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CMS Releases Final Rule for 2016 Medicare Physician Fee Schedule

On October 30, 2015, the Centers for Medicare & Medicaid Services (CMS) released a final rule updating payment policies, payment rates, and quality provisions for services furnished under the Medicare Physician Fee Schedule (PFS) on or after January 1, 2016. The rule also finalizes changes to several of the quality reporting initiatives that are associated with PFS payments, including the Physician Quality Reporting System (PQRS), the Physician Value-Based Payment Modifier (Value Modifier), and the Medicare Electronic Health Record (EHR) Incentive Program, as well as changes to the Physician Compare website on The final rule will be published in the Federal Register on November 16, 2015. Following are select highlights from the PFS final rule:

Payment Provisions

Conversion Factor

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) replaced the reduction in the PFS with a 0.5 percent update through the end of this year. The final CF for CY 2016 is $35.8279 down from the current CF of $35.9335. The drop in the CF will result in an approximate 0.03 percent cut in national payment rates for most urology services, in addition to the 2 percent payment reduction required by the sequestration and payment adjustments based on geographical locations.

Misvalued Code Changes

CMS did not finalize the proposal to review new CPT codes 52441 (Cystourethroscopy with insertion of permanent adjustable transprostatic implant; single implant), and 52442 (Cystourethroscopy with insertion of permanent adjustable transprostatic implant; each additional permanent adjustable transprostatic implant) as potentially misvalued. CMS acknowledged that nomination of these codes as potentially misvalued was unintended.

The AUA successfully convinced CMS to remove CPT codes 51728 (Insertion of electronic device into bladder with voiding pressure studies), 51729 (Insertion of electronic device into bladder with voiding and bladder canal (urethra) pressure studies) from the screen of Potentially Misvalued Services of $10,000,000 or More, because these codes do not fit the criteria for review based on the high expenditure profile. The remaining urology codes below will be reviewed as potentially misvalued, including CPT code 51798 despite having 0.00 work RVUs.

CPT CodeShort Descriptor
51700 Irrigation of bladder
51702 Insert temp bladder cath
51720 Treatment of bladder lesion
51784 Anal/urinary muscle study
51798 Us urine capacity measure
52000 Cystoscopy
55700 Biopsy of prostate

Penile Trauma Repair

Two new CPT codes are being created to capture penile traumatic injury that include penile fracture, also known as traumatic corporal tear, and complete penile amputation. CPT code 54437 describes a repair of traumatic corporeal tear(s), while CPT code 54438 describes a replantation, penis, complete amputation. CMS will assigned a work RVU of 11.50 for CPT code 54437 as proposed and the RUC-recommended work RVU of 24.50 for CPT code 54438.

Refinement Panel

CMS did not finalize the proposal to eliminate the refinement panel process at this time. Instead, CMS will retain the ability to convene refinement panels for codes with interim final values under circumstances where additional input provided by the panel is likely to add value as a supplement to notice and comment rulemaking.

Appropriate Use Criteria for Advanced Diagnostic Imaging Services

The Protecting Access to Medicare Act of 2014 (PAMA) directed the Secretary to establish a program to promote use of appropriate use criteria (AUC) for advanced diagnostic imaging services. In the rule, CMS notes it will specify the process for applicable AUC in the PFS rulemaking for CY 2017. At that time, CMS will provide clarifications, develop definitions, and establish the process by which the agency will specify qualified clinical decision support mechanisms. Policies regarding claims-based reporting and the process to identify outlier ordering professionals will also be addressed in subsequent rulemaking.

"Incident to" Policy for CY 2016

CMS did not finalize the proposal to delete the final sentence of the "incident to" regulatory language. Instead, CMS will revise the sentence to reflect that the physician (or other practitioner) supervising the auxiliary personnel need not be the same physician (or other practitioner) treating the patient. In addition to this revised sentence, CMS will add clarifying language specifying that only the physician or other practitioner under whose supervision the incident to service(s) are being provided is permitted to bill the Medicare program for the incident to services. In addition, CMS will amend the definition of auxiliary personnel permitted to provide "incident to" services to exclude individuals who have been excluded from the Medicare program or have had their Medicare enrollment revoked.

The Medicare EHR Incentive Program

CMS is revising the definition of certified EHR technology in accordance with criterion finalized by the Office of the National Coordinator for Health Information Technology and CMS' form and manner requirements for electronic submission of electronic clinical quality measures (CQMs).

Physician Self-Referral Updates

New Exceptions: The rule establishes a new exception to permit payment by hospitals, Federally Qualified Health Centers (FQHCs), and Rural Health Clinics (RHCs) to physicians for the purpose of compensating non-physician practitioners under certain conditions. It also establishes a new exception to permit timeshare arrangements for the use of office space, equipment, personnel, items, supplies, and other services.

