CMS Releases Final Rule for Medicare Physician Fee Schedule and Quality Payment Program

King & Spalding

On November 1, 2018, CMS issued a final rule (“Final Rule”) which finalizes numerous changes to the Medicare Physician Fee Schedule (“PFS”), the Quality Reporting Program, and the Medicare Shared Savings Program (“MSSP”).  The changes made in the Final Rule will generally become effective January 1, 2019.   

PFS Changes

The Final Rule includes several updates to payment policies and payment rates under the PFS for calendar year (“CY”) 2019.  The key provisions in the Final Rule concerning the PFS include the following:

  • Payment Update For CY 2019, the conversion factor will be $36.04, which represents an increase to the CY 2018 conversion factor of $35.99. 
  • Evaluation and Management Rates and Documentation Requirements:  There are currently four levels of evaluation and management (“E&M”) billing with different documentation requirements needed to support each level.  CMS previously proposed eliminating the different levels in exchange for a single E&M coding level.  The Final Rule will continue the current coding and payment structure for E&M visits through the end of CY 2020.  Beginning in CY 2021 there will be a single rate for E&M visit levels 2 through 4 for established and new patients.  The rate for more complex level 5 E&M visits will be maintained.  CMS is also relaxing certain documentation requirements for CY 2019 and CY 2020, with further changes to taking effect in CY 2021.
  • Telehealth
    • The Final Rule adds two newly defined physicians’ services: (1) brief communication technology-based service (e.g., a virtual check-in by telephone or other device to determine whether an office visit or service is necessary); and (2) remote evaluation of recorded video or images submitted by an established patient.
    • Beginning July 1, 2019, the home of an individual will be a permissible originating site for telehealth services furnished for purposes of treating substance abuse disorders and co-occurring mental health disorders.
    • Codes for prolonged preventive services are being added to the list of telehealth services.
    • Mobile stroke units, renal dialysis facilities and homes of end-stage renal disease (“ESRD”) beneficiaries are being added as originating sites.  CMS is also relaxing geographic originating site requirements for certain facilities for certain ESRD and dialysis treatments, as well as for certain acute stroke treatments.
    • Communication technology-based services and remote evaluation services furnished by a rural health clinic (“RHC”) or federally qualified health center (“FQHC”) involving medical discussions or remote evaluations of conditions will be payable so long as they are not related to a service provided within the previous seven days, within the next 24 hours, or at the soonest available appointment.
  • Radiologist Assistants:  The Final Rule relaxes requirements for certain diagnostic tests performed by radiologist assistants to be furnished under personal supervision.  CMS will allow these tests to be furnished under a direct level of supervision to the extent permitted by state law.
  • Outpatient Therapy
    • The Final Rule discontinues functional status reporting requirements for outpatient therapy.
    • There are two new modifiers for services furnished in whole or in part by Physical Therapy Assistants (“PTA”) and Occupational Therapy Assistants (“OTA”).
  • Practice Expense:  The PFS inputs for practice expense (“PE”) are being updated to include new inputs for supply and equipment pricing.  PE includes direct expenses such as clinical labor, medical supplies, and medical equipment, as well as indirect expenses such as administrative labor, office expense, and all other expenses (excluding malpractice).  The current inputs for supply and equipment pricing were developed in 2004–2005.
  • Rates for Non-Excepted Off-Campus Provider-Based Hospital DepartmentsThe PFS Relativity Adjuster—which applies a percentage to the OPPS rate to determine payment rates for items and services furnished in non-excepted off-campus provider-based hospital departments—will remain at 40 percent in CY 2019.
  • Clinical Laboratory Fee Schedule (“CLFS”):  CMS is changing the treatment of Medicare Advantage payments for purposes of determining which laboratories are required to report data to be used in calculating payments for clinical diagnostic laboratory tests under the CLFS.  This change will result in a greater number of laboratories meeting the Medicare revenue threshold that potentially qualifies them to be required to report data.
  • Reduction in Add-On Amount for New Part B DrugsPart B drugs that are paid based on wholesale acquisition cost (“WAC”) during the first quarter of sales (when average sale price is unavailable) will be subject to an add-on percentage of three percent, which represents a reduction from the current six percent.
  • Appropriate Use Criteria (“AUC”) for Advanced Diagnostic Imaging
    • The significant hardship criteria in the AUC program is being updated to include insufficient internet access, electronic health record (“EHR”) or clinical decision support mechanism (“CDSM”) vendor issues, and “extreme and uncontrollable” circumstances.
    • Independent diagnostic testing facilities (“IDTFs”) are being added to the definition of “applicable setting” under the AUC program.
    • The Final Rule permits ordering professionals to self-attest their hardship status, and will allow AUC consultations to be performed by clinical staff under the direction of the ordering professional.

