Freed Associates

Need to Know: Key Provisions in the 2016 Medicare Physician Fee Schedule Proposed Rule

By Emily Richmond

TOPIC: Medicare

The Centers for Medicare and Medicaid Services (CMS) has released the 2016 Medicare Physician Fee Schedule proposed rule, the first proposed fee schedule updates since the repeal of the Sustainable Growth Rate (SGR) formula by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The 2016 Medicare Physician Fee Schedule proposals reflect a focus on quality program-specific provisions, and align with CMS and Congress’ stated intent to continue shifting the Medicare program towards a system that rewards high-quality care to patients as opposed to the volume of services rendered by clinical providers. Below are some key highlights from the proposed rule that all healthcare providers should be aware of in order to prepare for 2016 and beyond.


  • CMS is laying the groundwork for the Merit-Based Incentive Payment System (MIPS), with its first payment implications in CY 2019.  MIPS is a federal program that combines three quality incentive payment programs previously established by CMS — the Physician Quality Reporting System (PQRS), the Value-Based Payment Modifier (VBM), and the EHR Incentive Program (Meaningful Use) — into a single quality incentive payment program. The MIPS program was established as a legislative requirement under MACRA and implementation will begin in CY 2017, with payment ramifications beginning in CY 2019. As such, several of the program changes discussed below are a result of the establishment of MIPS.


  • The current Physician Quality Reporting System will end in CY 2018. While the last year of PQRS reporting under current rules will be CY 2016 (with the payment adjustment occurring in CY 2018 for lack of satisfactory participation in the program), CMS may choose to include portions of PQRS as part of MIPS. CMS has proposed that the quality measure reporting requirements to avoid the 2.0% PQRS payment adjustment in CY 2018 remain the same as those previously established for avoiding the CY 2017 PQRS payment adjustment (associated with reporting that occurs in CY 2015). One additional reporting option that has been proposed is that groups participating in the Group Practice Reporting Option may report PQRS using the Qualified Clinical Data Registry reporting mechanism.


  • The current Value-Based Payment Modifier (VBM) will also end in CY 2018, but it will still be applicable to non-physician practitioners based on reporting in CY 2016. The VBM provides for differential payments under the Physician Fee Schedule to physicians, groups of physicians, and other healthcare providers based on the quality and cost of care they furnish to beneficiaries enrolled in the traditional Medicare Fee-for-Service (FFS) program.


As a result of MACRA language around the MIPS, CMS has revised its proposal for the CY 2018 payment adjustment period to apply the VBM only to non-physician eligible professionals who are physician assistants (PAs), nurse practitioners (NPs), clinical nurse specialists (CNSs), and certified registered nurse anesthetist (CRNAs) in groups with two or more eligible professionals as defined by CMS and those who are solo practitioners, and not to other types of professionals who are non-physician eligible professionals.


CMS proposes that for the CY 2018 payment adjustment period, groups and solo practitioners who satisfactorily participate in PQRS would be subject to upward, neutral, or downward adjustments derived under the quality-tiering methodology; however, CMS proposes that PAs, NPs, CNSs, 
and CRNAs in groups consisting only of non-physician EPs and those who are solo practitioners be held harmless from downward adjustments under the quality-tiering methodology of the VBM. The amount of the payment adjustments (both upward and downward) will depend on the group size and whether the group or solo practitioners met applicable PQRS criteria.


  • CMS has proposed separate payment for advance care planning discussions. Although reimbursement for advanced planning discussions were previously included in payment for the “Welcome to Medicare” visit that each Medicare beneficiary receives when they join the program, CMS heard from providers that this wasn’t always the best time for patients and families to discuss this topic and that that the discussions were often held later in the patient’s care continuum, such as closer to end-of-life or during treatment planning for a terminal illness.


As a result of this feedback and recommendations from the American Medical Association (AMA), CMS is proposing separate payment to Medicare providers for advanced care planning discussions with patients, allowing providers to have these discussions when it is best for the patient and their families. The exact payment amount was not proposed in this version of the rule, but CMS has asked for feedback during the public comment period and likely will include a payment amount for these services when the final rule is published later in 2015.


As the regulatory policy that dictates how physicians and other practitioners are paid for services under Medicare, the Physician Fee Schedule rule is updated annually and always includes numerous provisions that are of interest to various healthcare organizations and providers. However, the 2016 proposed rule is especially critical as it includes a number of components required by MACRA, marking a focused change in physician payment that will be felt sooner rather than later. If you are a healthcare organization or provider serving Medicare beneficiaries, you should be aware of the proposals in the Physician Fee Schedule and begin preparing for any changes that may significantly impact your organization.