How CMS wants to change the Physician Fee Schedule in 2019

Read Advisory Board's take on the opioid, telehealth and pharmacy aspects of this Rule.

CMS on Thursday released a proposed rule that would update the Medicare Physician Fee Schedule (PFS) for calendar year 2019.

CMS is accepting public comments on the proposed rule until Sept. 10.

Medicare 101: Cheat sheets for Parts A through D

Medicare Physician Fee Schedule proposed rule details

Overall, CMS said the PFS proposed rule aims to streamline the PFS payment system and ease health care providers' administrative burdens.

In addition to releasing the proposed rule, CMS also issued a request for information on price transparency. Specifically, CMS is requesting comment on whether the agency should require providers and suppliers "to inform patients about charge and payment information for health care services and out-of-pocket costs, what data elements would be most useful to promote price shopping, and what other changes are needed to empower health care consumers."

The agency also is seeking comment on creating a bundled payment model for substance use disorder care management and counselling treatment, as well as for regulatory changes to help prevent opioid use disorder and improve access to treatment, including non-opioid pain management treatments, under the Medicare program.

Read Advisory Board's take on the opioid aspects of this Rule.

Proposed payment changes

Under the PFS proposed rule, the statutory update factor (put in place by MACRA, updated in 2018 BBA) would increase by 0.25%. After accounting for the budget-neutrality adjustment required by law, CMS set the 2019 PFS conversion factor at $36.05, up from $35.99 in 2018.

The proposed rule contained no changes to site-neutral payments for services provided by "new" off-campus hospital outpatient provider-based departments. For 2019, CMS proposed maintaining the current PFS relativity adjuster for non-expected items and services, under which CMS pays 40% of the outpatient prospective payment system amount.

Proposals to streamline PFS billing standards

CMS also proposed overhauling Medicare billing standards that have been in place since 1995. Currently, most physicians bill Medicare using evaluation and management visit codes, a generic set of codes that set levels of complexity and site of care. According to AHA News, under the proposed changes, CMS would collapse the payment rates for levels two through five of evaluation and management codes to just one level.

To support this change, CMS proposed allowing clinicians to use their own medical decision-making or the time spent with a patient to determine the level of a patient's care needs, instead of relying on the evaluation and management codes. CMS also proposed eliminating the requirement that providers justify the medical necessity of a home visit over an office visit. The agency also said it is considering eliminating a policy that prevents Medicare from reimbursing providers for same-day visits with multiple clinicians in the same specialty within a group practice.

Bob Wachter, chair of University of California-San Francisco's department of medicine, in a tweet said, "If this pans out, could be awesome," adding, "There's no more soul-sapping experience than documenting 9 Review of Systems elements & 10 body parts examined to justify a billing level—when  what really took time was talking to patient, family, consultants, reviewing the chart, & thinking."

Proposals to expand telehealth reimbursements

CMS also proposed changes designed to expand access to telehealth care. For instance, the agency proposed:

• Paying clinicians for virtual check-ins, such as brief, non-face-to-face appointments that occur via telecommunications technology;
• Paying clinicians for evaluations made from patient-submitted photos; and
• "Expanding Medicare-covered telehealth services to include prolonged preventive services."

CMS said those changes would establish a Medicare payment for virtual visits used to determine if an in-person visit is necessary.

Read Advisory Board's take on the telehealth aspects of this Rule.

Proposal to change Part B payments

CMS also proposed changing how Medicare pays providers for Part B drugs beginning Jan. 1, 2019. Under the current payment system, Medicare Part B initially pays providers the wholesale acquisition cost (WAC) of newly released drugs plus 6%. According to Axios' "Vitals," Part B payments are adjusted after a calendar quarter to reflect the average sales price—which is typically lower than WAC—plus 6%.

Under the rule, CMS proposed reducing the initial WAC add-on payment to 3% until the ASP pricing data are available. The agency did not propose adjusting ASP pricing.  

A CMS spokesperson told Politico that the agency cannot yet estimate the total savings from the change because it would apply only to new drugs that are not yet on the market.

However, Rick Weissenstein, a regulatory analyst at Cowen Group, in a note wrote that any drug savings are "likely to be minimal" because the "reduction would affect only the first three months a drug is on the market."

Ted Okon, executive director of the Community Oncology Alliance, told Politico the change could backfire by incentivizing drugmakers to increase list prices of medicines to offset the initial loss in provider reimbursement.

Tom Nickels of the American Hospital Association in a statement said, "We are also concerned about reductions in payments for certain new drugs," adding, "[W]e believe CMS should instead address the skyrocketing list prices of drugs directly with pharmaceutical manufacturers."

Read Advisory Board's take on the pharmacy aspects of this Rule.

Other proposals

CMS in the rule also proposed, beginning in 2019:

• Revising physician supervision requirements to give radiologist assistants more flexibility in performing unsupervised diagnostic tests;

• Eliminating functional status reporting requirements for outpatient therapy; and
• Reducing the total number of quality measures accountable care organizations in the Medicare Shared Savings Program must report on from 31 to 24 and focusing quality measures more on outcome-based measures of care quality.

