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Physician & Outpatient Medicare Rates for 2016

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November 23, 2015


Tighter spending and value-based payment are themes that run through the final Medicare payment and policy regulations for physician, hospital outpatient, and ambulatory surgical center reimbursement for 2016. The final regulations were recently released by the Centers for Medicare & Medicaid Services and go into effect in January.


  1. Payment Rates: The overall payment update for hospital outpatient departments is an estimated 0.3% reduction, while payments for ambulatory surgery centers (ASCs) will increase 0.3%. For physicians, the payment increase is 0.5%.

  2. Misvalued Codes: CMS identified a list of high-volume services that will be revalued over the next several years, including a number of imaging services.

  3. APC Consolidation: CMS reorganized and consolidated the ambulatory payment classifications (APCs), resulting in fewer APCs in nine clinical groups. The changes in radiology and imaging APCs affected some 800 procedure codes.

  4. Combining Payments: For hospital outpatient department payment, certain ancillary services exceeding $100 will be packaged into the payment for the primary service they support. CMS has also made clear that further packaging of ancillary services can be expected. Separately, CMS created 10 new comprehensive APCs, including one that provides a single payment for all services furnished during a non-surgical outpatient encounter where the patient receives 8 or more hours of observation.

  5. Value-based Care: CMS continued implementation of quality-performance reporting for hospitals and ASCs. Failure to report properly under either system can result in a 2 percentage point reduction in payment updates. Similarly, under the value-based purchasing system for physicians, CMS announced an increase in the potential gains and losses that physician practices could experience based upon their performance.

  6. Low Dose CT: Under both the physician fee schedule and hospital outpatient payment system, reimbursement for low-dose CT for lung cancer screening was set at $112.50.

  7. Appropriate Use: CMS established which types of organizations are eligible to develop appropriate use criteria for advanced diagnostic imaging services. Congress directed that providers ordering such services must consult with appropriate use criteria via a clinical decision support mechanism.

  8. Two-midnight rule: Based on their judgment and with supporting documentation, physicians can decide on a case-by-case basis that a hospital stay of less than two-midnights is payable under Medicare inpatient payment rules. In 2013, CMS had proposed that hospital stays of that length be billed under outpatient payment rules, rather than inpatient.

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