Health Policy News

    Proposed Policy, Payment, and Quality Provisions Changes to the Medicare Physican Fee Schedule for Calendar Year 2016

    Thanks to the Medicare Access and CHIP Reauthorization Act (MACRA), which established the update factor for calendar years 2015 through 2025, this is the first year we have not had to wait for doc-fix legislation to estimate the conversion factor. For CY 2016, CMS estimates the PFS conversion factor to be $35.8279, which reflects a budget neutrality adjustment of -0.02%, a target recapture amount of -0.77%, and the 0.5 percent update factor specified under MACRA. Due to the budget neutrality and target recapture updates this is slightly below the 2015 conversion factor of $35.9335.  Also, CPT codes 51728 and 51729 -urodynamics codes - were removed from the misvalued services list.  Please find the complete CMS Fact Sheet Here.


    A new chapter for Medicare and physician payment is finally here. On April 14, 2015, Congress passed the bipartisan Medicare Access and CHIP Reauthorization Act—which repeals the so-called "sustainable" growth rate (SGR) payment formula that perennially threatened patients' access to care. This legislation also contains the language to stop CMS from implementing their policy to do away with the global surgical packages.

    This bill will go to the President to sign and CMS will be able to process Medicare claims at the current conversion factor. We will get a new conversion factor starting July 1st for the rest of the year that will include a half percent update to the overall physician pool of funding. 

    The AUGS Quality and Coding Committees are developing educational materials for members regarding the new systems. AUGS will also be considering and working through the implementation of the MIPS program and creation of alternative payment models for FPMRS. AUGS will be creating an Alternative Payment Model Task Force to further examine this issue and develop new payment models for our subspecialty. Stay tuned for more information about this initiative in the coming months.  Please read, Dr. Rosenthal's, "Physician Payment after the SGR- The New Meritocracy" for additional information.

    In the meantime, the AMA has developed the following resources for physicians:

    • Provision information:

    • FAQ’s on the new legislation:

    This is a truly historic moment for physicians and medicare patients. If you have any questions regarding this legislation, please contact AUGS at


    Review of Proposed Changes
    THE AFFORDABLE CARE ACT (ACA) established a value-based payment modifier that provides for differential payment to physicians based on the quality of care provided in relation to the cost of providing that care. The modifier must be budget neutral implying that a reward for high-quality care is offset by a penalty for poor-performance care as measured through alignment with the Physician Quality Reporting System (PQRS).

    The INITIAL component in the modifier determination is PQRS participation through satisfactory reporting of data on PQRS quality measures via the PQRS Group Practice Reporting Option (GRPO) (through the use of the web-interface electronic health record) or through satisfactory participation in a PQRS-qualified clinical data registry. All EP’s (eligible providers) that meet the initial reporting requirements are placed in Category 1 and Category 1 providers are then further quality-tiered for further adjustments. Those providers who do not meet Category 1 requirements fall into Category 2. Category 2 providers are only eligible for a downward payment adjustment. Quality-tiering methodology is being utilized for value determination within the initial category. Eligible providers are classified as either low quality/average cost, average quality/high cost, high quality/low cost or average quality/low cost. The value based modifier would be applied based on the tier the EP is placed in from PQRS reporting.

    In the CY 2015 Proposed Medicare Physician Fee Schedule Rule, CMS is proposing to increase the downward adjustment from -2.0 percent to -4 percent for 2017, using a data collection year of 2015. In other words, a -4.0% Value Modifier would be applied to EP’s that don’t meet quality reporting requirements for the PQRS (Category 2) or to the quality tiers classified as low quality/average cost or average quality/high cost within Category 1. However, solo providers and groups of 2 to 9 EP’s would receive only upward or neutral adjustments in 2017, given that this will be their first year under the VBM program. Groups with 10 or more EP’s would receive upward, neutral, or downward adjustments. This approach is designed to reward groups and solo practitioners that provide high quality/low-cost care, reduce program complexity, and engage groups and solo practitioners into the Value Modifier as the phase-in is completed.

    It is proposed that the Value Modifier begin in 2017 for ALL eligible providers and all physician groups including solo practitioners. A physicians’ value modifier adjustment would be based on the 2015 data collection year. This proposal would complete the phase-in of the Value Modifier that began in 2013 with the adjustment in 2015 for groups over 100 Eps and has continued to expand in subsequent years. This program is expected to involve 815,000 physicians and 315,000 non-physician providers.

    CMS is also applying the Value Modifier to physicians and non-physician providers that participate in an ACO (Accountable Care Organization) under the Medicare Shared Savings Program during the payment adjustment period. Beginning in 2017, practitioners that participate in the Pioneer ACO Model, the Comprehensive Primary Care (CPC) Initiative, or other similar Innovation Center models or CMS initiatives will also participate in the Value Modifier.

    There is a proposal also to expand the informal inquiry process for the Value Modifier starting in CY 2015. CMS will establish a “brief” period for a group or solo practitioner to request correction of a perceived error made by CMS in the determination of its Value Modifier adjustment. CMS is currently developing the necessary infrastructure to support this process. They currently propose to classify an EP as “average quality” to the extent CMS determines it has made an error in the calculation of the quality composite.

