Wednesday, March 29, 2017

CMS Corrects Part B Therapy Fee Schedule Pricing Error – Action Needed!

Dan Ciolek

On December 13, 2016, AHCA alerted you that the Centers for Medicare and Medicaid Services (CMS) had posted the calendar year 2017 Medicare Part B Physician Fee Schedule file, and that AHCA had posted a therapy code pricing file as a resource to our members.

However, in a recent MLN Matters announcement, CMS stated that there were errors in their pricing files of seven of the eight new codes for physical therapy (PT) and occupational therapy (OT) evaluations that were introduced on January 1, 2017. These errors have resulted in minor underpayments for the PT evaluation codes 97161-97163, and more significant underpayments for the OT evaluation codes 97165-97168 from January through March 2017. The CMS pricing file will be corrected on April 1, 2017, and will be applied retroactively.         

Provider therapy and billing staff should review these procedure price corrections to evaluate the scope and amount of underpayments. Please note that CMS instructed the Medicare Administrative Contractors (MACs) to not automatically correct claims already processed prior to April 1. However, CMS instructed the MACs to adjust any such claims that providers bring to their attention.

Due to these changes in the CMS 2017 Medicare Part B Physician Fee Schedule file, AHCA has posted an updated therapy code pricing file on our website.

AHCA again extends thanks for the efforts of Tony Marshall, President and CEO of the Georgia Health Care Association, for updating this data file. The following text contains detailed information related to how the CY 2017 AHCA therapy pricing file was constructed, and includes links to the relevant source CMS documentation.


The revised 2017 therapy fees for each CPT/HCPCS Code in each geographic area are provided in the AHCA therapy pricing file (changes have been highlighted in yellow). The Excel file contains the following information:

1. The 2017 Medicare Part B Fee Schedule for Outpatient Rehabilitation for each Carrier and Locality (Part B Fees)

2. The 2017 Medicare Part B MPPR Fee Schedule for "Always Therapy Services (50% MPPR Factor) for each Carrier and Locality (MPPR Fees)

3. The 2017 Relative Value Units for each Outpatient Rehabilitation Therapy Code (RVUs)

4. The 2017 Geographic Practice Cost Indices by Medicare Carrier and Locality (GPCI)

5. The 2017 Counties Included in 2017 Localities (GPCI Counties)

The Part B Fee Schedule amounts are calculated as follows:

        ((A1 x B1) + (A2 x B2) + (A3 x B3)) x Conversion Factor (Part B Fees), and

        ((A1 x B1) + ((A2 x B2) x (1-MPPR Factor) + (A3 x B3)) x Conversion Factor (MPPR Part B Fees), where:

A1 = Physician Work RVU
A2 = Non-Facility Practice Expense RVU
A3 = Malpractice RVU
B1 = Work GPCI
B2 = Practice Expense GPCI
B3 = Malpractice GPCI

        Conversion Factor = $35.8887

        MPPR Factor = 50%

Please note that the fees effective January 1, 2017 are calculated based upon the Calendar Year (CY) 2017 Medicare Physician Fee Schedule (MPFS) Final Rule (CMS-1654-F) published in the Federal Register on November 15, 2016. This final rule reflects the requirements of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) which repealed the Sustainable Growth Rate formula. Further, the MACRA allowed for a one-half percent (0.5%) update from July 1, 2015, to December 31, 2015, a one-half percent (0.5%) update for CY 2016, and allows a one-half percent (0.5%) update for CY 2017. The MACRA also extends the physician work geographic practice cost index (GPCI) floor of 1.0, and the therapy cap exceptions process, through December 2017. (The CY 2017 therapy cap amount is $1,980 for outpatient occupational therapy and $1,980 for physical therapy and speech-language pathology services combined.) Additionally, as required by the ACA, the 1.5 work GPCI floor for Alaska and the 1.0 practice expense GPCI floor for frontier states are permanent, and therefore, applicable in CY 2017.

The final rule continues the multiple procedure payment reduction (MPPR) policy for “always therapy” services. The MPPR policy required, effective April 1, 2013, a 50 percent reduction to be applied to the practice expense component of payment for the second and subsequent “always therapy” service(s) that are furnished to a single patient by a single provider on one date of service (including services furnished in different sessions or in different therapy disciplines). The MPPR worksheet lists those “always therapy” services subject to the MPPR policy and the reduced fee payment amounts.

Further, the final rule updates the Medicare Part B therapy code list for CY 2017 by adding eight “always therapy” codes (97161 – 97168) for physical therapy (PT) and occupational therapy (OT) evaluative procedures and deleting the four codes currently used to report these services (97001 – 97004) at the end of December 2016. Please see Transmittal 3654/Change Request 9782 and Centers for Medicare and Medicaid Services (CMS) MLN Matters article MM9782 for complete information on the 2017 Annual Update to the Therapy Code List.

Finally, supporting documentation and downloads for Regulation #CMS-1654-F may be found here. An overview of the Physician Fee Schedule Payment Policies may be found here and an overview of skilled nursing facility consolidated billing and annual updates may be found here.

This revised version reflects changes published in the Federal Register on March 22, 2017, which corrected a technical error in the allocation of indirect practice expense for CPT codes 97161 through 97168. These corrections are effective retroactive to January 1, 2017 as if they had been included with the final rule published November 15, 2016. Please note that Medicare Administrative Contractors (MACs) were told that they need not search their files to either retract payment for claims already paid or to retroactively pay claims already processed: however, the MACs will adjust such claims that providers bring to their attention. Make sure that billing staffs are aware of these changes. Please see Transmittal R3719CP/Change Request CR 9977 and Centers for Medicare and Medicaid Services (CMS) MLN Matters article MM9977 for complete information on the April CY 2017 Quarterly Update to the MPFS.

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