CMS Proposes Changes to Medicare Physician Payment in 2019 - McDermott+Consulting

CMS Proposes Changes to Medicare Physician Payment in 2019

On July 12, 2018, the Centers for Medicare & Medicaid Services (CMS) released the CY 2019 Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Medicare Part B [CMS-1693-P], which includes proposals related to Medicare physician payment and the Quality Payment Program (QPP). The proposed regulations will be published in the Federal Register on July 27, 2018. Comments are due September 10, 2018.

A topline summary of the major provisions follows.


Beginning in 2019, eligible clinicians (including most physicians) will be paid for Medicare Part B services under the new QPP (based on 2017 reporting activities), and they will continue to elect to either be subject to payment adjustments based upon performance under the Merit-based Incentive Payment System (MIPS), or to participate in the Advanced Alternative Payment Model track (APM).

Eligible clinicians choosing the MIPS pathway will have payments increased, maintained or decreased based on relative performance in four categories: quality, use of information technology, clinical improvement activities and cost. Eligible clinicians choosing the Advanced APM pathway will automatically receive a bonus payment once they meet the qualifications for that track.

Physician Fee Schedule (PFS) Changes

CMS describes the 2019 PFS proposed rule as initiating “historic changes to modernize Medicare and restore the doctor-patient relationship.” CMS continues to build on a theme that was articulated in the 2018 QPP final rule, namely, that many of the changes the agency made were aimed at reducing burdens and enhancing flexibilities for clinicians. Supporting those goals, CMS estimates that the proposed changes to documentation for evaluation and management services would save 51 hours per year for a clinician whose panel is 40 percent Medicare, and that the QPP-related proposed changes would collectively save clinicians an estimated 29,305 hours and approximately $2.6 million in reduced administrative costs in CY 2019.

1. 2019 Proposed Medicare PFS Conversion Factor Remains Flat

√ CMS also proposes to update supply and equipment inputs used to calculate PE RVUs.

The 2019 proposed physician conversion factor[1] is $36.0463. This represents a change of less than one cent from the 2018 conversion factor of $35.9996. The proposed anesthesia conversion factor is $22.2986, in comparison to the 2018 conversion factor of $22.1887. The 0.50 percent update specified by the Medicare Access and CHIP Reauthorization Act (MACRA) was reduced to 0.25 percent as a result of a provision in the Bipartisan Budget Act of 2018. The conversion factor was then further reduced by a relative value unit (RVU) budget neutrality adjustment (-0.12 percent).

Physician payment is based on the application of the dollar conversion factor to work, practice expense (PE) and malpractice RVUs, which are then geographically adjusted. PE RVUs capture the cost of supplies, equipment and clinical personnel wages used to furnish a specific service. CMS proposes to update input prices for supplies and equipment based upon a large survey conducted by a market research firm under contract to CMS. CMS would phase in these new inputs over a four-year period beginning in 2019. These supply and equipment prices were last systematically developed in 2004–2005.

CMS concedes that at the service level, there may be large shifts in PE RVUs for individual codes that happened to contain supplies and/or equipment with major changes in pricing. Codes with a sizable PE RVU decrease would be limited by the requirement to phase in significant reductions in RVUs. The phase-in requirement limits the maximum RVU reduction for codes that are not new or revised to 19 percent in any individual calendar year.

[1] The Medicare PFS relies on national relative values that are established for work, practice expense and malpractice, and are adjusted for geographic cost variations. These values are multiplied by a conversion factor to convert the RVUs into payment rates.

2. CMS Proposes to Overhaul E/M Billing and Advance Telehealth Services

√ A single blended E/M payment rate for new and established patients for office/outpatient services is also proposed.

Evaluation and management (E/M) services make up approximately 40 percent of allowed charges under the PFS (office/outpatient services comprise approximately 20 percent of allowed charges). For years, there has been significant concern around the complexity and burden of documenting E/M services. In the 2018 PFS proposed rule, CMS solicited comments on how to simplify the system. In this rule, CMS is proposing significant changes to the documentation and payment rates for these services.

To reduce the burden of documentation, CMS proposes to allow practitioners to choose to document office/outpatient E/M visits using medical decision making or time instead of applying the highly complex 1995 or 1997 E/M documentation guidelines as currently required. Alternatively, practitioners may continue using the current framework. While maintaining the current E/M codes, CMS proposes a new, single blended payment rate for new and established patients for office/outpatient E/M level 2 through 5 visits and a series of add-on codes to reflect resources involved in furnishing primary care and non-procedural specialty generally recognized services. In its analysis, CMS found that while the impact on many specialties is minimal, this proposed policy would negatively affect clinicians that tend to bill higher level E/M codes, such as certain specialties. Stakeholders from the primary care physician community that care for patients with multiple chronic conditions have also voiced concern regarding the potential impact of this policy.