Quality Payment Program Updates

The Final Rule also finalizes various changes to the Quality Payment Program, where clinicians have the ability to participate in the program through two pathways – Merit-Based Incentive Payment System (“MIPS”) and Advanced Alternative Payment Models (“APMs”).  The Final Rule makes various adjustments to requirements for both MIPS and APM, including the following:

  • Expansion of Practitioners Eligible to Participate in MIPS:  For Year 3, CMS is expanding the participations eligible to participate in MIPS to include physical therapists, occupational therapists, qualified speech-language pathologists, qualified audiologists, clinical psychologists, and registered dieticians and nutrition professionals.
  • MIPS Low Volume Threshold Changes
    • For CY 2019, CMS added an additional avenue for clinicians and groups to be excluded from MIPS under the low volume threshold.  Beginning in 2019, a clinician or group can be excluded from MIPS if they provide 200 or less covered professional services under the PFS.  This threshold is being added to the two existing low volume threshold criterion.  Thus, for CY 2019, a clinician or group may be excluded from MIPS if they meet one or more of the following three criterion:
      • Have $90,000 or less in Part B allowed changes for professional services;
      • Provide care to 200 or less Part B-enrolled beneficiaries; or
      • Provide 200 or less covered professional services under the PFS. 
    • The Final Rule also finalizes an opt-in policy which allows some clinicians who otherwise would have been excluded under the low-volume threshold to participate in MIPS.  Under this opt-in policy, starting in CY 2019, clinicians or groups who meet at least one of the low-volume threshold criteria, but not all three, may opt-in to participate in MIPS.
  • Revision to MIPS Final Score Weighting:  For CY 2019, CMS is decreasing the weight of the quality performance category to 45 percent (a reduction of five percent compared with CY 2018) and increasing the cost category performance weight to 15 percent (an increase of five percent compared to CY 2018).
  • Revision to MIPS Performance Threshold:  CMS is increasing the performance threshold to 30 points (as compared to 15 points from CY 2018).  The additional performance threshold for exceptional performance will also be increased to 75 points (up 5 points as compared to CY 2018).  CMS indicates it expects these changes to result in an evolving distribution of payment adjustments for high performing clinicians.
  • Increase in Advanced APMs Minimum Certified Electronic Health Record Technology (“CEHRT”) Use Threshold:  For CY 2019, CMS is increasing the CEHRT use threshold for Advanced APMs so that at least 75 percent of eligible clinicians at each APM entity must use CEHRT to document and communicate clinical care with patients and other health care professionals.  By comparison, for CY 2018, CMS only required 50 percent of eligible clinicians to use CHERT.

Medicare Shared Savings Program (MSSP) Updates

The Final Rule also finalizes certain changes proposed in CMS’s August 17, 2018 proposed rule, which addressed efforts to redesign the Accountable Care Organizations (“ACOs”).  Additional information regarding the prior proposed changes is available here

Although CMS is waiting to address numerous aspects of the ACO proposed rule in separate rulemaking, CMS addresses a subset of the proposals in the Final Rule.  Specifically, CMS is finalizing a voluntary six-month extension for existing ACOs whose participation agreements will expire on December 31, 2018.  This extension is necessary to ensure continuous participation given CMS’s decision to forgo an application cycle in 2018 for January 1, 2019 agreement start dates.  CMS is also finalizing a prorated method for determining shared savings and shared losses for this six month performance period (January 1, 2019 through June 30, 2019). 


To view the Final Rule, click here.  To view CMS’s fact sheet regarding the Medicare Physician Fee Schedule, click here.  To view CMS’s fact sheet regarding the Quality Payment Program, click here and here

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