The 500-page final rule from the Centers for Medicare and Medicaid Services on the 2016 physician fee schedule presents physicians with a maze of regulations and a myriad of acronyms.
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Published 12/1/2015
Elizabeth Fassbender; Shreyasi Deb, PhD, MBA

2016 Physician Fee Schedule Rule Finalized

Bundled payment proposal also revised

Despite the promise of a 0.5 percent increase in the Medicare conversion factor for 2016, orthopaedic surgeons may actually see a drop in payments under final rules released by the Centers for Medicare & Medicaid Services (CMS). The final rule updating payment policies, payment rates, and quality provisions for calendar year 2016 was published in the Federal Register on Nov. 16, 2015.

This is the first physician fee schedule (PFS) final rule since the repeal of the sustainable growth rate formula by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). That legislation established the 0.5 percent update, but a negative 0.02 percent budget neutrality adjustment and a requirement that Medicare reach a statutory target for savings have more than offset the increase.

In addition to payment changes, this rule includes new policies resulting from recently enacted legislation. Several provisions revise current Medicare physician quality and value programs, as well as current physician self-referral restrictions. This article provides an overview of several significant provisions of interest to orthopaedic surgeons.

Physician Compare
The "Physician Compare" website, launched in late 2010, provides public information on Medicare-enrolled physicians. The 2016 PFS final rule outlines plans to expand the site's contents and provide information on quality and performance. For example, the rule notes that CMS is finalizing a proposal to include a physician's certifying board on the site.

In addition, CMS is proposing to include "consumer-friendly" benchmark information in the form of a five-star rating for group practices and individual eligible professionals (EPs) Physician Quality Reporting System (PQRS) measures. This program would begin in 2017.

CMS did not specifically address AAOS concerns about the plan to establish a formal proposal making Open Payments (Sunshine Act) data available on Physician Compare. In an earlier comment letter, the AAOS argued that such a move ignores important differences between the two databases.

"Open Payments and Physician Compare are entirely separate databases with their own distinct purposes," wrote AAOS President David D. Teuscher, MD. "AAOS does not believe it would be helpful to patients to provide Open Payments data on Physician Compare. The information on Open Payments is unrelated to the quality or value of care provided to Medicare beneficiaries, which is likely to lead to confusion among beneficiaries and ultimately impede their ability to select a healthcare provider."

Physician self-referral updates
The physician self-referral prohibitions commonly known as the "Stark law" have long been problematic. The 2016 PFS final rule makes several significant changes, including new exceptions for certain non-physician practitioners (NPPs) and clarifications for physician-owned hospitals.

The rule finalizes several expansions to recruiting and paying certain NPPs to expand access to health care. For example, a new exception enables a hospital or defined health center to provide funds to a physician for compensating certain NPPs (including clinical social workers, clinical psychologists, physician assistants, nurse practitioners, clinical nurse specialists and certified nurse midwives and excluding certified registered nurse anesthetists, dieticians and physical therapists) who provide primary care or mental health services to patients of the physician's practice. Another exception protects timeshare arrangements between hospitals or physicians organizations and physicians for use of space, equipment, personnel, supplies, or services, provided they meet specific requirements.

With respect to physician-owned hospitals, the final rule clarifies the website and advertising requirements established under the Affordable Care Act. Finally, the rule includes a proposal that all physician investors—including those who do not make referrals to the physician-owned hospitals (such as retired or other non-referring physicians)—be included in calculating baseline investment levels. The AAOS disagrees with this policy, which could necessitate restructuring ownership arrangements and present financial hardships to non-referring or retired physicians.

CMS is preparing a report to Congress to determine if additional rulemaking may be necessary as a result of evolving payment models integrating physicians and other health care entities to achieve better population health and reduce costs.

Additionally, CMS outlined some updates to the Stark provisions that do not allow physicians or other providers to self-refer patients for services other than those being immediately provided. However, AAOS recommend that CMS carefully consider the future consequences of such minor adjustments to existing regulations in light of the potential statutory requirements related to the Merit-Based Incentive Payment System (MIPS) under MACRA.

In the Proposed Rule, CMS sought comments on various aspects of its plans for future implementation of major reforms under MACRA. Primary among these reforms is the new payment system—MIPS, which will incorporate and replace existing physician quality programs as well as separate payment adjustments for Meaningful Use for items and services provided on or after January 1, 2019. Further, MACRA introduced a framework for promoting and developing alternative payment models (APMs) and providing incentive payments for eligible professionals who participate in certain APMs.

