On July 13, 2017, CMS proposed a rule (Proposed Rule) updating payment policies and rates, as well as the quality provisions, for the Medicare Physician Fee Schedule (PFS). Among other provisions, the Proposed Rule reduces payments rates for non-excepted off-campus provider-based departments that are now paid off of the PFS. The Proposed Rule is scheduled to be published in the Federal Register on July 21, 2017, and is available in its pre-publication format here. The CMS fact sheet is available here. Comments to the Proposed Rule must be submitted no later than September 11, 2017.

Non-Excepted Off-Campus Provider-Based Hospital Department Payment Reductions

Among those changes proposed is a 50-percent cut in PFS payment rates for non-excepted off-campus provider-based hospital departments (PBDs). As of January 2017, certain items and services furnished by certain PBDs were no longer paid under the Outpatient Prospective Payment System (OPPS); instead, CMS selected the PFS as the applicable payment system for those items and services. CMS currently reimburses those services under the PFS at 50 percent of the OPPS payment rate, but CMS is proposing reducing that rate to 25 percent of the OPPS rate for calendar year (CY) 2018.

CMS halved the non-excepted PBD rates because it remained concerned that hospitals receive greater overall payments than would otherwise be paid under the PFS in a non-facility setting. CMS intends the 2018 adjustment to strike a fairer balance between hospitals and physician practices by promoting greater payment alignment. However, CMS noted that the CY 2017 claims data might illuminate additional factors affecting rates by setting, but it must implement the 2018 adjustments prior to studying the CY 2017 claims data.

Additional Telehealth Services

Each year, CMS accepts proposed additions to the list of telehealth services covered under Medicare. For 2018, CMS proposes adding the following codes to the telehealth list:

• HCPCS code G0296 (visit to determine low dose computed tomography eligibility); and
• CPT codes 90839 and 90840 (Psychotherapy for Crisis).

In addition, CMS proposes adding the following services as covered telehealth services, provided that they would only be considered covered telehealth services when billed as add-ons to codes already on the telehealth list:

• CPT code 90785 (Interactive Complexity);
• CPT codes 96160 and 96161 (Health Risk Assessment); and
• HCPCS code G0506 (Care Planning for Chronic Care Management).

Changes in Valuation for Services

Each year, CMS reviews the resource inputs for several hundred codes and relies on recommendations from the American Medical Association-Relative Value Scale Update Committee (RUC) as part of the potentially misvalued code initiative. For CY 2018, CMS proposes increasing the CY 2018 rates by 0.31 percent—from a conversion factor of $35.89 in 2017 to $35.99 in 2018. The increase reflects the 0.50 percent update established under the Medicare Access and CHIP Reauthorization Act of 2015, reduced by 0.19 percent to reflect adjustments to misvalued codes in the fee schedule.

Malpractice Relative Value Units (RVUs)

Each PFS service payment is comprised of the work, practice expense and malpractice (MP) expense. CMS last updated the MP RVU in 2015, basing its determination on the risk, intensity and complexity of a service. CMS spent CY 2017 collecting MP premium data as well, which it now proposes using in addition to previous measures to update the MP RVU, which comprises 4.3 percent of the payment for a service. CMS’s proposal also includes aligning future updates with the geographic practice cost index updates, which has been done once every three years. In addition, CMS requested comments regarding the availability of supplemental data sources for future updates.

Care Management Services

The Proposed Rule also continued CMS’s efforts to align its rules with Current Procedural Terminology (CPT) guidance for chronic care management (CCM) and similar management services—an ongoing attempt to recognize the changes in the care of chronically ill patients. To reduce administrative burdens, CMS would like to adopt CPT codes for CY 2018 for reporting several care management services currently reported using Medicare G-codes. CMS also requested public comment regarding further reducing CCM reporting burdens for providers by implementing additional alignment between CMS rules and CPT guidance with existing and new codes.

Improvement of Payment Rates for Office-Based Behavioral Health Services

CMS proposed increasing payment for office-based behavioral health services to better recognize the overhead expenses associates with those services.

