Summary of CMS CY2014 Physician Fee Schedule Proposed Rule

The purpose of this document is to provide a summary of Medicare’s CY2014 Physician Fee Schedule (PFS) Proposed Rule. It was placed on display @ on July 08, 2013 and will be published in the Federal Register on July 19, 2013. There are several significant issues to consider:

  • CMS proposal to adjust Resource-Based Practice Expense (PE) Relative Value Units (RVUs).
  • CMS continues to identify misvalued codes.
  • CMS proposes to further refine its multiple payment reduction policy.
  • A significant revision in Medicare’s coverage of items and service in FDA IDE clinical studies (Category A & B devices) is proposed. Anyone in Clinical/Regulatory Affairs should review this section beginning on page 224.
  • The majority of this proposed rule is concerned with improving the Physician Quality Reporting System (Physician Compare website, Electronic Health Record (HER) Incentive Program, Medicare Shared Savings Program, and valued-based payment modifier).

For a quick estimate of how Medicare’s CY2014 PFS proposed rule will impact a specific specialty, please review Table 71 found on page 587. Hardest hit specialties include- Interventional Radiology (-4%); Pathology (-5%); Radiation Oncology (-5%) and Radiation Therapy Centers (-13%). Additional information can be gleamed from the following excerpts taken directly from the proposed rule @

The CY2014 PFS conversation factor (CF) was not specified. “CY2013 PFS conversion factor was revised to $34.0320. The actual values used to compute physician payments for CY2014 will be based on later CMS-1600-P 20 data and are scheduled to be published by November 1, 2013 as part of the CY2014 PFS final rule with comment period” (stated on page 19); however later in the proposed rule on page 585, there is reference to a letter dated March 5, 2013 to Medicare’s Payment Advisory Commission, where the CY2014 Conversion Factor is stated to be $25.7109, representing a 24.4% reduction compared to CY2013’s CF.

Specific Items of Interest:

  • Billing and Payment for Telehealth Services begins on page 163.
  • Requirements for Billing “Incident To” Services begins on page 192.

“Over the past years, several situations have come to our attention where Medicare was billed for “incident to” services that were provided by auxiliary personnel who did not meet the state standards for those services in the state in which the services were furnished. The physician or practitioner billing for the services would have been permitted under state law to personally furnish the services, but the services were actually provided by auxiliary personnel who were not in compliance with state law in providing the particular service (or aspect of the service). Practitioners authorized to bill Medicare for services that they furnish to Medicare beneficiaries are required under Medicare to comply with state law. For example, section 1861(r) of the Act specifies that an individual can be considered a physician in the performance of any function or action only when legally authorized to practice in the particular field by the State in which he performs such function or action.

  • Complex Chronic Care Management Services begins on page 201.

As we discussed in the CY2013 PFS final rule with comment period, we are committed to primary care and we have increasingly recognized care management as one of the critical components of primary care that contributes to better health for individuals and reduced expenditure growth.

Scope of Complex Chronic Care Management Services: We consider the scope of complex chronic care management services to include: The provision of 24-hour- a-day, 7-day- a-week access to address a patient’s acute complex chronic care needs. To accomplish these tasks, we would expect that the patient would be provided with a means to make timely contact with health care providers in the practice to address urgent complex chronic care needs regardless of the time of day or day of the week. Members of the complex chronic care team who are involved in the after-hours care of a patient must have access to the patient’s full electronic medical record even when the office is closed so they can continue to participate in care decisions with the patient.

  • Medicare Coverage of Items and Services in FDA Investigational Device Exemption Clinical Studies–Revision of Medicare Coverage begins on page 224.

We are proposing to establish those criteria that ensure that studies and trials of Category A devices conform to appropriate scientific and ethical standards. We are also proposing, based on our rulemaking authority in section 1871 of the Act, to extend the same criteria proposed for Category A IDE studies and trials to Category B IDE studies and trials. We are proposing that IDE coverage decisions will be made by CMS centrally.

It also became apparent that the lack of centralization led to inconsistent IDE coverage across the Medicare contractors. These factors contributed to some reluctance to enroll Medicare beneficiaries in IDE studies. While each contractor’s process was appropriate, they were in practice slightly different from contractor to contractor; and in most cases duplicative. Furthermore, we found that local Medicare contractors were applying varying levels of scrutiny in reviewing IDE devices and the costs of routine items and services within IDE studies. Most contractors reviewed IDE study protocols extensively, while other contractors may have reviewed them less extensively.

