A Look at the Final 2014 Physician Fee Schedule and What it Means for Cardiology

The Centers for Medicare and Medicaid Services (CMS) released payment information and rules for the 2014 Physician Fee Schedule on Nov. 27, 2013. This rule would usually be released earlier but was delayed due to the government shutdown that took place in October. Nevertheless, the provisions of the rule will be implemented on Jan. 1, 2014. A payment reduction of 24.1 percent mandated by the Sustainable Growth Rate (SGR) formula has been delayed due to Congress' budget deal that was reached in late December. Read more about this topic here

Aside from the statutorily-mandated changes to overall payment, there are regulatory changes that have different impacts on different services. While the impact will be very different on practices depending on their ownership and mix of services, CMS estimates an overall 1 percent increase in payments to cardiologists as a result of the implementation of this rule. Some of the changes in payment and how they resulted are reviewed below.

Over the past five years, the Physician Fee Schedule rule has increasingly emphasized quality. This is particularly true in 2014. Physicians who do not participate in the Physician Quality Reporting System (PQRS) in 2014 will receive a 2 percent penalty in 2016. In addition, CMS has expanded the Value-Based Modifier program so that it affects all groups with ten or more billing providers (MD/DO, PA, NP). This pay-for-performance program is built up on the basis of the PQRS program and not participating in PQRS will result in even more penalties beyond the 2 percent. We'll review the requirements for participating and how physicians will need to be careful about the measures they pick.

Payment Issues


The largest single reason for the 1 percent increase in payment for cardiology services is an increase in payment for the technical component of echocardiography provided in the physician office setting. This change came as the result of efforts by the American Society of Echocardiography and ACC to demonstrate that the equipment used in this service is more expensive than had been reflected in the current inputs. While we still believe that the equipment is not properly represented, the new input is much closer than before.

RVU weighting

The biggest single negative for cardiology services was the result of a very technical change related to an update in the inputs that determine the weights of RVU categories (work, practice expense, and liability insurance). This change results in modest reductions for services with a high practice expense. For example, the payment for SPECT MPI in the office is reduced by approximately 4 percent as a result of this change. This is not a change that focuses on cardiology services but affects all those that include a significant technical component. On the other hand, services that are primarily professional services such as those performed in the hospital, increase as a result. For example, a typical PCI service increases by 3 percent under this regulation.

No new cap on services performed in both hospitals and physician offices

Many cardiologists will remember that the Deficit Reduction Act of 2005 capped the payment for technical component of services such as CT, MR, nuclear to be no more than what was paid in the hospital. CMS had proposed to greatly expand such a policy as part of this year's rule, to cover essentially every service that is provided in both a hospital and a physician office. While most cardiology services are paid at much higher levels in the hospital, this proposal would have greatly reduced the payment for lower extremity revascularization services. ACC and others objected to this policy partially because it tied the payment to the lower paid ambulatory surgical center setting, where these services are almost never provided.

Complex Chronic Care Management payment (starting in 2015)

In an unusual situation, CMS finalized a proposal to create a new payable code for complex chronic care management but decided not to do so until 2015, giving the next year to clarify certain provisions about who may bill for the service. The ACC will offer more information on the guidelines for the provisions of this service as we learn more in 2014.

Implantation/Removal of patient-activated cardiac event recorder

In response to an external request, CMS reviewed codes for this service, reducing the payment for implantation by 27 percent and the removal by less than 5 percent. These services are relatively uncommon.

Ultrasound Screening for Abdominal Aortic Aneurysm (AAA)

Coverage for ultrasound screening for AAA had been place in Medicare for a number of years. As a result of the statute that added this coverage, it could only be provided if it was referred after the rarely used "Welcome to Medicare" exam. In this rule, CMS used the authority granted under the Affordable Care Act to cover preventive services and determined that this service would be covered for patients meeting the eligibility requirements for the test.

Cardiology Impact

Payment changes to a number of common cardiology services are calculated in this spreadsheet.PDF The physician work RVU did not change for any of these services. Fluctuations generally result from the changes in practice expense that were discussed above. Electrocardiography and carotid ultrasound also saw modest reductions result from RUC and CMS review of direct practice expense inputs. These amounts do not reflect geographical adjustments that may alter these figures.

PQRS and the Value-Based Modifier

Physician Quality Reporting System (PQRS) – avoiding a penalty

Physicians who do not report at least three PQRS measures in 2014 will be subject to a 2 percent penalty in 2016.

PQRS – receiving a bonus

In order to receive a 0.5 percent bonus for 2014 reporting, physicians must report on nine measures covering three "domains." The domains define types of measures, such a patient safety or efficiency.

PQRS – methods of reporting eliminated for 2014

Almost all methods of reporting that were available for reporting PQRS in 2013 will be available in 2014. There are two eliminated options. First, physicians will no longer be able to report on "measures groups" via claims. These "measures groups" include a series of measures on the same patients. "Measures groups" may still be reported via registries.

PQRS – new method of reporting for 2014

Legislation passed at the beginning of 2013 required CMS to accept successful registry participation as a substitute for PQRS participation. The ACC has offered participation in PQRS through the outpatient PINNACLE registry for many years. These new regulations could expand that opportunity to additional members and additional measures. The ACC will inform members if there are changes to registry opportunities in 2014 and beyond. The inclusion of this language is a major victory demonstrating the power of registries in driving quality.

Value-Based Modifier

The Affordable Care Act mandates that Medicare adjust payment for physician's quality and resource use starting in 2015 and expanding to all physicians by 2017. Because of the nature of assessing these measures, the quality and resource use assessment takes place two years prior to the adjustment. For 2015, this adjustment will be limited to physicians in groups of 100 or more. For 2016, which will be based on 2014 data, this adjustment has expanded considerably so that all in groups of ten or more will have their payment adjusted. Importantly, nurse practitioners and physician assistants count towards the provider count, so many cardiology practices will be subject to this payment adjustment. Unlike in 2015, physician groups will not be given the option to elect whether their payment should be adjusted. Groups of 100 or more could have their payments adjusted up or down based on their relative quality and efficiency. Groups of between 10 and 100 can only have their payments adjusted up if they out perform their peers. All groups of 10 or more will be subject to penalties if the group does not successfully participate in PQRS. CMS has increased the maximum penalty that a group could be subject to in 2016 to two percent. There is no maximum bonus opportunity but ACC believes that the maximum bonus available would likely be similar to the maximum penalty of two percent.

Participating as a group in PQRS and the value-based modifier

In 2013, all groups subject to the value-based modifier in 2015 had to elect to participate in PQRS as a group, all using the same measures. Starting in 2014, CMS will continue to allow groups to select to be measured as a group using the same measures but have also opened up another opportunity. If 50 percent of the individuals that are part of the group successfully participate in PQRS, their individual scores will be aggregated to establish a group score. This can allow cardiologists who are part of multi-specialty groups to be able to demonstrate value by reporting on more appropriate measures and through all available methods, such as registries and electronic health records.

Keywords: Physicians' Offices, Tomography, Emission-Computed, Single-Photon, Insurance, Liability, Nurse Practitioners, Centers for Medicare and Medicaid Services, U.S., Electrocardiography, Patient Safety, Lower Extremity, Reimbursement, Incentive, Patient Protection and Affordable Care Act, Electronic Health Records, Registries, Outpatients, Fee Schedules, Physician Assistants, Aortic Aneurysm, Abdominal, United States, Echocardiography

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