CMS also proposes payment for several virtual or telehealth services. CMS proposes to pay for virtual check-ins—brief, non-face-to-face appointments via communications technology, and evaluation of patient-submitted photos—and to expand Medicare-covered telehealth services to include prolonged preventive services.

3. CMS Proposes to Reduce Payment for New Part B Drugs

√ Payment would be reduced from WAC plus 6 percent to WAC plus 3 percent for initial 2 quarters.

During the first two quarters that a Part B drug is launched, CMS pays at Wholesale Acquisition Cost (WAC) plus 6 percent. For 2019, CMS proposes to reduce the payment for these drugs to WAC plus 3 percent. Generally, by the third quarter, when more data is available, CMS transitions to Average Sales Price (ASP) plus 6 percent. CMS is not proposing any changes to ASP pricing methodology. CMS notes that this proposal is consistent with recent recommendations from the Medicare Payment Advisory Commission.

While CMS did not estimate cost savings for this proposed policy, it did express concern about the growth in recent years in spending for Part B drugs. CMS believes this policy could bring prices for new drugs closer to acquisition costs and would also provide beneficiary savings by decreasing copayments. This policy of reducing reimbursement for new Part B drugs fits in with the Trump Administration’s overarching goal to lower drug prices. These priorities are distilled in “American Patients First,” the president’s recently released blueprint for lowering drug prices and reducing out-of-pocket costs.

Proposals Related to the Quality Payment Program

This year’s QPP rulemaking continues to slightly escalate the ramp for MIPS-participating clinicians, with CMS proposing to increase the number of clinicians included in MIPS, increase the threshold score for avoiding a MIPS penalty and increase the weight of the MIPS cost component. Advanced APM track policies remained fairly stable, with some slight proposed policy changes intended to streamline the program and reduce burden for participants.


CY 2017CY 2018CY 2019CY 2020CY 2021
Year 1
Performance Year
Year 2
Performance Year
Year 3
Performance Year
Year 4
Performance Year
Year 5
Performance Year
Year 1
Payment Year
Year 2
Payment Year
Year 3
Payment Year

4. CMS Proposes to Expand the Pool of MIPS Eligible Clinicians

√ CMS estimates 650,156 MIPS eligible clinicians for Payment Year 2021.

CMS estimates that 650,156 clinicians will be MIPS eligible in Payment Year 2021. This represents an increase from the 2018 final rule, in which CMS estimated that approximately 622,000 clinicians would be MIPS eligible for Payment Year 2020.

CMS proposes to expand eligibility to participate in MIPS to the following clinician types: physical therapists, occupational therapists, clinical social workers and clinical psychologists. Current eligible clinician types include physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and groups that include such professionals (required by statute). CMS estimates that this would expand the pool of MIPS eligible clinicians by 18,303.

The Low Volume Threshold (LVT) excludes certain clinicians and groups from participating in MIPS. CMS has proposed adding a third criterion to the low volume exclusion test that would be based on the number of covered professional services provided. The proposed 2019 LVT policy is as follows: To be excluded from MIPS, clinicians or groups would need to meet one of the following three criteria: have ≤ $90K in Part B allowed charges for covered professional services, provide care to ≤ 200 beneficiaries, OR provide ≤ 200 covered professional services under the PFS. CMS estimates that this proposed 2019 policy would remove an additional 1,173 MIPS eligible clinicians in comparison to the 2018 LVT policy.

CMS also proposes a MIPS opt-in policy. Starting in Year 2019, clinicians or groups would be able to opt in to MIPS if they meet or exceed one or two, but not all, of the LVT criteria. CMS estimated an additional 42,025 MIPS eligible clinicians as a result of this policy.


Policy ChangesBaselineLVT PolicyExpansion of Eligible Clinician TypesMIPS Opt-In Policy
Estimated Number of Clinicians Affected by PolicyN/A-1,17318,30342,025
Estimated Number of MIPS Eligible Clinicians591,010589,837608,140650,165
* This table does not consider the impact of the Medicare Advantage Qualifying Payment Arrangement Incentive (MAQI) Demonstration waiver.
Extracted from Table 97, page 1078, 2019 Proposed PFS (CMS-1693-P, display copy)