Regulatory Changes Affecting Physician Reimbursement in 2018

Reviewing the changes to the regulations that govern Medicare reimbursement for physician practices is an annual event.  This article will highlight the provisions of the Medicare Physician Fee Schedule (MPFS) and other related regulations that will have an impact on practice reimbursement in 2018.

Medicare Physician Fee Schedule (MPFS)

Coding and Valuation

The overall change in the Medicare fee schedule conversion factor will be an increase of only 0.31%, so this alone will have little impact on a practice’s revenue in 2018.  However, the Centers for Medicare and Medicaid Services (CMS) annually reviews and adjusts the Relative Value Units (RVU) assigned to procedures it considers to be mis-valued, and it also assigns values to codes that are newly developed or redefined by the CPT® Editorial Panel.

The volume of each CPT code’s usage in a particular practice influences the effect of those valuation changes.  This is especially true where revisions have resulted in the bundling of payment under a single code that previously was reported using several separate codes.  A volume-weighted analysis based on the preceding year’s activity will generally give a good estimation of the effects of the CPT code changes we have described.

A thorough review of the 2018 coding and valuation changes is available on our website.

Telehealth and Remote Patient Monitoring Services

The list of services approved for telehealth was expanded to include the following for 2018:

Code Description
G0296  Counseling visit to discuss need for lung cancer screening
90839  Psychotherapy for crisis;
• First 60 minutes
90840  • Each additional 30 minutes
 Use in addition to the code for the primary procedure.
90785  Complex interactive encounter; interactive complexity
Use in addition to the code for the primary procedure.
96160  Administration of health risk assessment instrument with scoring and   documentation, per standardized instrument;
• Patient-focused
96161  • Caregiver-focused
99091  Collection and interpretation of physiologic data digitally stored and/or   transmitted by the patient and/or caregiver; requiring a minimum of 30   minutes of time.
 This code is now payable separately.


Note especially that CPT 99091 has been unbundled and is now able to be billed separately for collecting and interpreting digital physiologic data.  The modifier GT is no longer required, as distant site providers are now using Place of Service (POS) code 02 to indicate that the telehealth requirements have been met.

Appropriate Use Criteria and Clinical Decision Support

Implementation of the Appropriate Use Criteria/Clinical Decision Support (AUC/CDS) rule that was originally scheduled to begin in 2018 has now been deferred until January 1, 2020.  The Medicare AUC/CDS regulation mandates that ordering providers must consult AUC when ordering advanced imaging services such as MR, CT, PET and other nuclear medicine exams for Medicare patients.   Payment to the physician performing the service will be denied in full when the ordering provider fails to use a qualified CDS system.

In the first year of the program (2020) the performing physicians (such as radiologists or cardiologists) will be paid in full whether the AUC/CDS information is reported on their Medicare claims or not.  CMS has indicated that it will evaluate whether an additional year of no penalty (2021) will be needed.

A voluntary period of testing and evaluation will be in place from July 2018 to December 2019 for those practices that are ready to use their AUC/CDS system.  The use of AUC during 2018 will allow an ordering physician to claim credit as a high-weighted Improvement Activity under the Medicare Incentive-based Payment System (MIPS), and a 10-point bonus is available in the Advancing Care Information (ACI) performance category for reporting AUC consultation as an Improvement Activity.

This topic is covered in more detail in our article A Review of Medicare’s Appropriate Use Criteria and Clinical Decision Support Mandate.

Never miss an article! Sign up to receive these articles delivered right to your inbox. 

Diabetes Prevention Program (DPP)

The Medicare DPP is a model aimed at preventing type-2 diabetes in pre-diabetic individuals.  For 2018, CMS established additional model details, including a maximum payment of $670 over two years for furnishing educational sessions designed to change behavior for weight control and ongoing maintenance classes, as well as demonstrating sustained weight loss.  This is the total possible payment, which is paid incrementally as performance goals are reached.  The maximum payment is $195 without the required minimum weight loss.

The program will be effective for services performed on and after April 1, 2018.  More detailed information is available in the CMS Fact Sheet.

Payment Reductions for Non-Digital Imaging

Practices that perform diagnostic imaging using computed radiography (CR) rather than direct digital image processing will see a 7% payment reduction beginning in 2018.  The 7% penalty will continue through 2022, and then it will become 10% beginning in 2023.  A new modifier ”FY” will be required on claims for the technical component of such services, whether they are billed separately or included in the global billing.

Distinct Pricing of Biosimilar Products

Effective January 1, 2018, newly approved biosimilar biological products with a common reference product will no longer be grouped into the same billing code under the Healthcare Common Procedure Coding System (HCPCS).  This is a reversal of a 2016 policy that grouped all such products into the same payment calculation for determining a single average sales price payment limit.

