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Medicare Releases Final Rules for Physician and Outpatient Hospital Payment in 2016

On October 30, 2015, the Centers for Medicare and Medicaid Services (CMS) released payment rates and associated policies for services provided by physicians and for outpatients in hospitals starting January 1, 2016. ASH offered extensive comments on the proposed versions of the physician fee schedule rule when it was released in July. The two rules include hundreds of pages of regulation and explanatory text. There are a few items of particular interest to hematologists which are highlighted below:

Overall payment rate for Medicare physician fee schedule

For many years, the release of the Medicare physician fee schedule was accompanied by stories about impending cuts in overall payment of 10-25% as a result of the Sustainable Growth Rate (SGR) calculation that limited growth in overall Medicare physician fee schedule services. That calculation was replaced by the Medicare and Children’s Health Insurance Program (CHIP) Reauthorization Act (MACRA) passed in April 2015. Annual updates to the Medicare physician fee schedule are now largely set by statute with one adjustment. The legislation states that the Medicare physician payment should increase by 0.5% in 2016. However, earlier legislation indicated that if Medicare did not reduce payment for certain targeted individual services in a given year, the overall payments would be reduced. This year, Medicare reduced payment for some services but not enough to meet the target. The result is that overall payment rate for Medicare (known as the conversion factor) in 2016 is nearly identical to the overall payment rate for the second half of 2015. While individual services can have much bigger payment changes, ASH has not identified major hematologic services with large payment rate changes in 2015.

Upcoming Reviews of Services Performed by Hematologists

As part of an ongoing effort to ensure that payment rates for services are appropriate, Medicare has finalized the decision to review a number of services that are commonly provided by hematologists, along with many other services performed by other specialists. This will not affect payment rates for 2016 and a review does not mean that payment rates for these services will go up or down – it could remain the same. Those services identified for review and potential payment change for 2017 include bone marrow biopsy, therapeutic injection, and chemotherapy injection.

Advance Care Planning

Medicare will begin to pay physicians for the provision of advance care planning services under the CPT codes 99497 (for the service) and 99498 (for additional time) in 2016. The provision of this service under Medicare had been a major political battle at the time of the passage of the Affordable Care Act. ASH will provide further information and guidance on providing and billing for this service soon.

Biosimilar Drug Payment Rates

There has been a concerted effort to increase development of biosimilar drugs to serve in a role similar to generic drugs. CMS finalized a plan to pay all replacements for a particular reference drug at the same rate rather than have different payment rates for each different biosimilar producer. Such a plan could help to reduce the payment rate for these drugs as they become available on the market.

Physician Quality Reporting and Pay for Performance

The MACRA legislation passed earlier this year will make some changes to the pay-for-reporting and pay-for-performance programs of Medicare but those changes do not take effect until 2019. Before that time, Medicare will continue to implement existing programs of pay-for-performance called the Physician Quality Reporting System (PQRS) and Pay-for-Performance (Value-Based Modifier). This program is now applicable to all physicians. All physicians must successfully report on PQRS in 2016 in order to avoid a two percent payment penalty in 2018. In addition, successful reporting on PQRS is a required step for avoiding the largest penalties associated with the value-based modifier. Successful reporting generally requires reporting on nine measures covering three domains of quality. ASH will publish a guide to participating in the 2016 PQRS program early in 2016.

The value-based modifier program will adjust payments with potential adjustments based on group size. Groups of more than 10 provider may have payment adjustments of as much as four percent positive or negative. Those in smaller groups are eligible for bonus payment but will not be penalized if performance is below average. The resource use measures that comprise the other half of the value-based modifier remain the same, covering per capita spending for physicians who provide the plurality of office visits.

Correction on Payment for Blood Products

The proposed hospital outpatient rule had indicated that significant payment reductions would be expected for blood and blood products in 2016. However, CMS identified an error in the calculation that accounted for the majority of the reductions and has corrected that error for the final rule. Payments for many blood products have increased from 2015 after the recalculation.