Updating Physician-Owned Hospital Requirements: The ACA established new restrictions on physician-owned hospitals, including setting a baseline physician ownership percentage that cannot be exceeded and requires them to state on their websites and in their advertising that they are owned by physicians. CMS updated the regulations to clarify that a broad range of actions comply with the website and advertising requirements. CMS also finalized conforming changes that better align the regulations to the statute so that the baseline and future calculations of a hospital's physician ownership percentage includes all physicians rather than only those physicians who refer to the hospital. The physician ownership calculation change takes effect on January 1, 2017.

Reducing Burden Through Clarifying Terminology and Providing Policy Guidance: The Self-Referral Disclosure Protocol allows CMS to settle overpayments resulting from physician self-referral law violations. Review of self-disclosures indicates that clarifying terminology and providing policy guidance could reduce perceived or actual noncompliance without risk of abuse. CMS is making the following updates:

  • Clarifying that compensation paid to a physician organization cannot take into account the referrals of any physician in the physician organization, not just a physician who stands in the shoes of the physician organization, and that employees and independent contractors need not sign arrangements between the physician organization and a DHS entity;
  • Clarifying that the writing required in many of the exceptions to the physician self-referral law's referral and billing prohibitions can be a collection of documents (as opposed to a single formal contract) and making the terminology that describes types of arrangements consistent throughout the regulations;
  • Clarifying that the term of a lease or personal service arrangement need not be in writing if the arrangement lasts at least 1 year and is otherwise compliant;
  • Allowing expired leasing and personal services arrangements to continue indefinitely on the same terms if otherwise compliant;
  • Allowing a 90-day grace period to obtain missing signatures without regard to whether the failure to obtain the signature was inadvertent;
  • Clarifying that DHS entities can give to physicians items used solely for one or more of the purposes identified in the statute;
  • Clarifying that a financial relationship does not exist when a physician provides services to hospital patients in the hospital if both the hospital and the physician bill independently for their services;
  • Updating obsolete language in the exception for ownership in publicly traded entities to allow over-the-counter transactions and removing unnecessary language from the definition of a locum tenens physician;
  • Clarifying the geographic service area for the FQHCs and RHCs using the physician recruitment exception; and
  • Correcting a drafting error so that the retention exception indicates that retention payments based on physician certification may be no more than 25 percent of the physician's current annual salary averaged over 24 months (as opposed to no more than 24 months).

Quality Provisions

Modifications to the Physician Quality Reporting System

In the final rule, CMS established the same criteria for satisfactory reporting, which is generally to require the reporting of nine measures covering three National Quality Strategy (NQS) domains. If an individual eligible professional (EP) or group practice does not satisfactorily report or satisfactorily participate in PQRS for 2016, a 2 percent negative payment adjustment will apply to covered professional services furnished by that individual EP or group practice during 2018.

There will be 281 measures in the PQRS measure set and 18 measures in the GPRO Web Interface for 2016. CMS finalized the proposal to add the Multiple Chronic Conditions Measures Group to the PQRS measure set, along with six new urology/urogynecology measures developed by the American Urogynecologic Society reportable by gynecologists and urologists in 2016. Also, as recently authorized under MACRA, CMS is adding a reporting option that will allow group practices to report quality measure data using a Qualified Clinical Data Registry (QCDR).

Physician Compare

CMS will continue the phased approach to public reporting performance information on the Physician Compare website and will make all 2016 individual EP and group practice PQRS measures available for public reporting. In 2015, CMS began publicly reporting individual level QCDR measures. Starting in 2016, group-level QCDR measures will be publicly reported. All Consumer Assessment of Healthcare Providers and Systems (CAHPS) for PQRS measures for groups of two or more EPs who meet the specified sample size requirements and collect data via a CMS-specified certified CAHPS vendor are available for public reporting. In addition, all Accountable Care Organization (ACO) measures, including CAHPS for ACOs, are available for public reporting.

CMS is finalizing the proposal to publicly report an item-level benchmark for group practice and individual EP PQRS measures using the ABC methodology, which will be displayed as a five-star rating. CMS also will include in the downloadable database the Value Modifier tiers for cost and quality, noting if the group practice or EP is high, low, or neutral on cost and quality; a notation of the payment adjustment received based on the cost and quality tiers; and an indication if the individual EP or group practice was eligible to but did not report quality measures to CMS; and publicly report in the downloadable database utilization data for individual EPs.

