2015 Medicare Fee Schedule: No Tricks, No Treats

By David Glaser, Esq.
Original story posted on: November 10, 2014

Although posted on Halloween, the review copy of the 2015 Medicare fee schedule provides neither tricks nor treats for healthcare providers.

The official version is scheduled to be published in the Federal Register on Thursday, Nov. 13.

The fee schedule contains less regulatory news than it normally features.  This publishing usually does three things. First, it establishes payment rates for codes. Second, it contains regulatory changes. And finally, it features Centers for Medicare & Medicaid Services (CMS) discussion about policies and ideas for future changes that are under serious consideration. This year the focus is on the first and third of those, with very few significant regulatory changes. 

The changes to RVUs/payments can have a major practical impact on Part B suppliers, including physicians and non-physician professionals. As a lawyer, I am not an expert in this area, and I will leave this analysis to others. However, there was some interesting discussion about potentially mis-valued codes. CMS is determined to eliminate mis-valued codes, that is, codes for which CMS believes reimbursement is too high for the work involved. To search for potentially mis-valued codes, CMS was planning to look at codes with the highest total expenditures – that is, codes on which the most money was spent. Commenters correctly noted that frequent use of a code doesn’t really suggest that the code is mis-valued. In the final rule, CMS indicated that despite the validity of that criticism, it is going to use total expenditures as a “first cut” for finding mis-valued codes (despite noting that they aren’t revaluing codes using that method this year).     

The fee schedule suggests that there will be a variety of other changes in the near future. One of the most significant is the planned phase-out of the 10- and 90-day windows for procedures. One might think that as CMS attempts to shift to bundled payments, it would favor payment windows. However, the agency believes that the payment windows may not accurately capture actual costs of care. In particular, CMS believes that there are often fewer E&M services provided in the window than anticipated. In essence, CMS has indicated that the windows over-compensate physicians. The agency hopes to eliminate the 10-day windows by 2017 and the 90-day windows the next year. 

In the nearer term, CMS plans to eliminate place of service (POS) code 22. This change is being made to better track cost differences between on-campus and off-campus hospital-based locations. POS 22 will be replaced with two separate codes, one to identify outpatient services furnished on-campus or in remote or satellite locations of a hospital, and another to identify services furnished in an off-campus, hospital provider-based department setting that is not a remote location of a hospital, a satellite location of a hospital, or a hospital emergency department.

CMS will provide more details about this in the future. While this change is clearly intended to permit CMS to acquire data that will allow it to change reimbursement over the long run, it does not appear that the shift will have any immediate practical significance. 

In one of the few regulatory provisions in this year’s fee schedule, CMS clarified the rules governing the ways in which a physical therapist can be in private practice. CMS indicated that the rule was confusing because it made reference to “incorporation.” Officials felt this placed a misleading emphasis on the legal structure of the PT practice. CMS indicated that the new rule is simply a clarification and stressed that PTs can still be employed by a physician practice (something that has regularly confused people over the last 15 years). To be clear, Medicare doesn’t prohibit physicians from employing PTs; any restriction would come from state law. There are some states that have placed limits on the ability of a PT to be employed by a clinic. This is a great illustration of the point that it can be misleading to say something is or is not legal because of a Medicare regulation. With certain limited exceptions such as conditions of participation that apply to all patients, Medicare rules generally affect only Medicare patients.

There also has been a budding discussion about second interpretations of images. CMS had solicited comments about how to handle second interpretations of radiologic images. In particular, CMS is considering whether to pay for second interpretations, but it opted not to do anything in this area this year. Medicare typically will pay for the first interpretation it receives a bill for, but considers additional reads unnecessary. The discussion focused exclusively on images; there was no reference to other diagnostic tests, such as ECGs. The discussion serves as a good reminder that when a clinic or hospital asks a radiologist to provide an interpretation, it should be sure that no other clinic or hospital physician is billing for the service. 

Unless CMS opts to provide compensation for second reads, one should bill for them only with an understanding that CMS may challenge the medical necessity. Since Medicare doesn’t have a general prohibition of second opinions, it has never been clear why radiology tests are subject to this additional scrutiny. Therefore, an organization may make a reasonable decision to bill for second interpretations in cases for which there is a rational basis for the second read. You will want this to be a conscious decision, however, not a mistake.  

Finally, CMS is soliciting opinions about making changes to how it pays for substitute physicians. Currently, claims are billed with the Q-5 and Q-6 modifiers for reciprocal billing arrangements and locum tenens billing. The services are billed under the number of the “absent” physician as long as the billings are not done in this manner for more than 60 continuous days.  CMS would like to change its policy and is considering the best approach.  

About the Author

David M. Glaser, Esq.is a shareholder in Fredrikson & Byron’s Health Law Group. David assists clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Mondays and is a member of the RACmonitor editorial board.

Contact the Author 

dglaser@fredlaw.com 

Comment on this Article

editor@racmonitor.com

To view the new fee schedule go online, click here.