Medicare Physicians New Fee Schedule 2016

On Nov. 16 2015, Medicare published the 2016 Medicare Physician Fee Schedule Final Rules, which is meant to reflect a broader Administration-wide strategy to create a health care system that results in better care, smarter spending, and healthier people. But how does the physician fare in all this? Will the physician's revenues be hit or will there see an increment in terms of reimbursements?

The physician fee schedule for 2016, which is the first final rule was issued after the repeal of the sustainable growth rate formula issued by the Medicare Access and CHIP Reauthorization Act of 2015(MACRA). What does this rule establish? In some cases it favors the physician and in some cases it can cause a hit to the Revenue Cycle management. The coming of this updated Physician fee schedule signals certain important changes to how physicians will now be paid

1. Ends the SGR formula – a positive sign indeed
2. Establishes a new framework for rewarding providers for giving better care over volume- this has been found debatable although well-intentioned
3. Combines existing quality reporting programs into one new system termed the Merit-Based Incentive Payment System (MIPS). The MIPS will include the Physician Quality Reporting System (PQRS), Medicare Electronic Health Record (EHR) Incentive Program, and the Value-Based Payment Modifier. Based on the MIPS composite performance score, physicians and practitioners will receive positive, negative or neutral adjustments for annual payment updates- physicians are still divided over how this will work
4. Bonus payments for physicians will be made available for those who participate in eligible alternative payment models (APMs), but also based on certain criteria.

However, a bit of clarity is required here before we move further: the legislation and regulations along with Medicare refer to the Medicare physician payment schedule as a "fee schedule." But, from the perspective of AMA, the distinction between a payment schedule and a fee schedule is extremely important: a fee is what physicians establish as the fair price for the services they provide; a payment is what Medicare approves as the reimbursement level for the service. Thus, all references to the "full Medicare payment schedule" include the 80 percent that Medicare pays and the 20 percent patient coinsurance. Likewise, transition "approved amounts" also includes the patient coinsurance. In this final rule, to maintain budget neutrality for the finalized policies, the 2016 conversion factor (CF) taken is $35.8279. For instance, we can take a look at the impact factor for internal medicine with this CF for the year 2016 which is 0 percent (neutral). The impact of this can be viewed in the table replicated below from the American College of Physicians website

But it all depends on how the healthcare practitioners make the required changes in their Management planning to help improve their Revenue Cycle Management (RCM) and thereby their revenues to avoid getting hit with losses.