The 2019 Medicare Physician Fee Schedule: Winners And Losers

This month, CMS published its proposed 2019 physician fee schedule. The document is 1,472 pages long and is so it is not a quick read. There are a LOT of changes but the most notable is a dramatic way that Medicare will change reimbursement for outpatient evaluation and management (E/M) services. The proposed E/M reimbursement changes are on pages 322 – 394. Up until now, Medicare (and nearly everyone else) pays physicians for regular office and inpatient visits based on the complexity and time it takes to perform these visits. For inpatient visits, there are 3 levels of complexity and Medicare pays more for a level 3 visit, less for a level 2 visit, and even less for a level 1 visit. For outpatient office visits, there are 5 levels of complexity for both new patient visit and return patient visits. In the outpatient setting, the lowest level (the level 1 visit) is for patients that only need to see a nurse for a minor issue, such as a blood pressure measurement, and do not need to see the physician. The other levels of services, 2 through 5, are determined by the complexity and time required to perform that visit. So, for example, an office visit for a splinter in the finger might be a level 2 but an office visit to discuss end of life care and initiate hospice in a patient with metastatic breast cancer might be a level 5.

In the past, physicians have complained that they have to spend an inordinate amount of time doing unnecessary documentation in order to justify billing higher levels of service. Physicians have also been required to hire coding compliance staff to review their office note documentation to ensure that all of the elements are documented to justify higher levels of billing in order to avoid being accused of billing fraud by Medicare in the event of an audit. And Medicare has complained that the electronic medical record has allowed physicians to too easily fill office notes with excessive and irrelevant documentation in order to justify charges for inflated levels of service. In this regard, CMS reports that for new office visits, 32% are billed as level 3 and 44% are billed as level 4; for return office visits, 39% are billed as level 3 and 50% are billed as level 4. In Medicare’s words:

“We believe the current set of 10 CPT codes for new and established office-based and outpatient E/M visits and their respective payment rates no longer appropriately reflect the complete range of services and resource costs associated with furnishing E/M services to all patients across the different physician specialties, and that documenting these services using the current guidelines has become burdensome and out of step with the current practice of medicine.”

So, the solution that CMS is proposing is to eliminate all of the outpatient level 2-5 charges and only have a single charge for all new patient visits and a single charge for all return patient visits. The advantage is that this will greatly reduce the time physicians spend doing documentation, reduce the overhead costs of billing compliance staff, reduce the cost to Medicare (and reduce the fear of physicians) of fraud & abuse auditing, and allow physicians to spend more time with each patient in the office. For now, Medicare is not proposing changing how inpatient levels of services are billed or how emergency department levels of service are billed (but the document hints that this is coming in the future). The changes in reimbursement are summarized in the tables. Note that for level 1 visits (“nurse visits”), there will continue to be a separate, lower charge. The wRVU associated with the proposed new office visit code will be 1.90. The wRVU associated with the proposed return office visit code will be 1.22.

CMS recognized that some specialties have inherently more complexity and time for each patient visit than others. So, there will be a new HCPCS modifier code that physicians in certain specialties can add to their office visit in order to get a higher reimbursement. Code GCG0X will apply to endocrinology, rheumatology, hematology/oncology, urology, OB/GYN, allergy, otolaryngology, cardiology, and interventional pain specialists. The additional RVUs associated with this code will be 0.25 wRVU, 0.07 peRVU, and 0.01 mRVU which will equate to an additional $12 per office visit

Similarly, CMS recognized that primary care physicians spend more time and effort with office visits since they are responsible for more counseling and coordination of care. So, there will be a second HCPCS modifier code that primary care physicians can use. Code GPC1X will apply to primary care physicians performing office visits for counseling or treatment of acute or chronic conditions and add 0.07 wRVU, 0.07 peRVU, and 0.01 mRVU. This will equate to an additional $5 per office visit.

CMS will only require the amount of documentation that was previously required for level 2 office visits, thus reducing the amount of documentation (and chart clutter) required of physicians. There is also good news for teaching physicians who will now only be required to document that they were present at the time the service was provided and not have to meet the nuanced and complicated attestation requirements required in the past.

