CMS Releases Final Medicare Rules on OPPS and ASC Payment Systems, and Expanded Telehealth Opportunities

by Ropes & Gray LLP

Ropes & Gray LLP

On November 21 and 23, 2018, the Centers for Medicare & Medicaid Services (“CMS”) finalized rules reinforcing a developing trend away from delivery of care in traditional inpatient care settings. The “November 23 Final Rule” is available here, and the “November 21 Final Rule” is available here. Among other things, these changes will reduce Medicare reimbursement for services furnished in the remaining hospital off-campus provider-based departments (“OPDs”) that previously were not subject to a reduced rate; expand reimbursement opportunities for certain outpatient providers and telehealth services; reduce reimbursement for certain non-physician clinicians; and reduce medical record documentation requirements.

Site Neutrality: Reduced Reimbursement for OPDs

Clinic Visits at OPDs

CMS continues to whittle away at the payment differential that has favored furnishing care in a provider-based hospital OPD rather than in a physician office.

OPDs historically have received higher reimbursement than physician offices for delivery of the same services. However, in 2015, the Bipartisan Budget Act (“BBA”) reduced reimbursement for some OPDs—called non-excepted OPDs (i.e., those established on or after November 21, 2015)—from the higher Hospital Outpatient Prospective Payment System (“OPPS”) rate to the lower Physician Fee Schedule (“PFS”) rate. Other OPDs, so-called excepted OPDs (i.e., those in operation or under construction before November 21, 2015, and dedicated emergency departments), did not suffer the rate reduction.

For one particular type of billing code that covers an array of services for new and existing patients—hospital outpatient clinic visit for the assessment and management of a patient, billed under Healthcare Common Procedure Coding System (“HCPCS”) code G0463—the November 21 Final Rule applies a PFS-equivalent payment rate to all OPDs, including those originally excepted under the BBA. This change is significant because, as CMS’s rulemaking preamble stated, the code represents 50% of all separately payable or conditionally packaged services furnished in OPDs annually.

The reduction, which ultimately will reduce OPDs’ reimbursement for code G0463 by 60%, will be phased in over time. In 2019, Medicare will reimburse excepted OPDs at 70% of the current OPPS rate for hospital outpatient clinic visits for the assessment and management of a patient. In 2020, it will reimburse OPDs at 40% of the current OPPS rate for the same service. This brings parity to the payment rate for previously excepted and non-excepted OPDs. The aggregate dollar revenue reduction to many hospitals may be significant. CMS’s statutory authority to bring regulatory parity to excepted and non-excepted OPDs may be subject to judicial challenge, because the BBA expressly excepted certain OPDs from the payment reduction.

340B Program Site Neutrality Reimbursement

The November 21 Final Rule also adopts a site neutrality policy for drugs and biologicals under the 340B Drug Pricing Program (the “340B Program”). Like the site-specific rule above, reimbursements rates historically have varied between excepted OPDs and non-excepted OPDs, whereby non-excepted OPDs are paid a lesser rate. In brief, the new rule applies the same reimbursement rate for drugs and biologicals acquired under the 340B Program whether furnished by excepted OPDs, which are traditionally reimbursed under OPPS, or non-excepted OPDs, which are not. In applying this adjustment, however, CMS may run up against constraints on its authority to determine payments authorized under § 1842(o)(1)(C), the provision governing payments for drugs or biologicals, of the Social Security Act, which may provide fodder to OPDs experiencing reductions to challenge CMS’s new 340B reimbursement policy.

CMS Expands Medicare Reimbursement for Ambulatory Surgical Center (“ASC”) Procedures

CMS expanded the number of procedures payable by Medicare when furnished in an ASC. CMS did this by expanding the definition for covered services related to “surgery” to include “surgery-like” procedures, and, using that expanded definition as a foundation, added 17 procedures to the ASC Covered Procedures List (“CPL”). The principal effect of the change is to expand ASCs’ ability to furnish cardiac catheterization services and to further ASCs as alternatives to hospital care.

CMS Intends to Streamline Outpatient Evaluation and Management Visit Payments to Reduce Documentation Burdens on Physicians

The November 23 Final Rule finalized several documentation, coding, and payment changes for office and outpatient Evaluation and Management (“E/M”) visits. These changes appear to be in response to provider requests to ease medical record requirements. CMS indicated that the changes (i) will obviate the need for providers to re-record relevant patient information, such as history and physical exams, that remains unchanged from the previous visit, and (ii) will eliminate medical necessity documentation requirements when home visits are conducted in lieu of office visits.

