Radiation Oncology: Proposed 2016 MPFS Released

ADVOCATE Review – Radiation Oncology Review

The Centers for Medicare and Medicaid Services (CMS) recently released the calendar year (CY) 2016 Physician Fee Schedule proposed rule.  The proposed conversion factor is $36.1096, which reflects a budget neutrality adjustment of 0.9999 and the 0.5 percent update factor specified under MACRA.  Comments on the proposed rule are due Sept. 8 and a final rule is expected in early November.

The rule would reduce Medicare payments for radiation oncology services by changing an assumption involving the overall use of linear accelerators starting January 1, 2016. CMS estimates the overall impact would cut payments to the specialty by 3 percent, with freestanding centers facing cuts of approximately 9 percent, depending on the practices’ specific patient and modality mix.

Radiation Oncology Proposed Cuts                                         3%

Radiation Therapy Centers Proposed Cuts                           9%

The proposed rule is the first release since the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) repealed the sustainable growth rate (SGR) formula and replaced the statutory formula which had predicted negative updates for over a decade.  The MACRA will lend needed stability for radiology practices.  Although not ideal, the MACRA does allow groups to plan long term without the fear of an annual financial catastrophe caused by the threat of a 28% cut in Medicare payments.

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The new policy, which involves CMS increasing the rate it assumes linear accelerators are utilized in the clinic, has the effect of decreasing the reimbursement for the given service. CMS is proposing to increase this equipment utilization rate from the current standard of 50 percent to 60 percent in CY 2016 and 70 percent in 2017.

The ACA also requires CMS to identify “misvalued codes” in the MPFS. Subsequent legislation set a 2016 target reduction of 1%. If the net reductions in misvalued codes in 2016 are not equal or greater than 1% of the estimated expenditures under the fee schedule, a reduction equal to the percentage difference between 1% and the estimated net reduction in expenditures resulting from misvalued code reductions must be made to all PFS services. In this proposed rule, CMS is proposing a methodology for the implementation of this provision. Based on that methodology, CMS has identified changes that achieve a 0.25% reduction. Further misvalued code changes may be made if the final rule is to reach the 1% target. Radiation oncology codes included on this list and potentially subject to review are:

  • 77263 treatment planning
  • 77334 treatment devices
  • 77470 special radiation treatment

As always, ADVOCATE will keep you up to date on this and all issues impacting radiology as they become available.

Best regards,
Kirk Reinitz, CPA
President/CEO