Medicare Proposed 2018 Fee Schedule just released

July 17, 2017

The long-awaited proposed Medicare fee schedule for 2018 was just released last Thursday and there are several proposals you should know about.

  • Easing of PQRS Penalties: To make a smoother transition from the Physician Quality Reporting System (PQRS) and the Value Modifier (VM) program to the Merit-based Incentive Payment System (MIPS), CMS is proposing to retroactively lower the number of quality measures required under PQRS and VM to six instead of nine. In addition, measures will not be required to span three National Quality Strategy domains. So, physicians that were only able to report six measures under PQRS will not be subject to 2% PQRS penalties in 2018 – the last year of PQRS.
  • Reduction in VM Penalties: CMS is also proposing to reduce the 2018 VM automatic penalty for those clinicians that do not meet minimum quality reporting requirements from -4% to -2% for groups of 10 or more clinicians and from -2% to -1% for solo physicians and those in groups of nine or less. In addition, all physicians would be held harmless for reductions based on performance under the quality-tiering part of the VM program. This means CMS will not make any downward adjustments in 2018 for physicians whose costs are higher than their peers or who perform below their peers on quality measures.
  • Evaluation and Management Services: CMS is seeking comment from the public on how it can make documentation of evaluation and management services less burdensome.
  • Conversion Factor: There is a slight increase to the conversion factor from $30.89 to $35.99. (The conversion factor dollar amount is multiplied by the RVUs to get the reimbursement amount.) This increase reflects the 0.50% update factor required by the Medicare Access and CHIP Reauthorization Act (MACRA). However, that update has been reduced by .19% due to failure of CMS to meet its target for reducing expenditures based on revaluing of misvalued codes required under the Achieving a Better Life Act of 2014. If the net reductions in misvalued codes in 2018 is less than the target of 0.50%, a reduction equal to the difference must come out of all codes. Since the 2018 proposal would only achieve 0.31% in net reductions (instead of the .50% target), the 0.19% shortfall must be made up by lowering the Medicare conversion factor.
  • Revaluation of 95004: CMS is required, by law, to periodically identify potentially misvalued services and to adjust the relative values for those services. Last year, CPT Code 95004 (skin prick tests) was on the CMS list of potentially misvalued codes. As a result, it was reviewed by the AMA Relative Value Update Committee (RUC) that is responsible for making recommendations to CMS on the costs of a service and the amount of physician work involved. In revaluing, the RUC and CMS look at the physician work and the practice expenses associated with providing the service. Practice expense includes direct costs (clinical staff time, supplies, and equipment) and indirect costs which are allocated based on direct costs. The RUC receives input from the relevant specialty societies and the Advocacy Council participated in the process.

The outcome of the revaluation of the skin testing service (95004) is a proposed 21% drop in RVUs and thus in reimbursement. This is largely because the quantity of antigen used in conducting an individual skin test came under close scrutiny and the current amount of 1 ml per test could not be justified and was reduced to 0.25ml.

CMS comes up with values for supply costs by multiplying the cost of the supply times the amount used. We were able to mitigate the impact of this reduction by providing evidence to CMS that the cost of antigen had increased and should have a higher value. To do this, we collected invoices from many members and submitted them to CMS along with a recommendation that the cost of antigen used in testing be increased from $4.10 to $8.44 per ml.

We were also successful in maintaining the current physician work value of 0.01 RVUs per test.

The Advocacy Council will be submitting comments on the proposal and will keep you informed of any other developments.