With the release of the final 2019 Medicare Physician Fee Schedule (PFS) payment rule, CMS is touting program changes that aim to promote beneficiary access to virtual care and refine Medicare quality reporting requirements to emphasize reporting on measures linked to patient outcomes. Major initiatives are focused on:

• Proposed changes to the payment structure for the evaluation and management (E/M) codes used to describe office visits will be delayed until 2021, though reduced documentation changes will take effect in 2019.
• Newly-launched physician-administered drugs will be paid at 103% of wholesale acquisition cost (WAC+3%) rather than the current payment of 106% of WAC.
• Additional telehealth services will be eligible for separate payment in 2019, including opioid and substance use disorder treatments that originate in the beneficiary’s home.
• Additional labs are expected to qualify as “applicable labs” under the Promoting Access to Medicare Act (PAMA) requirements, due to a change in policy to include Medicare Advantage payments as private payer payments.
• Several changes to the Quality Payment Program were finalized, including an expanded pool of eligible providers, including physical therapists, occupational therapists, qualified speech-language pathologists, qualified audiologists, clinical psychologists, and registered dieticians or nutritional professionals.

The final rule is scheduled to be published in the November 23 edition of the Federal Register.

Changes to E/M Codes Scaled Back, Payment Changes Will Not Take Effect Until 2021

• CMS had proposed to consolidate the existing five-level evaluation and management (E/M) payments into two different payment levels, with reduced documentation requirements.
• CMS will be finalizing the changes, but only the changes to documentation requirements will be in effect in 2019 and 2020; changes to payment will not take place until 2021.
• For 2019 and 2020, the current coding and payment structure for E/M services will remain in effect: five levels of payment, depending on the intensity and complexity of the medical decisions made during the visit. Some documentation requirements will also be relaxed.
• Starting in 2021, CMS will create three payment levels for E/M codes: one level equivalent to the current level 1, a second level that will incorporate current levels 2-4, and a third payment rate for complex encounters equivalent to today’s level 5.
• CMS estimates that, once the new payment policies are implemented in 2021, they will disproportionally benefit specialties that report lower level visits, such as podiatry (+10%), as well as specialties that report E/M visits in conjunction with minor procedures, such as dermatology (+4%).
• The change in the proposal to maintain a level 5 visit for highly complex patients mitigates the estimated impacts on specialties that report many highly-complex visits, such as allergy/immunology (was -5%, now 0%), hematology/oncology (was -4%, now 0%), and rheumatology (was -4%, now -1%).
• Further, in response to comments from external stakeholders, CMS will not finalize the following proposals:
• Reduced payment for E/M services that are furnished on the same day as procedures;
• Separate coding and payment for podiatric E/M visits; or
• Standardized allocation of practice expense relative value units (RVUs) for the codes that describe these services.

In an Effort to Lower Launch Prices, New Drugs Will See Payment Reduction to WAC+3%

• Starting next year, newly-launched physician-administered drugs will be paid at 103% of wholesale acquisition cost (WAC+3%). Once an average sales price (ASP) is calculated, reported and published, payment would reset at 106% of ASP.
• CMS states that the new policy is intended to put downward pressure on launch prices of new products and to reduce beneficiary cost-sharing, which is directly linked to the Medicare payment for a product.
• This policy has been supported in the past by the Medicare Payment Advisory Commission (MedPAC) and was included in President Trump’s FY 2019 Budget Proposal.
• CMS did not provide an estimate of how much the new policy would be expected to reduce Medicare expenditures.

Expanded Telehealth Services Added for 2019, Including Home-Based Opioid and Substance Use Disorder Treatments

• Beginning in 2019, separate payment will be available for two newly-defined telehealth services:
  • Brief communication technology-based service, e.g. virtual check-in; and
  • Remote evaluation of recorded video and/or images submitted by an established patient.
• Telephone or other telecommunications devices may be used in either service in order to determine whether an office visit or other service is warranted.
• New chronic care remote physiologic monitoring and interprofessional internet consultation codes will also be eligible for separate payment.
• Beginning in July 2019, a patient’s home will be eligible to be the originating site for telehealth services for opioid and substance abuse disorder treatment or co-occurring mental health disorders.

