Medicare Physician Fee Schedule

In April 2015, the President signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (HR 2, also known as MACRA). This law:

  • Repeals the Sustainable Growth Rate (SGR) methodology for determining updates to the Medicare physician fee schedule.
  • Establishes annual positive or flat fee updates for 10 years and institutes a two-tracked fee update afterwards.
  • Establishes a Merit-Based Incentive Payment System that consolidates existing Medicare fee-for-service physician incentive programs.
  • Establishes a pathway for physicians to participate in alternative payment models, including the patient-centered medical home.
  • Makes other changes to existing Medicare physician payment statutes.

On November 2, 2016, the Centers for Medicare & Medicaid Services (CMS) released the 2017 final Medicare physician fee schedule( This regulation addresses changes to the physician fee schedule (PFS) and other Medicare Part B payment policies to ensure that Medicare payment systems are updated to reflect changes in medical practice and the relative value of services. This regulation is effective on January 1, 2017

The American Academy of Family Physicians (AAFP) sent a 56-page comment letter to CMS in response to the proposed version of this regulation on August 19, 2016. Upon the final rule release, the AAFP issued a media statement that:

  • Commended the creation of new primary care codes;
  • Strongly supported the expansion of the Medicare Diabetes Prevention Program;
  • Expressed disappointment that CMS only finalized misvalued code changes that achieve 0.32 percent in net expenditure reductions. Since these changes do not fully meet the misvalued code target required by law, physicians will not receive the Medicare Access and CHIP Reauthorization Act (MACRA) positive 0.5 percent update in 2017. The 2017 Medicare PFS conversion factor will be $35.89, an increase of only $0.09 from the 2016 conversion factor. The AAFP statement called this a violation of the spirit of MACRA.
  • Expressed increasing concerns that CMS is adding regulatory burdens to primary care physicians. For instance, CMS is requiring primary care physicians to consult appropriate use criteria for advanced diagnostic imaging and not aligning this program with the Merit-Based Incentive Payment System (MIPS).

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