Final 2016 Medicare Physician Fee Schedule Rule and Implications for Therapy

CMS recently released the final 2016 Medicare physician fee schedule rule, the first rule issued since enactment of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) repealed the SGR formula.   The rule, which updates payment amounts, refines quality programs, and revises other payment policies, contains several provisions and policies related to therapy including:

• The Medicare annual therapy caps for 2016 are set at $1,960 for physical and speech therapy combined and a separate $1,960 cap for occupational therapy.
• The therapy cap exceptions process was extended per MACRA through December 31^st, 2017 allowing therapists to use the KX modifier to request an exception to the therapy cap on claims for medically necessary services above the therapy cap.  CMS is still finalizing the revised process for targeted manual medical review of services which exceed the threshold amount of $3,700 for physical and speech therapy combined and the separate $3,700 threshold for occupational therapy.  Factors which may impact a targeted review include therapists with a high claims denial rate or with aberrant billing practices compared to their peers.  The manual medical review process is set to expire at the same time as the exceptions process on December 31^st, 2017.
• Therapy providers will not see significant changes to the PQRS program in 2016. Eligible professionals must successfully report under PQRS in 2016 to avoid a 2.0% negative payment adjustment in 2018 and will need to report at least nine measures covering at least three NQS domains for 50% of the Medicare Part B FFS patients seen during the reporting period to which the measure applies.  If fewer than nine measures apply, therapists must report as many measures do apply depending on whether they are reporting via claims or registry.  Providers who report fewer than nine measures will be subject to the Measures Applicability Validation (MAV) process to determine if they are reporting all measures which are applicable to them.   Physical therapists reporting via claims will have six available measures whereas physical therapists reporting via registry will have eight available measures unless they are using FOTO in which case they will have 15 available measures.
• CMS reversed its decision to include including physical and occupational therapists in the Value-Based Modifier (VM) program in 2016.
• CMS estimated the 2016 fee schedule conversion factor at $35.8279, a slight drop from $35.9335 in 2015. This decrease reflects a budget neutrality adjustment of 0.9999, a 0.5% update adjustment factor as specified under MACRA, and a 0.77% target recapture amount required by additional legislation which set a target reduction of 1% of expenditures for 2016. In the final rule, CMS identified 103 potentially misvalued CPT codes, resulting in changes that achieve a 0.23% reduction in expenditures.  Because this reduction fell short of the 1% target reduction, the conversion factor for 2016 was further reduced by 0.77% as a target recapture amount.
• Ten CPT codes commonly used by therapists are included in the list of 103 misvalued codes. CMS acknowledged that these 10 codes (97032, 97035, 97110, 97112, 97113, 97116, 97140, 97530, 97535, and G0283) are under review by the AMA Relative Update Committee, but that the codes would remain on the list until they receive updated values.
• Of interest to some will be CMS’s revision of “incident to” regulations. CMS clarified that the physician who bills Medicare for an “incident to” service must also be the physician who furnishes the service or who directly supervises the service.

We will provide more information about any specific changes to the PQRS measures for 2016 once CMS releases the measure specifications.  Stay tuned.