More Labs Expected to Qualify As ‘Applicable Labs’ Under New Revenue Reporting Rule

• CMS decided to change the Medicare revenues threshold in the PAMA applicable laboratories reporting requirements to include MA plan revenues as only private payor payments.
• It is anticipated that this will increase the number of laboratories that qualify as an applicable laboratory. They also sought comments on the impacts of either an increase or decrease by 50% in the low-expenditure threshold of $12,500 in Medicare revenues, resulting in a new expenditure threshold of either $18,750 or $6,250.
• After responding to commenter’s questions and concerns, CMS decided not to make any changes to the threshold at this time but to further examine the policy in the future.
• CMS is changing the definition of applicable lab to include 14X TOB revenues listed on the Form CMS-1450 14x TOB.

CMS Finalizes Variety of Proposals for the Quality Payment Program, Including Newly Eligible Clinicians, a MIPS Opt-In, and Changes to Performance Categories

• Beginning with the 2019 payment year, the MIPS adjustment factors will apply to Part B payments for covered professional services, but not Part B drugs.
• CMS is estimating that approximately 798,000 clinicians will be eligible for MIPS in the 2019 performance period, an increase of close to 150,000 from the proposed rule estimate, reflecting CMS’ belief that more clinicians than expected will use group reporting.
• CMS is estimating that between 165,000 and 220,000 clinicians will become Qualifying APM Participants (QP) in the CY 2019 performance year.

Advancing Care Information Category Changed to Promoting Interoperability Category

• The “Advancing Care Information” category has been changed to “Promoting Interoperability”.
• This mirrors a recent name change proposed by CMS to now call the Electronic Health Record (EHR) Incentive Program the Promoting Interoperability Program.

MIPS Opt-In Finalized for Clinicians Excluded by the Low-Volume Threshold

• CMS is adding an additional criterion to the low-volume threshold determination: those who provide 200 or fewer covered professional services to Part B-enrolled beneficiaries.
• This rule also finalizes an opt-in option for clinicians who would not be eligible based on the low-volume threshold. Clinicians will be able to opt-in if they meet or exceed at least one of the low-volume threshold determinations.

New Types of Clinicians to be Eligible for MIPS

• For year 3 of MIPS, CMS is expanding participation to include physical therapists, occupational therapists, qualified speech-language pathologists, qualified audiologists, clinical psychologists, and registered dieticians or nutritional professionals.
• Initially, CMS proposed to also expand eligibility to clinical social workers, but their inclusion was not finalized.

New Criterion for a Clinician to be Eligible for Facility-Based Measurement

• In 2019, if a clinician provides 75% or more of their services in an inpatient hospital, outpatient hospital, or ED setting, they are eligible for facility-based measurement under MIPS.

CMS Adds Opioids to MIPS High Priority Measures to Target Opioid Epidemic

• CMS is designating quality measures that relate to opioids as a high priority measures, with 2019 performance impacting payments in 2021.

CMS Finalizes Cost Performance as 15 Percent of a Clinician’s Final Score

• The quality performance category will be worth 50 percent of a clinician’s final score for the 2020 MIPS payment year (based on the 2018 performance year) and 45 percent of the score for the 2021 payment year (2019 performance year).
• For payment year 2021, the cost performance category will be 15 percent of a clinician’s final score.

New Episode-Based Measures to Cost Performance Category

• Beginning with performance year 2019, CMS is adding 8 episode-based measures to the cost performance category.

Changes to Improvement Activities

• An additional criterion for the development of new clinical improvement activities in respond to public health emergencies (e.g. the opioid epidemic) was added.
• For the 2019 reporting years, CMS has removed 1 previously existing improvement activity, added 6 new improvement activities, and modified 5 improvement activities.
• All of these will become effective in 2019 with a payment year of 2021.