    CMS has been distributing Quality and Resource Use Reports (QRURs) for three years to physicians providing feedback regarding quality and cost-of-care furnished to Medicare beneficiaries. CMS plans to continue with this service explaining how the Value Modifier would affect a provider’s reimbursement under PFS (Physician Fee Schedule). In the summer of 2014, CMS will provide the information to all providers based on data reported in 2013. This process will continue every summer evaluating the prior years reported data so that a provider may see how he/she fares under the new policy. It is suggested that providers access their 2013 QRURs when available to improve their performance on quality and cost measures. These reports will be available via the following link in late summer of 2014.

    There is Still Time to Avoid the 2015 PQRS Payment Adjustment!

    If you are considered eligible and able to participate in the Physician Quality Reporting System (PQRS), you may be subject to payment adjustments beginning in 2015.

    Eligible professionals (EPs) and group practices that fail to satisfactorily report data on quality measures during the 2013 program year will be subject to a 1.5% payment adjustment of their Physician Fee Schedule (PFS) charges beginning in 2015.

    If you and/or your group practice are not planning to meet the requirements to earn an incentive for satisfactorily reporting in 2013, and did not elect the administrative claims-based reporting option, you can still avoid the adjustment by doing the following:

    Individual EPs
    EPs can avoid the 2015 payment adjustment if they report at least:

    • One valid measure via claims, participating registry, or through a qualified Electronic Health Record (EHR) OR
    • One valid measures group via claims or participating registry

    Group Practices
    Group practices participating in the GPRO can avoid 2015 payment adjustments if they report at least:

    Report By December 31
    These criteria must be met during the 2013 PQRS program year, January 1-December 31, 2013. Take action by December 31 to avoid the 2015 payment adjustment!

    View the PQRS Payment Adjustments Tip Sheet for more information on how to avoid the 2015 payment adjustment.

    For more information or support on the PQRS program, please visit the PQRS Incentive Program website.

    If you passed the FPMRS Board Exam, Update your Medicare Enrollment and Private Insurance Contract Information to reflect this Specialization.

    Healthcare Provider Taxonomy Codes are designed to categorize the type, classification, and/or specialization of health care providers. The Code Set is maintained by the National Uniform Claim Committee.  The Code Set is a Health Insurance Portability and Accountability (HIPAA) standard code set.  As such, it is the only code set that may be used in HIPAA standard transactions to report the type/classification/specialization of a health care provider when such reporting is required.

    Why is it important to update your Healthcare Provider Taxonomy Code?

    As the Centers for Medicare and Medicaid Services (CMS) continues to implement the Value-Based Payment Modifier for physicians, physicians’ quality and cost, “scores,” will be compared to their peers.  One way for the Medicare program to define peers could be by using taxonomy codes.  Also, in the House Energy and Commerce Committee proposed legislation to repeal the sustainable growth rate (SGR), the proposed new payment system would be based on quality scores for physicians by cohort, with the cohort defined by ABMS approved specialties.  A way to segment by ABMS approved specialties is to use taxonomy codes.

    Taxonomy Code for Female Pelvic Medicine and Reconstructive Surgery

    Effective January 1, 2012, the National Uniform Claim Committee at the request of the American Board of Medical Specialties created a new healthcare provider taxonomy code to recognize the subspecialty of Female Pelvic Medicine and Reconstructive Surgery.

    Taxonomy Code 207VF0040X                    Female Pelvic Medicine and Reconstructive Surgery       

    A subspecialist in Female Pelvic Medicine and Reconstructive Surgery is a physician in Urology or Obstetrics and Gynecology who, by virtue of education and training, is prepared to provide consultation and comprehensive management of women with complex benign pelvic conditions, lower urinary tract disorders, and pelvic floor dysfunction. Comprehensive management includes those diagnostic and therapeutic procedures necessary for the total care of the patient with these conditions and complications resulting from them.

    When health care providers apply for a National Provider Identifier (NPI) from the National Plan and Provider Enumeration System (NPPES), a health care provider must select the Healthcare Provider Taxonomy Code or code description that the health care provider determines most closely describes the health care provider's type/classification/specialization, and report that code or code description in the NPI application.  If you passed the FPMRS Board exam, you can now amend your information with Medicare through their on-line system to reflect your new level of specialization. You may want to call those private insurance companies that you are on contract with to amend your contract to reflect this taxonomy code, as well.

    For Medicare, the Internet-based Provider Enrollment, Chain and Ownership System (Internet-based PECOS) can be used to update your enrollment information. Please visit the page of the Centers for Medicare and Medicaid Services (CMS) web site for the Internet-based PECOS system where there is a tutorial regarding how to use this system to update your Medicare provider and National Provider Identifier (NPI) information.

    Click here to view additonal practice management resources from AUGS.   

    Webpage last updated April 15, 2015.

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