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

CMS announced final rules for physician and outpatient hospital payments, which will go into effect on January 1, 2016. Payment rules for the 2016 calendar year for End-Stage Renal Disease Prospective Payment System, the Hospital Outpatient Prospective Payment System, Home Health Prospective Payment System, and the Physician Fee Schedule were finalized at the end of October.

This is the first year that the Medicare physician fee schedule was not tied to the Sustainable Growth Rate (SGR) calculation, which was replaced by the Medicare and Children’s Health Insurance Program (CHIP) Reauthorization Act (MACRA) in April 2015. As a result, the overall payment rate for Medicare in 2016 is nearly identical to the overall payment rate for the second half of 2015.

“CMS is pleased to implement the first fee schedule since Congress acted to improve patient access by protecting physician payments from annual cuts,” said Andy Slavitt, the acting administrator for CMS. He also noted that they received many comments from health-care professionals that supported the proposal to allow physicians to bill for advanced-care planning.

Key points from the ruling include:

  • Medicare finalized the decision to review a number of services that are commonly provided by hematologists (including bone marrow biopsy, therapeutic injection, and chemotherapy injection), along with many other services performed by other specialists.
  • CMS finalized a plan for biosimilar drug payment rates, agreeing to pay all replacements for a particular reference drug at the same rate rather than have different payment rates for each different biosimilar producer.
  • Medicare will begin to pay physicians for the provision of advanced-care planning services.
  • Medicare will continue to implement existing programs of pay-for-performance (the Physician Quality Reporting System and Value-Based Modifier). This program is now applicable to all physicians, and all physicians must successfully report on PQRS in 2016 in order to avoid a two percent payment penalty in 2018.

Sources: Centers for Medicare & Medicaid Services. “CMS finalizes 2016 Medicare payment rules for physicians, hospitals & other providers,” October 30, 2015; American Society of Hematology. “Medicare releases final rules for physician and outpatient hospital payment in 2016,” November 5, 2015.