Beneficiary Satisfaction Emphasized in New Quality Measures; ACO Quality Measures Reduced

• In 2019, CMS will start scoring two additional quality measure surveys in the Accountable Care Organizations’ (ACOs) quality determination: the Consumer Assessment of Healthcare Providers & Systems (CAHPS) measures for Courteous and Helpful Office Staff, and Care Coordination
• The two summary survey measures (SSMs) will be added to the quality measure set in hopes to place greater emphasis on outcome measures and beneficiary voice.
• For the performance years 2019 and 2020, these SSMs will be pay-for-reporting for all ACOs before phasing into pay-for-performance in 2021, giving the ACOs time to become familiar with the measures.
• Additionally, CMS will retire four quality measures in an effort eliminate measure overlap and reduce burden on ACOs, their providers, and suppliers:
  • Skilled Nursing Facility 30-Day All-Cause Readmission Measure (SNFRM);
  • All-Cause Unplanned Admissions for Patients with Diabetes;
  • All-Cause Unplanned Admission for Patients with Heart Failure; and
  • Use of Imaging Studies for Low Back Pain

Medicare Advantage Qualifying Payment Arrangement Incentive Demonstration Aims to Increase Participation in APM-Like Arrangements

• As part of the update to the Quality Payment Program (QPP), CMS will implement a Medicare Advantage Qualifying Payment Arrangement Incentive (MAQI) demonstration.
• This demonstration will waive MIPS reporting requirements and payment consequences for clinicians participating in arrangements with Medicare Advantage Organizations (MAOs).
• It is designed to test whether excluding these clinicians would impact participation in arrangements similar to Advanced Alternative Payment Models and improve overall care delivery.
• As the demonstration must maintain budget neutrality, removing these MIPS eligible clinicians from the population may affect payment adjustments for other clinicians.

New Modifiers for Therapy Services Provided by Therapy Assistants

• In 2019, two new modifiers will be available in order to distinguish therapy provided by Physical Therapy Assistants (PTAs) and Occupational Therapy Assistants (OTAs).
• In response to commenters, CMS will classify the modifiers as “payment” modifiers, not “therapy” modifiers.
• Providers will be expected to use the modifiers when more than 10% of a service is provided by a PTA or OTA; payment will be 85% of the Medicare payment for the service.
• The modifiers will not be required to be used on claims until January 1, 2020.

Repeal of Therapy Caps Leads to Discontinuation of Functional Status Reporting Requirements for Outpatient Therapy

• Beginning in 2019, providers will no longer be required to report functional status reporting on outpatient therapy claims.
• CMS is finalizing this change to reduce administrative burden, and because the elimination of the therapy caps means that the information is no longer necessary.

Medicare Continues Policy of Lower Payment for Non-Excepted Items and Services at Off-campus Provider-Based Hospital Departments

• CMS finalizes a payment rate of 40% of the Hospital Outpatient Department Prospective Payment System (HOPPS) payment rate for nonexcepted off-campus provider-based hospital departments (PBDs) furnishing nonexcepted items and services paid under the Physician Fee Schedule.
• This is a continuation of the 40% rate in CY 2018, which was a decrease from the 50% rate in CY 2017.
• CMS states that this methodology will continue to be standard practice until an alternative payment method is proposed and finalized through rulemaking.

Minor changes made to physician self-referral exceptions

• There are two special rules on compensation arrangement exceptions finalized in this rule that clarify and align existing statutory and regulatory language for parties looking to enter into a compensation arrangement are permitted certain exceptions to billing prohibitions in order to ensure the law is acting as intended and penalizing only bad actors:
  • One special rule addresses the documents that can be used to satisfy the writing requirement component of the compensation arrangement.
  • The second finalizes the timeline by which parties are required to acquire all necessary signatures.
• Lastly, CMS includes the final annual update of the list of CPT/HCPCS codes that are included in the scope of designated health services to which the Physician Self-Referral Law applies.

Comment Period on the Promoting Interoperability RFI ends

CMS acknowledges the receipt of comments for the request for information (RFI) on Promoting Interoperability and Electronic Healthcare Information Exchange that was solicited in all of the proposed payment rules earlier in this year.