The Final Rules Are Out!

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Melody MulaikBy Melody W. Mulaik, MSHS, CRA, FAHRA, RCC, CPC, CPC-H

The Hospital Outpatient Prospective Payment System (OPPS) and Medicare Physician Fee Schedule (MFPS) Final Rules have been released, and there are several areas of concern for AHRA members. The Regulatory Affairs Committee is working diligently to review the information and schedule appropriate education, publications, and more for the membership, but in the meantime we wanted to provide you with this high level overview so that you can begin preparing for 2017 and beyond.


Overall: There is a 1.65% payment increase factor for outpatient services. Hospitals that failed to meet the Outpatient Quality Reporting requirements will continue to incur a 2% payment reduction.

Imaging APC Structure: The imaging APCs have been consolidated from 17 in 2016 to only 7 in 2017. Payments for the new APCs range from $60 (for example, 2-view chest x-ray, APC 5521) to $657 (for example, MRI of the chest with contrast, APC 5573). Interventional radiology services are being assigned to vascular procedure APCs, and nuclear medicine services will remain in their own APCs.

Comprehensive APCs (C-APCs): CMS is establishing 25 new C-APCs, which bundle most other services performed on the same day into the payment for the primary procedure. New dialysis circuit intervention codes 36902-36906 have all been assigned to C-APCs.

Packaging: CMS is changing the payment logic for conditionally packaged services (status indicators Q1 and Q2) for 2017 so that packaging occurs at the claim level instead of the date level. This will allow appropriate packaging when the encounter spans more than one date, as in the case of some emergency department or observation stays.

Payment for Film X-Rays: The Consolidated Appropriations Act of 2016 requires a 20% reduction in OPPS payment for x-rays taken using film rather than digital radiography. This reduction applies for dates of service January 1, 2017 and later.  Hospitals are required to append new modifier FX to the code for the film x-ray so that the Medicare contractor can pay appropriately. One very important note is that CMS did clarify that Critical Access Hospitals (CAHs) are exempt from this payment reduction since they are not paid under OPPS.

Site-Neutral Payment: CMS is implementing the site-neutral payment policy required by the Bipartisan Budget Act of 2015. Services performed in certain off-campus provider-based departments (PBDs) will be paid under the Medicare Physician Fee Schedule in 2017, even though providers will be able to continue billing on the UB-04. The policy does not apply to PBDs that are within 250 yards of the hospital’s main building or within 250 yards of a remote hospital location (defined as one that offers inpatient services). It also does not apply to services performed in dedicated emergency departments, including off-campus EDs. Finally, the policy does not apply to off-campus PBDs that were billing covered outpatient services furnished prior to November 2, 2015, even if they are now billing for types of services that they did not offer in 2015. PBDs that began furnishing services at a later date (“nonexcepted PBDs”) are subject to the new payment methodology. These PBDs must apply modifier PN (Nonexcepted service provided at an off-campus, outpatient, provider-based department of a hospital) to the codes for all nonexcepted services. Medicare will pay the PBD a facility fee that is in most cases 50% of the OPPS payment rate for that code.

The full text of the Final Rule can be accessed here: 2017 Hospital Outpatient Prospective Payment System Final Rule.



Overall: The estimated CF for 2017 is $35.8887.

Mammography: While there are 3 new CPT® codes that combine mammography with CAD services, CMS states that they have identified Medicare claim processing issues so they will not be accepting these new codes. The existing G codes (G0202, G0204, and G0206) will be revised with new code descriptors to bundle mammography and CAD. More information will be available after the HCPCS codes are released.

Appropriate Use Criteria (AUC)/Clinical Decision Support (CDS): While the final details for implementation are still not available, CMS did finalize the specific requirements for the delivery mechanisms for the AUC/CDS reporting requirement and a set of priority clinical areas for determining physician outliers. The approved qualified CDSMs will be announced by June 30, 2017. As of today, CMS has indicated that they still expect implementation to occur on January 1, 2018.

The full text of the Final Rule can be accessed here: 2017 Medicare Physician Fee Schedule Final Rule.


Stay tuned for additional information!

Melody W. Mulaik, MSHS, CRA, FAHRA, RCC, CPC, CPC-H is the president of Coding Strategies, Inc. She is also a member of the AHRA Regulatory Affairs Committee. She can be reached at  


  1. The reduction for CR doesn’t start until 2018 and will be 7% from 2018 through 2022.

  2. You stated that the G codes for mammography will be bundled with CAD. Will there be a new code in the event that you are not currently using CAD?

  3. No – the new code descriptions state “if performed” so it doesn’t change the code assignment if you do not use CAD. This is similar to other codes that are structured in the same manner.

  4. Weren’t they going to review the CR vs DR again and perhaps not make the reduction if you have CR due to that fact that some exams are done with both DR and CR and how would we differentiate that. i.e AP and lateral knees done DR and the sunrise view done with CR.

  5. Hi Mary – that issue has not really been discussed/addressed at this point. There will be more information forthcoming in 2017 for the 2018 implementation.

  6. If a group needs to use both the PN and the FX modifiers, what order are they listed on the claim? Thank you

  7. Hi Judy – great question. Since they both impact reimbursement it will really be up to the MAC. Personally i would order it FX, PN but the payor may want that flipped.

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