AAOS commended the agency for seeking early comments on its plans to implement the MIPS. However, to ensure that the proposals are appropriate, AAOS believes CMS must work closely with medical specialty societies throughout the drafting process. AAOS has submitted comments on detailed questions related to both MIPs and APMs. CMS has received more than 90 public comments and will further consider and respond to these public comments in future rulemaking.

"As specialty physicians, orthopaedic surgeons face unique technology challenges, ranging from certification issues to collection of specialty-appropriate data, as well as the larger issues impacting all physicians such as interoperability and cost," wrote Dr. Teuscher in the AAOS response. "As noted in previous communications, the AAOS is ready to work with CMS in establishing specialty-specific standards and performance measures for all orthopaedic treatment domains."

Bundled payment proposal
Although not part of the fee schedule announcement, a bundled payment proposal (Comprehensive Care for Joint Replacement Payment Model) was also finalized and released on Nov. 16, 2015. The final rule reduced the number of randomly selected geographic areas in the proposal from 75 to 67 and delayed implementation of the rule until April 1, 2016.

AAOS commended the effort to address stakeholder concerns in implementing this unique model. Specifically, CMS took positive steps in revising the composite quality score methodology and establishing a more gradual transition to downside risk. However, other concerns raised by the AAOS still need to be addressed. For example, the program continues to lack risk adjustment and designated physician leadership for episodes-of-care.

Although the delayed implementation date adds some flexibility to the payment program, it does not fully address the concern that physicians continue to require better analytics and support, tools for best practices and ease of reporting, validated patient risk assessment measures, and data sharing with physicians through required transparency by hospitals and payers.

The AAOS believes that CMS needs to further strengthen the support and infrastructure for physicians and facilities before adding programs that require significant investment and development. Rather than establish a specific implementation date, AAOS recommended that the program not become mandatory until at least 85 percent of providers have attained meaningful use or another metric of infrastructure readiness.

"The AAOS supports efforts by CMS to make appropriately structured alternative payment models available to physicians and other providers," said Dr. Teuscher. "But we are very concerned about serious unintended consequences for Medicare beneficiaries and physicians. AAOS members have been leaders in developing, implementing, and evaluating episode of care payments, and we look forward to working closely with CMS on further refining the program and to improving the care of all musculoskeletal patients in the United States."

Elizabeth Fassbender is the communications manager and Shreyasi Deb, PhD, MBA, is the senior manager, health policy, in the AAOS office of government relations.

Eight More Things to Know about the 2016 PFS

  • The criteria for satisfactory reporting in 2018 under the PQRS remains unchanged from the 2017 PQRS payment adjustment.
  • Per MACRA guidelines, a new reporting option will allow group practices to report quality measure data using a Qualified Clinical Data Registry.
  • The 2018 PQRS payment adjustment will be the last one under this system. Starting in 2019, adjustments to payment for quality reporting and other factors will be made under the MIPS.
  • In the 2018 payment adjustment period, the Value-Based Payment Modifier will be applied only to the following nonphysician eligible practitioners (EPs): physician assistants (PAs), nurse practitioners (NPs), clinical nurse specialists (CNSs), and certified registered nurse anesthetists (CRNAs) who are solo practitioners and in groups.
  • The quality-tiering methodology (PQRS) will be applied to all groups and solo practitioners who meet the criteria to avoid the downward adjustment under the PQRS. However, PAs, NPs, CNSs, and CRNAs (both solo practitioners and in groups) will be held harmless from downward adjustments under the quality-tiering methodology in 2018.
  • Beginning with the 2017 payment adjustment period, the minimum episode size for the Medicare Spending per Beneficiary measure to be included in the Value Modifier increases to 125 episodes for all groups and solo practitioners. 
  • The All-Cause Hospital Readmissions measure will not be used for solo practitioners and groups with two to nine EPs in the quality composite calculation for the Value Modifier.
  • The 2016 PFS rule finalizes separate payment and payment rate for two advance care planning services provided to Medicare beneficiaries by physicians and other practitioners.
  • A clarification to the physician "incident to" rules now requires the billing physician or practitioner to also be the supervising physician/practitioner.

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