On July 7, 2016, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that updates payment policies, payment rates, and quality provisions for services furnished under the Medicare Physician Fee Schedule (PFS) on or after January 1, 2017. The PFS pays for services furnished by physicians and other practitioners in all sites of service. These services include but are not limited to visits, surgical procedures, diagnostic tests, therapy services, and specified preventive services.

To set payment rates, CMS evaluates three components of medical services/procedures: physician work, practice expense, and malpractice expense. Each component is assigned a value also known as a relative value unit (RVU). The work RVU, practice expense RVU, and malpractice RVU are each multiplied by geographic practice cost indices (GPCI), added together, and then multiplied by a conversion factor that is updated annually. The 2017 proposed conversion factor is $35.7751 (the 2016 final conversion factor was $35.8043).

A full summary of the proposed rule is available here, including a list of new Category I spine codes set to take effect January 1, 2017. A comparison of spine codes from the 2016 final rule to the 2017 proposed rule is available here. The ISASS comment letter is available here. The final rule is expected to be released in early November.