The Centers for Medicare and Medicaid Services (CMS) releases its Physician Fee Schedule (PFS) final rule each year, bringing with it changes to physician reimbursement and a variety of related programs. The final rule for year 2015 was released on Oct. 31, 2014, with changes to physician fees, Medicare’s Physician Quality Reporting System (PQRS), the electronic health records (EHR) Meaningful Use program, and other quality and payment initiatives.

This article summarizes the issues of greatest concern and impact for orthopaedic surgeons.

Shift away from global payments
In what is perhaps the most dramatic policy shift in this year’s final rule, CMS has finalized its proposal to eliminate all 10- and 90-day global payment periods for surgical services. This change will be phased-in over the next 4 years, with 10-day global payments being transitioned in year 2017 and 90-day global payments in year 2018.

CMS has also indicated that it will be evaluating whether there is a better episode-based method of bundling surgical payments during this transition period. For physicians, this will ultimately mean that a single payment will be made for all physician and clinical staff work performed for a given surgery on the day of that surgery, and that surgical follow-up visits will be billed individually.

The American Association of Orthopaedic Surgeons (AAOS) expressed concerns to CMS about this proposal during the public comment period earlier in the year. In its letter, the AAOS described the inefficiency of “unbundling” surgical payments, the uncertainty of the mechanism and amount of physicians’ reimbursement when caring for Medicare beneficiaries, and the incredible amount of work in revaluing the vast number of affected procedure codes.

“Transforming a single, global claim for surgical services into several claims for surgery and follow-up visits will increase the administrative costs of processing claims for both physician practices and Medicare contractors,” wrote AAOS President Frederick M. Azar, MD. “We believe that this proposal presents a burden to patients, an unclear future of reimbursement for surgical services, and a revaluation task with an uncertain process and a lack of informative data.”

Exactly how these services will be revalued is yet to be determined by CMS, but the task might be performed by the American Medical Association’s Multi-Specialty Relative Value Update Committee (RUC), which regularly reviews physician services for valuation. The AAOS has been an active participant in the RUC process since its inception in the early 1990s and will continue to be engaged with the RUC as these changes unfold.

Arthroplasty reimbursement
CMS reaffirmed the values of hip and knee arthroplasty procedures as adopted in 2014. CMS has decided to not make any further downward adjustments for year 2015. The AAOS and the American Association of Hip and Knee Surgeons (AAHKS) worked hard to minimize these reimbursement cuts, and it appears that no further reductions will be made in the coming year for the affected codes.

Medicare quality initiatives
The PQRS initiative will continue with a major shift from incentive payments to penalties in 2015. Physicians who did not participate in the reporting program in 2013 will receive a negative 1.5 percent payment adjustment on all Medicare reimbursements. This adjustment is slated to grow to a negative 2.0 percent adjustment in 2016, for nonparticipation in 2014.

In a related move, implementation of the physician Value-Based Modifier (VBM) continues. Beginning in 2016, the VBM program will be expanded to cover all medical groups with 10 or more physicians, based on performance during year 2014. The VBM program is scheduled to be expanded to all physicians in 2017, based on performance in year 2015. In addition, the associated maximum payment adjustment will increase from negative 2.0 percent to negative
4.0 percent. Together, payment adjustments could be as much as negative 6.0 percent in 2017 for physicians who do not participate in PQRS in 2015.

As part of its ongoing performance measures effort, the AAOS requested that CMS not delete two measures covering the treatment of osteoarthritis patients from the PQRS program. In the final rule, CMS indicated the measures will stay and have allowed the AAOS to become the official “steward” of these measures.

Open Payments (Sunshine) Act
The Open Payments program made its debut in 2014, publishing payments made from pharmaceutical and medical device manufacturers to physicians and related entities. A key change to this program for 2015 is the removal of an exception for continuing medical education (CME) events and services. This change will require the reporting of payments to physicians who serve as faculty or speakers in CME events.

Physician Compare
CMS created the Physician Compare website to provide Medicare beneficiaries with the ability to compare the performance of physicians. Since its introduction, Physician Compare has had relatively little information on it, but that is starting to change. The 2015 Final Rule contains provisions that would expand the Physician Compare website to include the following:

• all 2015 PQRS measure data reported through the group practice reporting option, a registry, or an EHR in year 2016
• all performance measures reported by Accountable Care Organizations in 2015
• CMS did not finalize its proposal to publish all individual-reporting physician PQRS data on Physician Compare, thus this change applies only to physicians in groups of two or more.

The SGR Formula
As prescribed under the Protecting Access to Medicare Act of 2014 (the latest patch to the sustainable growth rate [SGR] formula), CMS indicated that no changes in payments to physicians will occur through March 31, 2015. However, the current SGR formula calls for a 21 percent decrease in physician payments after the current patch expires on April 1, 2015. CMS indicated the Administration is quite supportive of a permanent repeal of the SGR formula, suggesting it would provide needed stability for Medicare beneficiaries and their physicians.

The AAOS remains committed to the effort to repeal the SGR formula and will continue to work closely with House and Senate Committees that are involved in the development of SGR repeal legislation. Over the years, the AAOS has made hundreds of visits to Congressional offices in support of a permanent fix. The AAOS believes that repealing the SGR formula is essential to ensure Medicare remains a viable program through which orthopaedic surgeons can provide care to beneficiaries.

The changes made in the 2015 Medicare PFS final rule cover great breadth and depth. Physicians will see the impact of these changes to varying degrees depending on their practice setting and patient mix.

The AAOS will continue to work with CMS to ease these changes as much as possible for orthopaedic surgeons. The AAOS will also continue to educate AAOS members on healthcare and payment reform through articles in future issues of AAOS Now and a forthcoming webinar series beginning in early 2015.

Anthony Wheeler, PhD, is the senior manager, health policy, in the AAOS office of government relations; Matt Twetten, MA, is a consultant to the AAOS office of government relations; and Alexandra E. Page, MD, chairs the AAOS Health Care Systems Committee.

Additional Information:
CMS Fact Sheets