Physician Value-Based Payment Modifier

This year, for the Value-Based Modifier, CMS is finalizing the following key provisions:

  • To apply the Value Modifier to non-physician EPs who are Physician Assistants (PAs), Nurse Practitioners (NPs), Clinical Nurse Specialists (CNSs), and Certified Registered Nurse Anesthetists (CRNAs) (and not to other nonphysician EP types) in groups and to PAs, NPs, CNSs, and CRNAs who are solo practitioners, in the CY 2018 payment adjustment period;
  • To apply the quality-tiering methodology to all groups and solo practitioners that meet the criteria to avoid the downward adjustment under the PQRS. Groups and solo practitioners would be subject to upward, neutral, or downward adjustments derived under the quality-tiering methodology, with the exception that PAs, NPs, CNSs, and CRNAs in groups consisting of nonphysician EPs and PAs, NPs, CNSs, and CRNAs who are solo practitioners will be held harmless from downward adjustments under the quality-tiering methodology in CY 2018;
  • To continue to set the maximum upward adjustment under the quality-tiering methodology for the CY 2018 Value Modifier at: +4.0 times an adjustment factor (to be determined after the conclusion of the performance period), for groups of physicians with ten or more EPs; +2.0 times an adjustment factor, for groups of physicians with between two to nine EPs and physician solo practitioners; and +2.0 times an adjustment factor for groups that consist of nonphysician EPs and solo practitioners who are PAs, NPs, CNSs, and CRNAs; and
  • To set the amount of payment at risk under the CY 2018 Value Modifier to -4.0 percent for groups of physicians with ten or more EPs, -2.0 percent for groups of physicians with between two to nine EPs and physician solo practitioners, and -2.0 percent for groups that consist of nonphysician EPs and solo practitioners who are PAs, NPs, CNSs, and CRNAs.
  • To waive application of the Value Modifier for groups and solo practitioners, as identified by their Taxpayer Identification Number (TIN), if at least one EP who billed for PFS items and services under the TIN during the applicable performance period for the Value Modifier participated in the Pioneer ACO Model, Comprehensive Primary Care Initiative (CPCI), or other similar Innovation Center model (such as Comprehensive ESRD Care Initiative, Oncology Care Model (OCM), and the Next Generation ACO Model) during the performance period, beginning with the CY 2017 payment adjustment period;
  • To use CY 2016 as the performance period for the CY 2018 Value Modifier and continue to apply the CY 2018 Value Modifier based on participation in the PQRS by groups and solo practitioners;
  • Beginning with the CY 2017 payment adjustment period, CMS is increasing the minimum episode size for the Medicare Spending per Beneficiary measure to be included in the Value Modifier to 125 episodes for all groups and solo practitioners. Also, beginning with the CY 2017 payment adjustment period, for solo practitioners and groups with two to nine EPs, CMS is finalizing that the All-Cause Hospital Readmissions measure will not be used in the quality composite calculation for the Value Modifier. These changes are being made to be consistent with the policy to only use measures that have moderate to high reliability.
  • To not apply the automatic downward adjustment applicable to TINs that do not meet the criteria to avoid the downward adjustment under PQRS, when PQRS determines on informal review that at least 50 percent of the TIN’s EPs meet the criteria to avoid the downward PQRS payment adjustment. Also, CMS notes that if the group was initially determined to have not met the criteria to avoid the PQRS downward payment adjustments and consequently was initially subject to the automatic downward adjustment under the Value Modifier, then CMS does not expect to have data for calculating their quality composite, in which case they would be classified as "average quality."

MACRA Changes to Medicare Physician and Practitioner Opt-Out

Prior to MACRA, physicians and practitioners that wished to renew their opt-out were required to file new valid affidavits with their Medicare Administrative Contractors (MACs) every 2 years. Section 106(a) of MACRA indicates that valid opt-out affidavits filed on or after June 16, 2015 automatically renew every 2 years. Therefore, physicians and practitioners that filed valid opt-out affidavits on or after June, 16, 2015 are not required to file renewal affidavits. If physicians and practitioners that filed affidavits effective on or after June 16, 2015 do not want their opt-out to automatically renew at the end of a two-year opt-out period, they may cancel the renewal by notifying all MACs with which they filed an affidavit in writing at least 30 days prior to the start of the new two-year opt-out period.

The provisions in the final rule are effective January 1, 2016, except for the definition of "ownership or investment interest" in §411.362(a), which has an effective date of January 1, 2017. CMS will accept comments on the final rule until December 29, 2015.

To learn more about how the final rule policies will affect reimbursement rates for urology services, and to view conversion tables below.

AUA staff is currently analyzing the final rule and will prepare comments for submission to CMS. If you have questions about the final payment and policy changes, please contact the AUA at R&



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