Final Rule Changes to the 2018 Medicare Physician Fee Schedule

Final Rule Changes to the 2018 Medicare Physician Fee Schedule

American Academy of Audiology Analysis

On November 2, 2017, the Centers for Medicare & Medicaid Services (CMS) issued the Revisions to Payment Policies under the Physician Fee Schedule (PFS) and Other Revisions to Part B for CY 2018; Medicare Shared Savings Program Requirements; and Medicare Diabetes Prevention Program final rule. The final rule addresses adjustments to the Medicare physician fee schedule (MPFS) and other Medicare Part B payment policies including changes in valuation from services and overall payment updates. The changes will go into effect on January 1, 2018. The Academy has prepared a list of payment rates by CPT code for audiology procedures covered under the fee schedule: CY 2018 and CY 2017 rates for reference along with helpful fee calculation definitions. For additional information, view CMS' Fee Schedule Fact Sheet.

The Academy has also prepared an analysis of the final rule below and will continue to add to this review and update our membership as more information becomes available.

CMS Finalizes Conversion Factor of $35.99 for CY 2018

For CY 2018, CMS determined the MPFS conversion factor to be $35.99. This update reflects the +0.50 percent update established under the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015, reduced by 0.09 percent, due to the misvalued code target recapture amount, required under the Achieving a Better Life Experience (ABLE) Act of 2014.  The conversion factor for CY 2018 represents a slight increase over the conversion factor for CY 2017 which is $35.89.

Valuation of Specific Services

For CY 2018, CMS is finalizing the values for individual services that generally reflect the expert recommendations from the American Medical Association-Relative Value Scale Update Committee (RUC) without as many refinements as CMS has proposed in past years. The Academy addressed the valuation process in our proposed rule comments.

Notably, CMS also encourages the RUC to heed public comments requesting a more open valuation process and for broader medical representation across specialties on the panel. It is unclear if such comments will affect the RUC, which has long been considered a private and closed process.

Professional Liability Insurance

CMS finalized its proposal to utilize the RUC and specialty recommendations related to expected specialties for low volume codes, a change advocated by the AMA RUC and supported by the Academy. CMS did not finalize its proposal to use updated premium data in computing the professional liability insurance relative values. CMS has stated that they will work to address the limitations with the premium data before updating this information in 2020.

Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital

In CY 2017, CMS finalized the MPFS as the applicable payment system for certain items and services furnished by certain off-campus hospital outpatient provider-based department. For CY 2018, CMS is finalizing a reduction in the current MPFS payment rates for these items and services by 20 percent. CMS currently pays for these services under the MPFS based on a percentage of the OPPS payment rate. Specifically, the final policy will change the PFS payment rates for these services from 50 percent of the OPPS payment rate to 40 percent of the OPPS rate.

Physician Quality Reporting System (PQRS)

CMS is finalizing a change to the current policy that requires reporting of 9 measures across 3 National Quality Strategy domains to only require reporting of 6 measures.

MACRA Patient Relationship Categories and Codes

CMS is finalizing their proposal to use the Level II HCPCS Modifiers found in Table 1 (below) as the patient relationship codes. CMS will add these codes to the operational list of patient relationship categories available at the Healthcare Common Procedure Coding System (HCPCS).

Table 1: Patient Relationship HCPCS Modifiers and Categories

No. HCPCS Modifier Patient Relationship Category
1x X1 Continuous/broad services
2x X2 Continuous/focused services
3x X3 Episodic/broad services
4x X4 Episodic/focused services
5x X5 Only as ordered by another clinician

CMS is also finalizing their proposal that Medicare claims submitted for items and services furnished by a physician or applicable practitioner on or after January 1, 2018. It should include the applicable patient relationship modifier, as well as the NPI of the ordering physician or applicable practitioner (if different from the billing physician or applicable practitioner). Audiologists are not considered applicable practitioners at this time. For 2018, an applicable practitioner is defined as a physician assistant, nurse practitioner, clinical nurse specialist, and a certified registered nurse anesthetist. The Secretary of HHS has the authority to expand the list of applicable practitioners to include other providers, such as audiologists, in 2019.

In the final rule, CMS is finalizing that HCPCS modifiers may be voluntarily reported, and the use and selection of the modifiers will not be a condition of payment. CMS has stated that voluntary reporting will allow the Agency to collect more information about the patient relationship codes, and provide more opportunities for education and outreach to clinicians. This will inform their overall ability to refine the codes in the future.

The Academy is closely monitoring this issue. We have advocated that when HHS determines that audiologists are applicable practitioners (likely 2019), that CMS extends the same opportunities for voluntary reporting, flexibility, and education and clinician outreach.

Additional Information

The Academy will update this analysis as more information becomes available. We will also include any updates in the Audiology Today Weekly E-newsletter.


The Academy continues to monitor CMS Medicare Part B policies, provide commentary, and meet with CMS at Agency headquarters as necessary to advocate for the profession of audiology.

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