CMS Releases Final Rule for 2014 Medicare Physician Fee Schedule

Payment Matters Newsletter

December 11, 2013

By: John S. Linehan

CMS has released its much-anticipated final rule with comment for the Calendar Year (CY) 2014 Medicare Physician Fee Schedule (PFS). The final rule prescribes physician payment rates that will go into effect on January 1, 2014, and addresses the policies previously announced in the proposed rule. The fee schedules were delayed for almost a month due to the partial shutdown of the federal government that occurred in October. The final rule, which is available here [PDF], was published in the Federal Register on December 10, 2013.

Primary Care and Chronic Care Management

The centerpiece of the final rule is its adoption of a plan to provide separate payments to physicians who treat certain chronic care needs. Beginning in 2015, primary care physicians will be eligible to receive non-face-to-face complex chronic care management services for Medicare beneficiaries who have multiple (two or more), significant chronic conditions. The measure represents an important milestone in Medicare’s support for the provision of primary care. According to CMS Principal Deputy Administrator Jonathan Blum, “successful efforts to improve chronic care management for these patients could improve the quality of care while simultaneously decreasing cost, through reductions in hospitalizations, use of post-acute care services, and emergency department visits.”

Sustainable Growth Rate Methodology

The final rule retains the proposal to apply the sustainable growth rate (SGR) formula, which will result in across the board reductions in physician reimbursement. Specifically, physicians are currently facing a decrease of over 20 percent in payment rates beginning January 1, 2014. Physician groups like the American Medical Association are currently lobbying to persuade Congress to override the SGR payment formulation. In past years Congress had intervened to prevent the SGR adjustment from taking effect.

Telehealth Services

The rule implements a range of telehealth payment policies, including a redefinition of the geographic criteria for eligible teleheath originating sites to include health professional shortage areas (HPSAs) located in rural census tracts of urban areas. CMS has established a policy to determine geographic eligibility for an originating site on an annual basis to avoid mid-year changes to geographic designations that could cause disruptions. The list of eligible Medicare telehealth services has been updated to include transitional care management services.

Revisions to the Practice Expense Geographic Adjustment

CMS is finalizing new geographic practice cost indices (GPCIs) defining the work, practice expense, and malpractice cost components of physicians’ services under the PFS. The new GPCIs incorporate updated data and will be phased in over CY 2014 and CY 2015.

Medicare Economic Index (MEI)

Revisions are being made to the calculation of the Medicare Economic Index (MEI), which is used to update physician payments for inflation. The revisions are based upon recommendations produced by a Technical Advisory Panel that met in CY 2012, and include a shifting of weight from the practice expense component to the work component of the GPCI.

Misvalued Codes

As part of its ongoing effort to identify and review potentially misvalued codes, CMS has finalized the values for approximately 200 codes and adjusted the work value units for 200 additional codes on an interim basis for 2014. The rates for hip and knee replacements, mental health services, and GI endoscopy services are currently open for public comment until January 27, 2014. CMS decided not to finalize its proposal to modify relative values under the PFS to cap the physician practice expense payment for procedures provided in a non-facility setting at the total payment rate for the service when provided in an ambulatory surgical center or hospital outpatient setting. CMS plans to address the issue in future rulemaking after further consideration of issues raised by public commenters.

Application of Therapy Caps to Critical Access Hospitals

CMS is finalizing its proposal to apply annual limitations or “therapy caps” on per beneficiary incurred expenses for outpatient therapy services furnished by a Critical Access Hospital (CAH) beginning on January 1, 2014.