This Week – November 5, 2016

This Week in Washington, D.C.

  • CMS Releases CY 2017 Medicare Outpatient Facility Rates and Physician Fee Schedule
  • MACRA Tidbit for the Week: What’s the relationship between the annual Medicare payment rules and MACRA?

From ACG National Affairs Committee Chair, Whitfield L. Knapple, MD, FACG

CMS Releases CY 2017 Medicare Payment Rates

This week, the Centers for Medicare and Medicaid Services (CMS) released the 2017 Medicare facility fees for the hospital outpatient department (HOPD) and ambulatory surgical center (ASC), as well as the 2017 Medicare Physician Fee Schedule final rule.  ACG, AGA and ASGE alerted members when these rules came out and are currently reviewing the details.  Stay tuned for a more extensive summary.

Some highlights from the GI societies’ alerts:

Moderate sedation:  CMS is removing the value of performing “moderate sedation” in many GI endoscopy codes, thereby reducing the value of the underlying procedural codes.  There will be no financial impact for ACG members who perform their own moderate sedation.  If you administer moderate sedation, you will now report two codes instead of one beginning January 2017: the procedure code and this new moderate sedation code.  ACG members who use anesthesia professionals, however, will see a small cut in reimbursement for these codes.  CMS reduced the value of these codes by .10 RVUs.  The reduction is less onerous than recommended by the AMA Relative Value Update Committee (RUC), and as well as the value taken out of all other specialty codes with moderate sedation previously considered inherent to the procedure (.25 RVUs for all other specialties).  ACG recognizes your frustration and appreciates the real world implications.  ACG is also committed to work tirelessly on your behalf to represent the best interests of clinical GI.

Ambulatory Payment Classification (APC) Adjustments & more: read the full blog here.


What’s the relationship between
the annual Medicare rules and MACRA?

Earlier this week, CMS released the Medicare payment rates for CY 2017.  It is important to note that the MACRA only applies to your professional fees.  MACRA does not impact the annual ASC or HOPD facility fees.  So how does MACRA impact the annual regulation on Medicare Part B professional fees?

Some Background:

CMS makes policy changes and reimbursement rate revisions in the annual fee schedule rule.  This rule sets the “relative value units (RVUs)” for each code and the reimbursement rate.  The RVU is an estimate for the physician work, practice expense, and medical malpractice relative to (or compared to) other physician services in Medicare.  CMS adds up the RVUs, and then multiples the sum by a “conversion factor” to ultimately set your reimbursement.  The conversion factor is basically a number derived from the various budgetary mandates from Congress (i.e. “sequestration”) as well as other rules CMS must follow.  For example, when CMS increases services for some codes, the Agency must then administer an across the board cut to all other codes by a small, incremental amount.  There are also geographic locality adjustments that impact your reimbursement too.

(Work RVU+ Practice Expense RVU+ Malpractice RVU) x Conversion Factor = Medicare National Payment Rate

A Basic Example:

The 2016 national average Medicare professional fee for colonoscopy (45378) is $199.79.  The conversion factor in 2016 is 35.8043.

The Formula: (Work RVU+ Practice Expense RVU+ Malpractice RVU) x Conversion Factor = Payment Rate

$199.79 = (3.36 work RVU + 1.74 PE RVU +. 48 Mal. RVU) x 35.8043 conversion factor

This is the starting point…

…Now enter MACRA

Beginning 2017, MACRA now sets forth the process by which CMS will adjust this reimbursement rate up or down via your participation in the Merit-based Incentive Payment System (MIPS), or an approved alternative payment model (APM), ultimately coming up with your actual personalized reimbursement for CY 2019.

Under MIPS

Example: CPT 45378 under MIPS.  To keep things simple, let’s stick with the 2016 data.  Please also assume that the conversion factor is the same.  Some possible outcomes are demonstrated below:

  1. The Bonus. The provider participates in MIPS in 2017 and scores well in each of the MIPS categories. CMS determines that the provider is eligible for a 4% bonus payment for 2019:

$207.78 = (3.36 + 1.74 +. 48) x 35.8043 with 4% MIPS Bonus

  1. The Cut. The provider chooses not to participate in MIPS in 2017. CMS determines that the provider is scheduled for a 4% payment cut in 2019:

$191.80 = (3.36 + 1.74 +. 48) x 35.8043 with 4% MIPS cut

Under the APM Model

Example: The provider participates in MIPS in 2017, and CMS determines that the provider meets the requirements for a MACRA-approved APM.  Thus, the provider is scheduled for the 5% APM participation bonus in 2019.  One possible scenario:

$209.46 = (3.36 +1.74 + .48) x 35.8043 with 5% APM bonus.

Please keep in mind that the provider’s actual 2019 payment also depends on the collective performance of their APM group as well as the “risk arrangement” the APM has with CMS.

Moving Forward

Prior to MACRA, this annual fee schedule also contained everything: all the reimbursement changes as well the quality reporting changes associated with Medicare (PQRS, value-based payment modifier, etc.).  Now that MACRA is in the picture, CMS currently has two separate regulations out there running on parallel tracks (MACRA and annual fee schedule).  Both regulations are expected to merge after this year, thereby going back to having everything in the annual payment rule.