We are proposing a transparent, centralized review process that would be more efficient by reducing the burden for stakeholders interested in conducting nationwide trials. Once the IDE coverage process is centralized, there would be a single entity making the IDE coverage decision. We believe that a centralized review process would not significantly reduce the number of IDE devices currently covered; but we are specifically requesting public to comment on this issue. Changing the review and decision of IDE coverage to a centralized review process in no way changes any beneficiary appeal rights.

We are not proposing any changes to coverage of the Category A IDE device. Category A devices would continue to be noncovered. We are proposing 13 standards that Category A IDE studies must meet in order for the costs of routine care items and services to be coverable. The first four and the seventh proposed standards embody ethical values. The fifth and sixth proposed standards were developed in response to reports of egregious misconduct in the past in endeavors to conduct clinical research by placing individuals at the risk of harm.

We would automatically cover the costs of routine items and services in the a Category A study or trial, and the costs of the investigation device and the routine items and services in a Category B study or trial as follows:

  • The study is a pivotal study.
  • The study has is a superiority study design. Non-inferiority trial designs (in contrast to superiority designs) only support more limited and thus less useful conclusions, that is, that the investigated device is no worse than the comparator treatment by some pre-specified margin.

We propose that requests should be submitted via email to or via hard copy to the following address:

Centers for Medicare & Medicaid Services
Center for Clinical Standards & Quality
Director, Coverage and Analysis Group
ATTN: Clinical Study Certification
Mailstop: S1-02-01
7500 Security Blvd
Baltimore, MD 21244

We propose that we would notify beneficiaries, providers, and practitioners of the IDE studies of all IDE devices eligible for coverage by posting the IDE study title and registry number on our website and publishing a list in the Federal Register.

We propose to revise the definition of Category B (Nonexperimental/ investigational) device to mean a device for which the incremental risk is the primary risk in question (that is, initial questions of safety and effectiveness of that device type have been resolved), or it is known that the device type can be safe and effective because, for example, other manufacturers have obtained FDA approval for that device type.

  • CMS has established a Medicare Shared Savings Program (Shared Savings Program) to facilitate coordination and cooperation among providers to improve the quality of care for Medicare Fee-For-Service (FFS) to beneficiaries and reduce the rate of growth in healthcare costs. Eligible groups of providers and suppliers, including physicians, hospitals, and other healthcare providers, may participate in the Shared Savings Program by forming or participating in an Accountable Care Organization (ACO).(Premable begins on page 479).

ACOs are required to completely and accurately report on all quality performance measures for all quality measurement reporting periods in each performance year of their agreement period. There are currently 33 quality performance measures under the Shared Savings Program.

  • Value-Based Payment Modifier and Physician Feedback Program begins on page 494.

Value-based payment modifier has the potential to help transform Medicare from a passive payer to an active purchaser of higher quality, more efficient and more effective healthcare by providing upward payment adjustments under the PFS to high performing physicians (and groups of physicians) and downward adjustments for low performing physicians (and groups of physicians)

Budget neutrality means that payments will increase for some groups of physicians based on high performance and decrease for others based on low performance, but the aggregate amount of Medicare spending in any given year for physicians’ services will not change as a result of application of the value-based payment modifier. (page 512)

  • What will the CY2014 Conversion Factor (CF) Be?

An indirect answer can be found on page 585: “While the Congress has provided temporary relief from negative updates for every year since 2003, a long-term solution is critical. We are committed to working with the Congress to reform Medicare physician payments to provide predictable payments that incentivize quality and efficiency in a fiscally responsible way. We provide our most recent estimate of the SGR and physician update for CY 2014 on our website at

This leads to a DHHS letter dated March 5, 2013, stating “We currently estimate that the statutory formula used to determine the PFS update to the CF will result in a CY2014 CF of $25.7109, which represents a change in -24.4% from the December 2013 CF.

There are many opportunities to submit comments to CMS by September 6, 2013. For questions, additional information and/or personal discussion, please do not hesitate to call (203-271-3366) or email (