Overall, CMS said the proposals to reduce providers' paperwork burdens, if finalized, would save clinicians an estimated 51 hours per year if 40% of their patient pool consists of Medicare beneficiaries (Clason, CQ News, 7/12 [subscription required]; AHA News, 7/12; Baker, "Vitals," Axios, 7/13; Morse, Healthcare Finance News, 7/12; Dickson, Modern Healthcare, 7/12; CMS release, 7/12; Diamond, "Pulse," Politico, 7/13; CMS PFS factsheet, 7/12).

Advisory Board's take: Opioid and substance abuse bundles

Rebecca Tyrrell , Senior Consultant, Pharmacy Executive Forum

CMS' decision to seek comment on both creating a bundled episode for substance use disorders and identifying non-opioid alternatives for pain management indicates that they are taking a more aggressive approach to addressing the opioid epidemic.

While most of their preventative action to date has focused on limiting post-discharge opioid prescriptions (e.g., cutting the number of days they will cover), their decision yesterday shows that they are also trying to encourage the adoption of other methods of pain management. This indicates a broad desire expand the scope of prevention and avert future cases of misuse and abuse.

The Rule also reflects an intent to expand beyond prevention and focus on increasing access to treatment. At least 2 million people already have an opioid use disorder. CMS' openness to creating a bundled episode for opioid treatment and counseling could help streamline services and payment for those struggling with addiction. However, what's missing from this early proposal is a mention of how to equip providers to better manage patients in recovery from substance abuse disorder. For instance, we still hear many stories of patients telling their doctors about their recovery and then still being prescribed opioids after a procedure. Hopefully, after the comment period, future proposals will also provide doctors with the tools they need to help patients to recovery.

Advisory Board's take: Impact on telehealth

Anna Yankovenko, Practice Manager and Emily Johnson, Senior Analyst, Service Line Strategy Advisor Telehealth Team

Yesterday’s proposal appears to be a major step forward in Medicare’s coverage of telehealth.

Historically, Medicare has only covered live audio-visual visits—which are just one of three common telehealth modalities. Last year, CMS expanded coverage to a second modality, remote patient monitoring. With this proposal, CMS would expand coverage to the third modality, known as 'store-and-forward' or 'asynchronous communication.' In store-and-forward applications, a patient submits a photo or video to a provider, who then reviews the communication and responds with a treatment recommendation.

CMS is also proposing to cover a new type of service, which it's calling a "brief communication technology-based service," or a "virtual check-in." The stated purpose of this service is to allow patients to have a quick virtual communication with their regular provider to determine whether they need to come in for an in-person office visit. If the provider determines that the patient does need to come in, the virtual check-in is bundled into the in-person visit; if not, the provider is reimbursed for the virtual check-in. CMS is explicit that the goal of this new code is to reward provider activities that avoid unnecessary healthcare utilization.

Throughout the proposal, CMS makes it clear that it's interested in expanding Medicare telehealth coverage as much as possible within the constraints of current law, and, to that end, it's willing to get creative about its definition of services. For example, CMS is careful to specify that it does not consider either the new store-and-forward codes or the virtual check-in codes "telehealth." By doing so, it ensures that the new codes are not subject to the usual geographic restrictions on Medicare telehealth services.

In sum, with this proposal, CMS is signaling that it is interested in working with providers to expand telehealth coverage to the best of its ability. And with Medicare regulators clearly warming to telehealth, lawmakers may not be far behind.

Advisory Board's take: What to know about changes to Medicare Part B payments

Lindsay Conway, Managing Director, Pharmacy Executive Forum

CMS is proposing cutting reimbursement for a subset of Part B drugs, specifically, those drugs reimbursed based on their wholesale acquisition cost (WAC). Most Part B drugs are reimbursed based on their average sales price or ASP. Therefore, while WAC drugs represent a relatively small number of provider administered drugs, they are usually new drugs and tend to be higher cost. As a result, they make up a larger portion of Medicare drug spending and provider revenues.

CMS' rationale is that the reimbursement cut will reduce the incentive for physicians to prescribe more expensive drugs and reduce Medicare beneficiaries' out of pocket costs. They note that the percentage mark-up on Part B drugs is understood to cover the storage, handling, and acquisition costs associated with a drug, but that the percentage-based reimbursement formula is flawed because these costs do not correlate with the drug's price.

Due to the budget sequestration cuts enacted in 2013, Medicare reimbursement for Part B drugs was reduced from ASP + 6% to ASP + 4.3% and remains so today (CMS continues to express reimbursement as ASP + 6%, as the rate was set by statutory authority.) Despite vigorous lobbying by physician groups, they have been unable to reverse the cut. Presumably, the sequester will also apply to the newly reduced reimbursement for drugs paid based on their WAC price.

Perhaps to help offset the lost drug revenue, CMS also proposes to create a new G code to enable certain specialties—many of which administer Part B drugs (e.g., oncology, neurology, rheumatology)—to bill higher rates for complex and extended office visits. It's unclear whether the added reimbursement will be sufficient to cover the additional administrative work required for billing. But in combination with the Part B cuts, it may signal a philosophical shift away from reimbursement for procedures toward payment for cognitive work.