay-for-reporting program, which began as a voluntary program that provided payment incentives to eligible professionals (EPs) who satisfactorily report data on quality measures for covered services furnished during a specified reporting period. Beginning in 2015, no more incentives will be offered for the program, and lack of participation will result in a payment penalty of 2 percent to be applied in 2017. EPs can report measures for the program through claims, a traditional registry, electronic health records (EHRs), or a qualified clinical data registry (QCDR). CMS finalized several key changes for PQRS 2015.

Individual measure reporting

EPs can participate in the PQRS program by reporting on individual measures or, alternatively, on measures groups. For individual measure reporting via the claims- and registry-based options, CMS requires the reporting of nine measures covering at least three National Quality Strategy domains (NQS) for 50 percent of the applicable Medicare Part B fee-for-service (FFS) patients in order to avoid a payment penalty. Previously, EPs had to report on only three PQRS measures to avoid a penalty.

A new requirement in 2015 for those EPs who have at least one face-to-face Medicare encounter is that at least one of the nine measures must be reported from the 19 cross-cutting measures identified by CMS. In CMS’ view, cross-cutting measures are broadly applicable to all physician specialties.

The EHR-based reporting mechanism remains unchanged from 2014. EPs may continue to report on nine measures covering three NQS domains.


In addition to the claims-, EHR-, and traditional registry-based reporting options, beginning in 2014, EPs were able to report to PQRS using the QCDR reporting option. A QCDR is a CMS-approved entity that collects medical and/or clinical data to track patients and diseases with the goal of improving quality of care.

A QCDR differs from a traditional PQRS registry in several ways. This option was created to provide opportunity for EPs to simultaneously use existing high-quality clinical registries for quality improvement to meet PQRS reporting requirements. QCDRs can offer more flexibility in PQRS participation than other PQRS reporting options, allowing EPs to report on a variety of measure types, including those from the Clinician and Group Consumer Assessment of Healthcare Providers and Systems (CG-CAHPS) survey, measures that the National Quality Forum (NQF) has endorsed, current PQRS measures, measures used by medical boards or specialty societies, and measures used in regional quality collaboratives.

QCDRs must have the capacity to track outcomes, provide timely feedback reports, have a methodology for benchmarking, and risk adjust as appropriate. All of these capabilities are intended to result in the reporting of measures that are more relevant, clinically appropriate, and actionable for surgeons when compared with the measures currently available as PQRS reporting options. For the 2015 QCDR reporting requirements, individual EPs must report on nine measures selected by the QCDR, including three outcome measures that cover at least three NQS domains for 50 percent of applicable patients to which each measure applies. In lieu of two outcome measures, at least one outcome measure and one of the following types of measures must be reported: resource use, patient experience of care, efficiency/appropriate use, or patient safety. Beginning in 2015, QCDRs also will be required to publicly report performance results excluding measures that fail to meet a minimum patient sample of 20, fail to prove to be valid and reliable, and are being reported for the first time in 2015.

The Metabolic and Bariatric Surgery Accreditation and Quality Improvement Program (MBSAQIP) was the first ACS clinical data registry that CMS approved as a QCDR in 2014. As a QCDR, MBSAQIP participants have the option of reporting through MBSAQIP to satisfy the CMS PQRS requirements for 2014.

Measures group reporting

A PQRS measures group allows EPs to report on a set of relevant measures determined by CMS. Measures groups can only be reported through an approved CMS traditional registry. The ACS Surgeon Specific Registry was approved for 2014 PQRS reporting under this option.

The reporting requirement for the measure group option for 2015 remains the same as 2014—EPs must report one measures group for 20 majority Medicare (at least 11 Medicare) FFS patients. However, in 2014, two PQRS measures groups were relevant to surgical care: the Perioperative Care Measures Group and the General Surgery Measures Group. For 2015, CMS has eliminated the Perioperative Care Measures Group for reporting—despite the ACS’ efforts to encourage CMS to maintain the measures group, as its removal leaves surgeons with a limited number of meaningful measures to report.

CMS will continue to allow some of the perioperative care measures (#21: Selection of Prophylactic Antibiotic—First or Second Generation Cephalosporin, #22: Discontinuation of Prophylactic Parenteral Antibiotics, and #23: Venous Thromboembolism Prophylaxis When Indicated in All Patients) to be reported as individual measures via the individual claims- or registry-based option. If an EP decides to report on these three perioperative care measures, they will only count toward the reporting of nine measures across three NQS domains for claims- and registry-based reporting. Therefore, the EP would need to report on six additional measures while being sure to report across three NQS domains, including one cross-cutting measure. Although CMS will continue to allow EPs to report on the General Surgery Measures Group, the agency has added two new measures to the group—measure #226: Tobacco Use: Screening and Cessation Intervention, and measure #130: Documentation of Current Medications in the Medical Record, for a total of seven measures (see table).

2015 PQRS General surgery measures group

Measure number (NQF/PQRS) Measure title NQS domain


Documentation of Current Medications in the Medical Record Patient Safety


Preventive Care and Screening: Tobacco Use: Screening and Cessation Intervention Community/Population Health


Anastomotic Leak Intervention Patient Safety


Unplanned Reoperation within the 30 Day Postoperative Period Patient Safety


Unplanned Hospital Readmission within 30 Days of Principal Procedure Effective Clinical Care


Surgical Site Infection Effective Clinical Care


Patient-Centered Surgical Risk Assessment and Communication Person- and Caregiver-Centered Experience and Outcomes


Currently, the CG-CAHPS survey is the only patient experience of care survey measure included in PQRS. The ACS developed CAHPS for Surgical Care (S-CAHPS) in collaboration with various surgical specialty societies to expand on the CG-CAHPS by incorporating domains that are relevant to surgical care. CMS acknowledges the importance of including S-CAHPS in PQRS, noting that the CG-CAHPS survey would not accurately reflect the care provided by single- or multispecialty surgical or anesthesia groups, and that S-CAHPS expands on the CG-CAHPS by focusing on aspects of surgical quality that are important to patients and for which patients are the best source of information.