Effective in 2021, CMS also compressed E/M visit levels two through four to a single rate for visits other than inpatient visits. CMS, however, did not go as far as it initially proposed. Specifically, CMS originally proposed compressing level five, as well. However, in the November 23 Final Rule, CMS recognized the need to preserve at least level five to reflect variability in care needs for particularly complex patients.

Signaling future changes, CMS indicated that, beginning in 2021, it will grant providers flexibility to use medical decision-making or time to document certain E/M office/outpatient visit levels, and will adopt a new “extended visit” add-on code for use only with certain E/M office/outpatient visit levels when providers need to spend extended time with the patient.

Medicare Adds New Reimbursement Opportunities for Providers via Telehealth

The November 23 Final Rule expands Medicare coverage for telehealth services to reimburse two newly defined physician services: virtual check-ins (HCPCS code G2012) and remote evaluation of video or images submitted by a patient (HCPCS code G2010).

These services, already in use as telehealth capabilities have grown over the years, permit providers to determine whether an office visit or other additional service is warranted for an established patient. Virtual check-ins may include telephone or video conferencing services. Remote evaluations include pre-recorded video or image transmission services, and may also include virtual follow-up within 24 hours via audio or video communication, secure text message, email, or a patient portal. Previously, any routine non-face-to-face communication that occurred prior to or after an in-person visit was part of the in-person visit bundled payment, such as through an E/M visit code. Where these non-face-to-face check-in services did not lead to an office visit, however, the virtual services could not be bundled and were not reimbursed.

The two newly defined reimbursement codes address this gap. If a virtual check-in or a remote evaluation does not result in an in-person office visit, the virtual check-in or remote evaluation will be reimbursed separately. Note, however, that virtual check-ins and remote evaluations that result in an in-person office visit will continue to be bundled into the in-person office visit. Additionally, if a remote evaluation of video or images originates from a related E/M office visit provided within the previous seven days by the same physician, the remote evaluation also will be bundled into the E/M service.

Also significant, CMS did not apply for virtual check-ins or remote evaluations the requirements applicable for other telehealth services that the patient be present at a specified originating site (physician offices, hospitals, community mental health centers, to name a few) and be in a certain geographic area, such as those designated by HHS as a rural health professional shortage area.

While at it, in a similar vein, CMS relaxed originating location requirements for some other telehealth services:

  • For remote treatment of a substance use disorder or co-occurring mental health disorder, CMS removed the geographic requirements and added beneficiary residences as permitted originating sites.
  • For remote monthly end-stage renal disease (“ESRD”)-related clinical assessments, CMS removed the geographic requirements and added beneficiary residences and renal dialysis facilities as permitted originating sites.
  • For the remote diagnosis, evaluation, and treatment of acute stroke symptoms, CMS removed the geographic requirements and added hospitals, critical access hospitals, and mobile stroke units as originating sites.

While not opening all telehealth services at all locations to Medicare reimbursement, these changes collectively reflect movement in that direction.

Mixed Changes for Non-Physician Services

The November 23 Final Rule will make it easier for group practices and facilities effectively to use and bill radiologist assistants’ (“RAs”) services. In particular, the rule eases physician supervision requirements for RA services by requiring only a direct level of physician supervision, rather than personal supervision, to qualify for Medicare reimbursement.

Currently, RAs are not recognized by CMS as independent health care providers, and cannot directly bill for services such as diagnostic tests. Instead, practices receive Medicare reimbursement for RA services only when those services have personal supervision by a radiologist. Unlike personal supervision, which requires the physician to be present in the room when diagnostic tests are performed by a RA, direct supervision requires only that the physician is “immediately available” to provide assistance and direction throughout the procedure. In implementing these changes, CMS recognized growing radiologist demands across care settings and acknowledged that oversight requirements may not be necessary in light of technological advancements.

In another area, CMS finalized two Medicare reimbursement modifiers for physical therapy assistants (“PTAs”) and Occupational Therapy Assistants (“OTAs”) to implement the Bipartisan Budget Act of 2018 provisions that reduce payment for services furnished in significant part by OTAs and PTAs. Specifically, the statute reduces, by 2020, outpatient therapy service reimbursement by 15% when outpatient therapy services are in part or entirely furnished by OTAs or PTAs. CMS has defined “in part” by OTAs or PTAs to mean more than 10% of outpatient therapeutic services. Consequently, providers should carefully document the degree to which OTAs and PTAs are involved in patient care—and the degree to which they perform what CMS considers to be strictly administrative tasks, such as scheduling appointments, greeting, or gowning, which do not count toward the 10% threshold.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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