Site Neutrality Adjustment

In an attempt to close the gap between the payment level for hospital-based services and the payment for similar services provided outside the hospital, Congress mandated in the Bipartisan Budget Act of 2015 that services provided in facilities that are owned by a hospital but which are not located on the hospital campus are to be paid for under the MPFS rather than under the Outpatient Prospective Payment System (OPPS) that ordinarily covers payment for hospital outpatient services.

The MPFS Final Rule sets the “PFS Relativity Adjuster” for payment of services in such Provider-Based Departments (PBD) at 40% of the OPPS fee schedule amount for 2018, a reduction from the 50% level of 2017.  Note, however, that the PFS Relativity Adjuster reduces only the technical component, even if the facility uses global billing; the professional reimbursement should not be affected.

PBDs operating prior to November 2, 2015 are exempted from this rule and will continue to be paid under OPPS at 100% until they are relocated or sold.

Modification of Fee Schedule Payment Adjustments

Data submitted under the Physician Quality Reporting System (PQRS) for 2016 is used to determine a practice’s Medicare fee schedule payment adjustment for 2018.  In the 2018 MPFS Final Rule, CMS has retroactively modified the 2016 reporting requirements.  Whereas 9 measures across 3 National Quality Strategy (NQS) domains were originally required to be submitted, the criteria has been changed so that only 6 measures with no domain or cross-cutting measure specification will be considered satisfactory in order to avoid a 2% Medicare payment reduction in 2018.

The Meaningful Use of Electronic Health Records incentive program criteria were similarly modified.  Whereas the original requirement was 9 Clinical Quality Measures (CQM) across 3 NQS domains, now only 6 measures with no domain specification will be considered satisfactory for eligible professionals and groups that attested via PQRS portal.

The Value-based Payment Modifier (VM) further adjusts a practice’s Medicare fee schedule payment in 2018 based on PQRS performance in 2016.  There was to be a payment reduction of 4% (for groups of 10 or more physicians) or 2% for smaller groups or solo physicians for failure to meet PQRS criteria.  Those penalties will now be 2% and 1%, respectively.  Any practice that met the newly-defined PQRS reporting criteria described above will not receive any payment reduction.

Since the VM is designed to be budget-neutral, these reduced penalties mean that there will be less money available to fund upward adjustments for those practices that earned them.  The maximum upward adjustment has been capped at 2 times the adjustment factor rather than the 4-times that was to have been available to groups of 10 or more high-performing physicians.

A review of the original 2018 PQRS/VM payment plan can be found in our article CMS Quality Initiatives – Reporting by Radiology Practices in 2016 and Beyond.

Quality Payment Program (QPP)

The Quality Payment Program is the system that was created by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).  For most physicians the Merit-based Incentive Payment System (MIPS) is the branch of the QPP in which they will participate.  2018 will be the second year of reporting under MIPS, and physicians’ performance in 2018 will determine their Medicare fee schedule payment adjustment in 2020.  The QPP is governed by its own Final Rule, and our analysis of this complex program is covered in our article MIPS Rules Changes for 2018.

Patient Relationship Codes

The QPP requires that physicians provide information that describes their relationship to the patient for the purpose of assigning accountability for the patient’s cost of care.  This information ultimately will be used to determine a physician’s score in the QPP Cost Category, although it will not be used for the 2018 performance year.  The series of HCPCS Level II modifiers shown below that describe patient relationship categories are available for voluntary optional use on Medicare claims beginning in 2018:

Modifier Patient Relationship Category
X1  Continuous/broad services
X2  Continuous/focused services
X3  Episodic/broad services
X4  Episodic/focused services
X5  Only as ordered by another clinician

New Medicare Card Design

CMS will be mailing new Medicare cards to beneficiaries starting in April 2018.  The new cards contain a unique, randomly assigned number that replaces the current Social Security-based number.  Replacement of all cards is targeted for completion by April 2019.  There will be a 21-month transition period during which practices will be able to use either the current number or the new number, and CMS indicates that a secure look-up tool will be available to provide quick access to the new Medicare numbers when needed.


Of course, not all of the rule changes described here will apply to every practice equally.  It is recommended that every practice pay special attention to the details of the CPT coding changes to ensure your practice is using the latest codes that best describe the procedures you perform.  The practice’s EMR system will have to be updated to be sure the new codes are properly captured.  Finally, educating the physicians and staff on any of the applicable rules change is a key component of a successful implementation plan.

Get our latest free educational articles delivered right to your inbox. Subscribe now.

Related Articles:

Preventing Regulatory & Commercial Payer Audits

2018 Coding Changes That Will Affect Physician Practices

How Should Physician Practices Approach the Revised CMS Student Documentation Rules?

Looking to change medical coding vendors? Contact HAP to see what we can do for your practice.