However, CMS did not include S-CAHPS as a measure reportable through PQRS for 2015. CMS explained that because of the cost and time needed to identify S-CAHPS vendors, implementation of the S-CAHPS survey for 2017 or 2018 PQRS payment adjustment is infeasible. CMS encourages the inclusion of the S-CAHPS as a measure included in a QCDR. The ACS is working with CMS to develop a solution for implementing the S-CAHPS in future years.

Physician Compare website

The Physician Compare website is designed to help patients locate and obtain information on Medicare-participating physicians. CMS finalized several of its proposals for adding new information via the Physician Compare website, including but not limited to the following: adding check marks for EPs who satisfactorily report under the PQRS program and participate in the EHR Incentive Program; publicly reporting all 2015 individual EP level PQRS measures collected via registry-, EHR-, or claims-based reporting in 2016; and reporting all individual EP level 2015 PQRS QCDR registry data in 2016. CMS noted in the final rule that they will only post measures that they determine to be statistically valid and reliable, have undergone consumer testing, and have been part of the PQRS program for more than a year. The ACS expressed concern about CMS’ rigorous timeline to post information on the Physician Compare website and urged the agency to conduct an analysis of how many consumers are using the website to make health care decisions. CMS plans to continue expansion of the website in the future.

Value-based payment modifier

The Affordable Care Act (ACA) requires that CMS apply a value-based payment modifier to physician payments, starting with some physicians in 2015 and extending the mandate to all physicians by 2017. With the application of the value-based payment modifier, Medicare physicians will be paid differentially based on the cost and quality of care they provide.

2015 payment adjustment

In 2015, the value-based payment modifier will initially apply to physicians in groups of 100 or more EPs and will be based on the providers’ 2013 quality and cost data. EPs include physicians and certain nonphysician health care practitioners. CMS plans to separate these groups of EPs into categories based on whether they successfully participate in PQRS. The value-based payment modifier for group practices that satisfactorily report PQRS quality measures will be set at zero initially, which would prevent a payment reduction in 2015. These physicians may either keep the 0 percent update or pursue a higher modifier amount based on their performance with respect to quality and cost measures—an option described as “quality tiering.” Physicians attempting to earn a higher value-based payment modifier amount through quality tiering would also be at risk, based on their quality and cost scores, for a payment decrease of up to 1 percent in 2015. Physicians in groups of 100 or more EPs who did not meet the PQRS reporting requirements for 2013 would have a modifier amount of –1 percent applied to their Medicare Part B claims in 2015.

2016 payment adjustment

The application of the value-based payment modifier in 2016 will be similar to 2015, with a few exceptions. In 2016, the value-based payment modifier will apply to physicians in groups of 10 or more EPs (down from 100 or more) based on their quality and cost data from 2014. In 2016, CMS will separate these groups of 10 or more EPs into categories based on whether they successfully participate in PQRS. All physicians in groups of 10 or more will be subject to quality tiering based on their quality and cost measures. Physicians in groups of 10–99 could receive either no adjustment or a positive adjustment under quality tiering. Physicians in groups of 100 or more could receive no adjustment, a positive adjustment, or a negative adjustment of up to –2 percent in 2016. Physicians in groups of 10 or more EPs who did not meet the PQRS reporting requirements for 2014 would have a modifier amount of –2 percent applied to their claims submitted under the PFS in 2016.

2017 payment adjustment

Starting in 2017, the value-based payment modifier will apply to all groups and individual physicians based on their quality and cost data from 2015. Similarly to previous years, in 2017 CMS will separate physicians into categories based on whether they successfully participate in PQRS. All physicians will be subject to quality tiering based on their performance with respect to quality and cost measures. Physicians in groups of two to nine EPs and solo practitioners could receive either no adjustment or a positive adjustment under quality tiering. Physicians in groups of 10 or more EPs may receive no adjustment, a positive adjustment, or a negative adjustment of up to –4 percent in 2016. Physicians in groups of two to nine EPs and solo practitioners who did not meet the PQRS reporting requirements for 2015 would have a modifier amount of –2 percent applied to their claims submitted under the MPFS in 2017. Physicians in groups of 10 or more EPs who did not meet the PQRS reporting requirements for 2015 would have a modifier amount of –4 percent applied to their claims submitted under the MPFS in 2017.

*The Centers for Medicare & Medicaid Services. Place of service codes. Available at: www.cms.gov/Medicare/Coding/place-of-service-codes/Place_of_Service_Code_Set.html. Accessed November 10, 2014.

All specific references to CPT codes and descriptions are © 2014 American Medical Association. All rights reserved. CPT and CodeManager are registered trademarks of the American Medical Association.

Centers for Medicare & Medicaid Services. Medicare Program; revisions to payment policies under the physician fee schedule, clinical laboratory fee schedule, access to identifiable data for the Center for Medicare and Medicaid Innovation models & other revisions to Part B for CY 2015 final rule. Federal Register. 79 (November 13, 2014):67801. Available at: www.federalregister.gov/articles/2014/11/13/2014-26183/medicare-program-revisions-to-payment-policies-under-the-physician-fee-schedule-clinical-laboratory. Accessed December 1, 2014.

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