December 2, 2016

Medicare Physician Fee Schedule: Final Rule for Calendar Year 2017

By Melissa Korey, Supervisor, Advisory Services

Medicare Physician Fee Schedule: Final Rule for Calendar Year 2017

On November 15, 2016, the Centers for Medicare and Medicaid Services (“CMS”) published the Physician Fee Schedule (PFS) final rule for calendar year (“CY”) 2017 in the Federal Register. The final rule included updates to the list of codes for telehealth services, therapy evaluations and re-evaluations, therapy caps and the exception process, payment provisions for chronic care management and transitional care management services, as well as updates to the Medicare shared savings program. The regulations summarized below are effective January 1, 2017.

Medicare Telehealth Services

As part of the provisions of Medicare telehealth services, CMS is required to perform a review of any qualifying service code requests to determine if services should be added or deleted from the eligible list of telehealth services. In the PFS final rule for CY 2017, CMS has added several new current procedural terminology (“CPT”) codes (90967 – 90970) for end-stage renal disease (“ESRD”)-related services for dialysis for less than a full month of service, per day. In addition, codes were added to advanced care planning services to include the explanation and discussion of advance directives for the first 30 minutes of face-to-face (99497) and for each additional 30 minutes (99498). This time includes the discussion and completion of any standard forms. CMS is also finalizing new HCPCS codes G0508 and G0509 for critical care consultations to be used when a patient would benefit from additional services from a distant-site consultation. Lastly, CMS has added a Place of Service (“POS”) code for physicians and practitioners furnishing telehealth services, to indicate that the billed service is furnished as a telehealth service from a distant site. CMS believes that the POS code will help improve payment accuracy for telehealth service providers.

Therapy Evaluation and Re-evaluation Codes

One of the most significant changes in the PFS final rule for therapy providers is the replacement of CPT codes 97001 – 97004 for physical therapy and occupational therapy evaluations and re-evaluations. Starting January 1, 2017, providers must use CPT codes 97161 – 97168 to define the complexity level for each therapy evaluation. The new codes are classified as “always therapy” CPT codes. At this time, the relative value units (“RVUs”) for each complexity level will be the same. CMS believes that keeping the RVUs consistent among the complexity levels will deter providers from up-coding, since there is no variance in payment.

Therapy Caps

CMS has added a slight increase to the therapy cap limitations. The annual therapy cap limitation in CY 2017 for physical and speech-language pathology therapy rose from $1,960 to $1,980, and the occupational therapy cap also increased by $20 to $1,980. In addition, the therapy cap exceptions process will still be in place for CY 2017, but providers should be aware that this provision is set to expire on December 31, 2017.

Chronic Care Management and Transitional Care Management

CMS realizes that certain care management functions, especially those that deal with cognitive specialties, do not receive adequate reimbursement under the existing evaluation and management (“E/M”) codes. To alleviate this issue, CMS has created new codes that will be paid separately for certain chronic care management (“CCM”) and transitional care management (“TCM”) services, such as creating new codes for CCM patients with greater complexities, as well as new codes for comprehensive assessment and care planning for patients with cognitive impairment.

Medicare Shared Savings Program

CMS allowed participating ACOs in track 3 to apply for a waiver of the 3-day in-patient hospital stay requirement for Medicare coverage in a skilled nursing facility (“SNF”) stay, in order to help reduce costs and increase quality of care. While this waiver is critical to the transition of residents from one continuum to another, it can also result in a negative impact for beneficiaries who lose coverage under the ACO program and had the 3-day qualifying hospital stay waived. CMS felt that beneficiaries should not be penalized under certain circumstances and is implementing the following protections within this final rule:

  • The SNF will not be eligible for payment beyond a 90-day grace period.
  • The beneficiary will not be charged for expenses incurred for services provided.
  • If the SNF collected money during the beneficiary’s stay, the funds must be returned.
  • The ACO will be required to submit a corrective action plan to CMS for approval.

To view the rule in its entirety please visit:

For further information or questions regarding the final rule, please contact your Marcum advisor.

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