New Care Coordination Services and Payment for Rural Health Clinics (RHCs) and Federally-Qualified Health Centers (FQHCs)

CMS proposed two new billing codes that would be exclusive to RHCs and FQHCs and in addition to payment for an RHC or FQHC visit. The codes would cover services for regular and complex chronic care management, behavioral health integration, and psychiatric collaborative care models.

Implementation of Appropriate Use Criteria for Advanced Diagnostic Imaging

The Proposed Rule also seeks to implement the Medicare Appropriate Use Criteria (AUC) Program for Advanced Diagnostic Imaging with an educational and operations testing year in 2019. During 2019, CMS would pay advanced diagnostic imaging claims regardless of whether they contain the required AUC information. In connection with the Proposed Rule, CMS is releasing newly qualified provider-led entities that are permitted to develop AUC, as well as qualified clinical decision support mechanisms. Physicians who begin using these mechanisms in 2018 will be eligible for credit under the Merit-Based Incentive Payment System (MIPS). CMS seeks comments to this proposal regarding the readiness of stakeholders.

Expansion to the Medicare Diabetes Prevention Program (MDPP)

CMS also proposes to implement the expanded model of the MDPP in 2018. The proposed rule includes the MDPP payment structure, enrollment requirements, and compliance standards. The MDPP fact sheet is available here.

Physician Quality Reporting System (PQRS)

Under PQRS, physicians who did not satisfactorily report on their quality measures in 2016 will be subject to a downward payment adjustment of two percent in 2018. The data submission deadline for 2016 PQRS quality data was March 31, 2017. Because PQRS is being replaced by MIPS, CMS proposes reducing the PQRS requirement of reporting on nine quality measures to six quality measures, consistent with the MIPS requirement.

Medicare Shared Savings Program Rules

CMS proposed a number of modifications to the rules for accountable care organizations (ACOs) participating in the Medicare Shared Savings Program. These include:

• Revising the methodology for assigning beneficiaries to ACOs to treat services reported on RHC or FQHC institutional claims as primary care services furnished by a primary care physician;
• Including three new chronic care management codes and behavioral health integration codes to the definition of primary care services in the ACO assignment methodology; and
• Eliminating the requirements that skilled nursing facilities (SNFs) submit financial relationship narratives and quality ratings for affiliates on their application for use of the SNF 3-Day Rule Waiver as too burdensome.

2018 Value Modifier

CMS had previously finalized policies for the MIPS 2018 Value Modifier. However, to smooth the transition to MIPS and better align incentives, CMS is proposing a number of changes to those policies. These include reducing the automatic downward payment adjustment from -4 percent to -2 percent for groups with ten or more clinicians, and from -2 percent to -1 percent for solo practitioners or groups with less than nine clinicians. In addition, CMS would hold harmless from downward payment adjustments those physician groups and solo practitioners who met minimum quality reporting requirements for the last year of the Quality Payment Program.

Solicitation of Comments

In addition to comments on provisions of the proposed rule, CMS is seeking comments on a number of policies and programs not directly impacted by the proposed rule:

• Evaluation and Management and Emergency Department Visits: CMS is seeking comment on whether it should changes to evaluation and management (E/M) coding guidelines, specifically on how CMS should focus initial changes to guidelines for patient history and physical exams. CMS also requested comment regarding whether it undervalues emergency department (ED) visits due to increasingly diverse ED settings under which services are provided and changes to the patient population.
• Clinical Laboratory Fee Schedule:  CMS seeks comments from applicable labs and reporting entities regarding the data collection and reporting process used to determine weighted means of private payer rates.
• Payment of Biosimilar Biological Products Under Part B:  CMS seeks comments on the effects of the single average sale price payment policy for biosimilar products, including instructive market analyses or research articles.

Request for Information

CMS also included a Request for Information (RFI) in the proposed rule, requesting input on changes that would improve the quality of care, lower costs, and make the system more effective, simple and accessible. CMS seeks ideas – with data and specific examples – regarding payment system redesign and eliminating or streamlining reporting, monitoring and documenting requirements, as well as ways CMS can simplify its rules for providers and patients alike. The RFI specifically requested ideas for incentivizing organizations and professions to treat opioid and other substance use disorders. CMS will not respond to the RFI in the final rule, but will consider the submissions in future proposals and guidance.