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Issue Background

Physician Quality Reporting System

CMS Guidance on Part B Drugs and Payment Adjustments for Medicare Programs

March, 2015 -- The negative payment adjustments for the Medicare Electronic Health Record (EHR) Incentive Program, Physician Quality Reporting System (PQRS), and Value-Based Payment Modifier (VM) only apply to Medicare Physician Fee Schedule (MPFS) claims for Part B covered professional services.

Covered professional services means services furnished by an eligible professional for which payment is made under, or is based on, the MPFS, as provided in section 1848(k)(3) of the Act.

The Part B drugs themselves are not services, and therefore are not paid under the MPFS. Only the services associated with the Part B drugs, such as injections, that may be necessary to administer the drugs are considered covered professional services that are paid under, or are based on, the MPFS.  For example, HCPCS code J2778 (Lucentis) would not be subjected to payment adjustments, but CPT code 67028 (intravitreal injection) would be subjected to payment adjustments.

Therefore, claims for Part B drugs themselves are not affected by the payment adjustments for EHR, PQRS, or VM.  Read the related FAQ.  

For more information about the EHR Incentive Programs, visit the CMS EHR website.

Medicare Physician Fee Schedule 2015 Final Rule
On November 13, 2014, the Centers for Medicare & Medicaid Services (CMS) published the 2015 Medicare Physician Fee Schedule Final Rule, which presents payment policies and rates for Medicare Part B physician services effective for calendar year 2015. 

2015 Medicare Physician Fee Schedule: Coding & Payments

  • No changes to payment methodology for Part B drugs and biologicals
  • Sustainable Growth Rate (SGR) payment cuts are scheduled to go into effect on April 1, 2015 absent further action from Congress
  • Enhanced transparency in PFS rate setting to be implemented by 2017, giving stakeholders a greater opportunity to provide input on new and revised codes
  • Payment to physicians for chronic care management services with new Current Procedural Terminology (CPT) code 99490 which began on January 1, 2015
  • CMS’s review of “potentially misvalued” codes will not include drug administration codes at this time

2015 Medicare Physician Fee Schedule:  Changes to Physician Quality Programs
CMS is continuing its implementation of Medicare physician quality initiatives, which have the potential to significantly impact physician payment over the next few years.  The specific quality-related programs addressed in the Final Rule include:

  • the Physician Quality Reporting System (PQRS);
  • the Physician Value-Based Payment Modifier (VBPM);
  • the Medicare Shared Savings Program; and
  • the Physician Compare website.

Physicians should note that the various payment adjustments under the Medicare physician quality programs, most notably the PQRS, VBPM, and Medicare Electronic Health Record (EHR) Incentive Program, are additive. Therefore, a physician’s PFS payments could be reduced by as much as 9% by CY 2017, when the effects of all three of these programs are combined.  The quality-related payment adjustments, however, do not apply to payment for Part B drugs and biologicals administered in the physician office setting, which will continue to be paid based on the Average Sales Price methodology.

2015 Medicare Hospital Outpatient Prospective Payment System
Summary of Key Provisions from the 2015 OPPS Final Rule

  • 2.3% increase in overall OPPS payments in CY 2015
  • No changes to the payment methodology for separately payable drugs and biologicals
  • Continued shift toward more “packaging” under the OPPS, although drug administration codes are not affected for now
  • New reporting requirements for hospitals and physicians providing care at off-campus provider-based departments of hospitals
  • Updates to the Hospital Outpatient Quality Reporting (OQR) program

For more information, read Medicare Physician Fee Schedule (PFS) 2015 Final Rule: Changes to Coding and Payment Policies by Johnson & Johnson Health Care Systems Inc.