Proposed CMS fee schedule: How will it impact the specialty?

mark-kaufmann-head-shot.jpgBy Mark Kaufmann, MD
Chair of the Academy’s Resource-Based Relative Value Scale Committee and member of the AAD Board of Directors


In July, the Centers for Medicare and Medicaid Services (CMS) released the 2017 proposed Medicare Physician Fee Schedule on July 15. CMS estimates that dermatology as a specialty will see a 1 % increase in payments in 2016.  Results for individual dermatologists will vary depending on the mix of services. The Academy recently launched a resource that outlines how Medicare fees are set.

The American Academy of Dermatology Association (AADA) staff has analyzed the proposal. Below are the key points dermatologists should know about the proposed schedule.

What is new for dermatology for 2017?

Values for most dermatology services are projected to be about the same in 2017 as they are in 2016.

Here are some of the most commons codes and the changes in value that are expected:

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1CPT codes and descriptors only are copyright 2016 American Medical Association.  All Rights Reserved.  Applicable FARS/DFARS apply.                    

These payment rate calculations were made using conversion factor of 35.8043 for CY 2016 and 35.7751 for CY2017.


A list of all dermatology codes with RVU information and the projected changes in payment can be downloaded here.

Reflectance Confocal Microscopy (RCM): The only new dermatology code values this year are for reflectance confocal microscopy for imaging of skin, CPT codes 96931, 96932, 96933, 96934, 96935, and 96936.  The proposed physician work RVUs were lower than what the RUC recommendations, based on the similarities of the service to code 88305, even though RCM is microscopic imaging of the patient’s skin and 88305 is a pathology code.   The AADA will comment on this because RCM requires more work, time and intensity than 88305.  

Pathology:  Many pathology codes suffered significant reductions in PE RVUs.  Payment for code 88305 (Level IV - Surgical pathology, gross and microscopic examination) was reduced by 7% primarily because of a correction to the cost of eosin. CMS had been using 8 gm of eosin powder instead of 8 ml of eosin stain. This change applies to all the tissue exam codes 88302- 88309, in situ hybridization codes 88364 – 88368, and morphometric analysis codes 88373-88377.

Collecting data on resources used in furnishing global services

In order to capture number and level of visits during the pre and post-operative periods, CMS proposed using three approaches (claims-based reporting, survey of representative sample of providers and direct observation of the pre- and post-operative services) to collect the data.

Comprehensive claims-based reporting

CMS proposed a set of time-based, post-operative visit G-codes to be reported during the 10 and 90 day global periods. These G-codes are distinguished by setting and whether the service is provided by a physician or by a clinical staff.  The codes are to be reported in 10 minute increments. CMS expects the reporting of this code to begin on claims that are submitted for all 10 and 90 day global codes effective January 1.

A survey of representative sample of providers

In addition to collecting claims data CMS would survey about 5,000 practitioners by asking them to respond to 20 discrete pre-operative and post-operative visits questions.  The survey would be based on random sample from providers that billed Medicare for more than the threshold of surgical procedures in most recent available prior year of claims data.

Direct observation of the pre- and post-operative services  

CMS will do a more in depth look at the volume, level of services, activities and inputs involved in furnishing global services. CMS is planning to collect primary data by surveying a small number of ACOs. CMS believes that they can learn from practices of ACOs who have the incentive to minimize cost by minimizing post-op visits in order to increase their shared savings.  

Identification and review of potentially Misvalued Services

CMS identified 0-day global codes that are typically reported with Evaluation and Management (E/M) using modifier 25 as potentially misvalued services.  CMS believes that the routine billing of separate E/M services may indicate a possible problem with the valuation of the code, which is intended to include all the routine care associated with the service. CMS is recommending review of procedure codes typically billed with an E/M with Modifier 25 may improve valuation of these services. Among the 83 identified codes there are 24 dermatology codes.  CMS stated that this list includes codes only that have not be reviewed by the RUC in the past 5 years and with greater than $20,000 allowed services.  CMS is soliciting comments on ways to address appropriate valuations of such services.

Dermatology codes commonly reported with E/M
using Modifier 25 – potentially misvalued

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Physician self-referral updates

The Physician Self-Referral [Stark] Law prohibits physician referrals for certain designated health services paid by Medicare to an entity in which the referring physician—or their immediate family member—has a financial relationship (ownership/compensation), unless an exception can be met.

Proposed prohibition: While CMS permits a physician (lessor) to lease office space or equipment to another physician (lessee), and further allows payments between these parties to factor in per-unit of service rental charges, CMS is proposing to prohibit the lessor from generating payment through referrals to the lessee for the use of rented space or equipment. This restriction would apply to the lessor since they stand to gain financially through direct referrals to the lessee for renting office space or equipment.

Example: A dermatologist may lease office space or medical equipment to another physician who uses the space or equipment twice a week and pays a monthly rental charge using a fair-market value formula that generally factors in the two days per week per month. However, under this proposed revision, CMS would prohibit the lessor from referring patients to their lessee since the former stands gain financially. The intent of this proposed change reflects CMS’s ongoing concern with potential for “overutilization, patient steering and other anti-competitive effects, and reduction in quality of care and patient outcomes, as well as concerns regarding the potential for increased costs to the Medicare program.”

Next steps

This is a proposed rule. The final rule will be released in November. The AADA will submit comments to CMS on the proposed Medicare physician fee schedule rule prior to the September 6 deadline.

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