CMS Proposed 2018 Physician Fee Schedule


CMS Proposed 2018 Physician Fee Schedule

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The Centers for Medicare & Medicaid Services (“the CMS”) released the Proposed 2018 Medicare Physician Fee Schedule (“the PFS”) on July 13, 2017.  The goal of the PFS is to provide flexibility and innovation in delivery of patient care and to ease regulatory burdens to providers.  The PFS may also provide better payment alignment to encourage fairer competition between hospitals and physicians.

Background of Medicare Physician Fee Schedule

The CMS uses the Medicare Physician Fee Schedule that became effective January 1, 1992, to reimburse physicians. The PFS is a complete listing of fees or Current Procedural Terminology Codes (“CPT”)  used by Medicare to pay doctors, providers and suppliers.

There are three elements to the PFS – physician work associated resource costs, practice expense and professional liability insurance. For each CPT, each element is assigned a Relative Value Unit (“RVU”).  The PFS has a Geographical Practice Cost Index which is updated every three years based on geographic location, and is used to adjust the RVU.

The RVU determines the Medicare payment for a particular physician service. The PFS is also updated annually for inflation in physician costs and is used to make payments to a variety of entities, practitioners and providers.

Proposed 2018 physician fee schedule:

The CMS has outlined proposals for the 2018 PFS.  Some of more important changes are:

  1. Payments to physicians will increase by 0.31 percent. The CMS arrived at the increase by accounting for a .50 percent increase, and a .19 percent decrease as required by the Medicare Access and CHIP Reauthorization Act and Achieving a Better Life Experience Act of 2014 respectively.
  2. The CMS is proposing to change payments to off-campus hospital outpatient provider based departments.  Under Section 603 The Bipartisan Budget Act, payments will be reduced from .50 percent to .25 percent of the outpatient provider services rate.
  3. The CMS also proposes to pay for new telehealth services, including psychotherapy for crisis, care planning for chronic care management, health risk assessment, interactive complexity and visits to determine low dose computed tomography eligibility.
  4. To be consistent with MIPS requirements, groups and clinicians reporting six quality measures for the Physician Quality Reporting Program for 2016 will avoid the 2% penalty that was to apply to 2018.
  5. There are proposed changes to the maximum penalties for the Value-based Payment Modifier. The penalty will be reduced from 4 percent to 2 percent for groups of 10 or more, and 2 percent to 1 percent for groups 10 or less.
  6. A request for input will be made to increase innovation and transparency with the goal of decreasing burdensome regulations.



The proposed 2018 PFS attempts to reduce the regulatory burden for physicians, providers and groups.  There are reductions in penalties along with information requests to assist in reducing regulatory burdens and improve innovation and transparency.  It remains to be seen whether the proposed changes will improve the quality and delivery of healthcare.

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