Based on CMS’s database of Medicare billing by specialty, they anticipate that some specialties will benefit by the new standards, some specialties will be financially harmed, but most will have no overall change to reimbursement (table 22 on page 366 of the proposed fee schedule). Those specialties that will see an increase in reimbursement are OB/GYN (+4%) and nurse practitioners (+3%). Specialties with an increase of <3% include: hand surgery, interventional pain, optometry, physician assistants, psychiatrists, and urologists. Those specialties that will see an overall decrease in reimbursement include podiatry (-4%), dermatology (-4%), and rheumatology (-3%). Specialties with a <3% decrease in reimbursement include: allergy, audiology, hematology/oncology, neurology, otolaryngology, pulmonary, and radiation therapy. For all other specialties, CMS projects that there will be no overall change to reimbursement.

Whenever the rules of reimbursement change, there are winners and losers. From my perspective here is who is going to benefit and who is going to be hurt.


  1. Physicians who hate to type. For all those doctors who never took a typing course and then found themselves in the brave new world of the electronic medical record, you’ll be able to give your fingers a rest when documenting your office notes.
  2. High volume physicians. Regardless of specialty, those physicians who have offices set up to see lots of patients in a short amount of time are going to reap benefits. In this sense, Medicare is going to be paying physicians by volume, rather than by quality or complexity.
  3. Efficient physicians. Because Medicare will be paying by volume, the less time a physician spends with a patient, the more patients he/she can see per hour. Time management will become the buzz-word of physician office managers in the future.
  4. Physicians who take care of simple medical conditions. CMS projects that family medicine as a specialty will have no overall change in reimbursement. However, the family physician who has a practice full of 20-40 year old healthy adult patients is going to be able to see more of those patients for their routine office visits than the family physician who has an older population of 60-90 year old patients who each have multiple chronic medical problems.  Physicians who mainly bill level 2 & 3 office visits will benefit financially.
  5. Nurse practitioners and physician assistants.
  6. Physicians in specialties that CMS has identified as projected to have a net increase in reimbursement: OB/GYN, hand surgery, interventional pain, optometry, psychiatrists, and urologists.


  1. Physicians who like to talk. Every practice has those physicians who spend a little extra time with each patient, counseling them a little more than usual, explaining medications in more detail, or just listening to the patient’s story. In the future, the byline of the successful physician will be the quote by Joe Friday from the TV show Dragnet: “Just the facts, ma’am.”
  2. Super specialists. These are physicians, like myself, who only take care of a specific and complex medical problem. My outpatient practice is limited to interstitial lung disease. Most of my patients are referred by other pulmonologists and come to me with multiple CT images, lab tests, and pulmonary function tests that need to be reviewed. I know from interrogating our electronic medical record that I enter more orders per patient visit, order more medications per patient visit, and field more patient phone calls than the average pulmonologist in our group. These patients are complex and usually end up on high-risk immunosuppressive medications. Consequently, I bill a higher average level of service than other pulmonologists. Every specialty has people like me. For example, the cardiology practice that has a physician who takes care of the heart transplant patients or the nephrology practice that has a physician who takes care of all of the lupus nephritis patients. Although specialties as a whole will be largely unaffected by the proposed changes in reimbursement, individual physicians within those specialties will either benefit or be harmed, depending on their unique subspecialty or patient population. Physicians who mainly bill level 4 & 5 visits will see a reduction in income.
  3. Coding specialists. Large physician practices employ coders to audit their office note documentation in order to ensure that they are not over-billing Medicare because all physicians have lived in fear of the dreaded Medicare chart audit. There will be less need for coding specialists in the future.
  4. Physicians in specialties that CMS has identified as projected to have a net decrease in reimbursement: podiatry, dermatology, rheumatology, allergy, audiology, hematology/oncology, neurology, otolaryngology, pulmonary, and radiation therapy.

As with any change in reimbursement, there are always unintended consequences. Furthermore, it is human nature to adapt one’s behavior in order to maximize reward. We are about to see a big change in how outpatient medicine is practiced.

July 24, 2018