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Washington Highlights

CMS Releases 2014 Physician Fee Schedule Final Rule

December 6, 2013— The Centers for Medicare and Medicaid Services (CMS) Nov. 27 released its finalized policiesfor the calendar year (CY) 2014 physician fee schedule. Under the finalized policies, physicians will see their Medicare payments cut by approximately 24 percent under the sustainable growth rate (SGR) formula.

CMS finalized many of its proposals related to the physician quality reporting system (PQRS) and value-based payment modifier (VBM) programs.  The VBM program scores physicians and groups on their performance on both cost and quality measures.

Under the finalized policies, starting in 2016 but based on performance in 2014, groups of 10 or more eligible professionals (EPs) will be subject to the VBM. Groups of 100 or more will face a positive, neutral, or negative adjustment based on performance with a maximum of 2 percent of payments at risk. Groups of 10-99 EPs will not be subject to a negative payment adjustment.

Groups have three options for reporting data: the group practice reporting option (GPRO) web interface, CMS qualified registries, or electronic health records (EHRs). Also, providers that do not wish to report PQRS measures as a group can satisfy group reporting requirements if at least 50 percent of group providers submit data satisfactorily as individuals. CMS then will calculate a group score based on data submitted by the reporting providers. A group is defined by the number of providers billing under the same tax identification number (TIN).

CMS also has finalized its proposal to add the Medicare spending per beneficiary (MSPB) measure as a cost measure to the VBM. This measure, originally designed for hospitals, includes all costs attributed to a beneficiary three days before and 30 days after an inpatient hospital admission. The MSPB measure is attributed to the group that provided the plurality of services during the inpatient admission.

Other cost measures include total cost per capita (Medicare Parts A and B) and total cost per capita for patients with four chronic conditions: chronic obstructive pulmonary disease (COPD), heart failure, coronary artery disease, and diabetes. All cost measures are payment standardized and cost adjusted. In addition, each group’s cost measures are adjusted for the specialty mix of providers in the group.

Providers are scheduled to receive a 24 percent cut to Medicare payments beginning Jan. 1, 2014, under the SGR formula. Congressional action has averted these cuts in the past. The AAMC has strongly encouraged Congress to continue efforts to repeal and replace the SGR and applauds the House Ways and Means, House Energy and Commerce, and Senate Finance Committees on their bi-partisan efforts to “repeal the flawed SGR formula.” [See Washington Highlights, Oct. 31].

Mary Patton Wheatley, M.S.
Director, Health Care Affairs
Telephone: 202-862-6297

Evan Collins, MHA
Specialist, Clinical Operations and Policy
Telephone: 202-828-0552


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806