Medicare Payment Rules Finalized for 2014 with Some Big Changes Included

The 2014 Medicare physician payment schedule was finalized on November 27, 2013 when the Center for Medicare and Medicaid Service (CMS) released its final schedule.

This document establishes the framework and payment schedule for medical providers and includes several critical changes from previous years. Some of these changes will reduce certain payments to physicians and other providers when these rates take effect.

On its surface these payment rules force a reduction of 20.1 percent for the conversion factor used to calculate rates for payments to physicians, physical therapists and other health providers. The majority of this reduction is due to the contentious debate over the current sustainable growth rate formula Congress has been wrestling with for some time. This reduction climbs to a 24 percent reduction when other factors such as relative value scale are added into the equation. This drastic of a change has many health care professionals worried and will affect their financial projections for much of the year. This final rule also addresses other Medicare related parameters including changes to the Physicians Quality Reporting System, Value Index, Medicare Economic Index and other updates to various geographic indexes. The one ray of hope in averting this decrease in payment schedules is that every year since 2003 Congress has enacted legislation to avoid then reduction and may do so again for this most recent change.

Other details of the Final Rule apply to therapy caps, which have been raised to $1,920 for 2014. The major difference is that this therapy cap also applies to critical access hospitals beginning January 1, 2014. They will also be allowed to apply for an exception to this therapy cap as do other physical therapy professionals and providers. However the automatic therapy cap exception process will expire with the introduction of these new Final Rules unless an extension is granted by Congress.

PQRS rules are also changing for 2014. Physicians, physical therapists and other healthcare professionals are able to avoid the upcoming 2016 PQRS 2 percent penalty by documenting a minimum of 3 individual measures by either claims or registry process for at least 50% of their eligible Medicare patients in 2014. CMS will also increase the scope of individual measures to 9 from the previous level of 6 to allow providers to qualify for the .5 percent bonus. This is welcome change for most healthcare providers that allows them to better support their patients.

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