The Centers for Medicare and Medicaid Services (CMS) on Wednesday released the final 2017 Medicare physician fee schedule. The fee schedule transforms how Medicare pays for primary care through a new focus on care management and behavioral health, which is expected to result in an additional $140 million in payments next year for physicians providing these services.

The 2017 physician fee schedule focuses on improving Medicare payments for services provided by primary care physicians for patients with multiple chronic conditions, mental and behavioral health issues, and cognitive impairment or mobility-related disabilities.

These changes will improve payment for clinicians who are making investments of time and resources to provide more coordinated and patient-centered care. These coding and payment changes will better reflect the resources involved in furnishing contemporary primary care, care coordination and planning, mental health care and care for cognitive impairment, such as Alzheimer’s disease.

According to CMS, the coding and payment changes in the 2017 fee schedule could over time lead to $4 billion or more in additional support for care coordination and patient-centered care.

The rule also begins to implement the California Medical Association (CMA) sponsored California Geographic Practice Cost Index (GPCI) fix, which will overhaul California’s outdated geographic payment localities. This reform will raise payment levels for 14 urban California counties misclassified as rural, while holding the remaining rural counties permanently harmless from cuts (the hold harmless provisions will take effect in 2018).

All California payment localities will transition to Metropolitan Statistical Areas. The transition to the new localities starts next year, with higher payments being phased in over a six-year period (2017-2022). Unfortunately, the California GPCI malpractice expenses and rent expenses went down in California and many other regions of the country. Therefore, most California physicians will experience an overall GPCI rate reduction in 2017. The general GPCI cut would have been larger if the California GPCI fix was not being simultaneously enacted. (To see the net GPCI payment impact by region, click here).

The fee schedule also finalizes the CMS proposal to expand the Medicare Diabetes Prevention Program (DPP) model to all Medicare patients at risk of developing type 2 diabetes starting January 1, 2018. Expansion of the DPP model will help at-risk seniors and people with disabilities lower their risk factors and prevent their condition from advancing to type 2 diabetes. This marks the first time a prevention model from the CMS Innovation Center will be adopted.

For more information, see the CMS fact sheet.

CMA and the American Medical Association are reviewing the details of the final rule and will provide additional information in the near future.