A few weeks ago, Regs & Eggs discussed the constant give and take between federal agencies and Congress as they both work on overlapping policies and objectives. The major regs released last week provide an excellent example of how “final” policies established by the Centers for Medicare & Medicaid Services (CMS) may not be so final if Congress decides to intervene. My colleagues Leigh Feldman, Rachel Stauffer and Kristen O’Brien and I lay out four policy areas where Congress may take action.

Policy Area 1: The Medicare Physician Fee Schedule Conversion Factor

History often repeats itself—like the last few years, we again find ourselves in a position where Congress must step in or clinicians will face a significant cut under the Physician Fee Schedule (PFS). Before describing our current situation, let’s take a trip down memory lane and see how Congress has intervened over the last few years.

Trip Down Memory Lane

CY 2021

The recent reductions to the PFS conversion factor (CF) began in the CY 2021 PFS final reg when CMS finalized major increases to the office and outpatient evaluation and management services and implement a new add-on code to complexity, G2211. These changes forced CMS to reduce the CF by 10.2% to preserve budget neutrality. In the Consolidated Appropriations Act, 2021, enacted on December 27, 2020, Congress provided a 3.75% fix to the PFS and postponed the add-on code for complexity until CY 2024. The delay in the implementation of G2211 added an another 3.1% back to the CF. The net effect of this congressional action was a bump of around 6.9% to the PFS CF—so instead of a 10.2% cut, there was “only” a 3.3% reduction to the CF in CY 2021.

CY 2022

Since the 3.75% fix was only temporary and lasted a year, it “expired” in CY 2022, meaning that if Congress didn’t act again, the CF in 2022 would be reduced by that amount (you will see that this pattern repeats itself year after year). Congress did step in again and offset 3% of that cut in the Protecting Medicare and American Farmers from Sequester Cuts Act, enacted on December 10, 2021. Therefore, the final cut to the PFS CF in CY 2022 was about 0.8%.

CY 2023

Going into CY 2023, the PFS CF again faced at least a 3% cut since the 3% fix from CY 2022 only lasted one year. To make matters a bit worse in some clinicians’ view, CMS enacted policies in the CY 2023 PFS final reg that forced CMS to make another 1.5% cut to preserve budget neutrality. Facing a 4.5% cut, clinicians again turned to Congress. In the Consolidated Appropriations Act, 2023, enacted on December 29, 2022, Congress for the first time made a partial two-year fix. Congress offset 2.5% of the 4.5% cut to the CF in 2023 (leaving a final cut of 2% to the CF in 2023). And, because the 2.5% fix in CY 2023 was set to expire in CY 2024, Congress also decided to make a “down payment” and pay for half of the cut. Therefore, Congress also provided a 1.25% fix for CY 2024.

Current Outlook

Since Congress paid for half of the 2.5% fix that was expiring in CY 2024, CMS still had to take the other half (1.25%) out of the 2024 CF in the CY 2024 PFS final reg. However, that was not the only cut CMS made to the CY 2024 CF. CMS also made a 2.1% cut to preserve budget neutrality—and the majority of that cut was due to CMS’s decision to implement the same add-on code for complexity that CMS had initially implemented for CY 2021 and Congress delayed until CY 2024 (see, it’s important to pay attention to history!)

So, now clinicians face a 3.4% cut (1.25% + 2.1%) to the CF unless Congress acts. The US Senate Finance Committee is considering legislation that would pay for the remaining half of the 2.5% cut. If that legislation goes through (a big unknown at this point) and Congress adds 1.25% to the CF, there would still be a 2.1% cut to the CF in 2024. CMS has estimated that the cost of providing care (as measured through the Medicare Economic Index) is set to increase by 4.6% next year, so a 2.1% cut still won’t cover many clinicians’ estimated costs.

A previous Regs & Eggs post mentioned draft legislation that would try to address the PFS budget neutrality policy and reform physician payments by providing a stable inflationary update each year. However, it is unclear whether this legislation will move, and perhaps the “best” clinicians will get is simply another 1.25% fix.

Policy Area 2: The Alternative Payment Model Bonus

Another area where Congress may intervene relates to a bonus that clinicians can receive for meaningfully participating in an Advanced Alternative Payment Model (APM), which is an APM that includes downside financial risk. Many in Congress share CMS’s goal of moving clinicians towards value-based care and tying payments to quality and outcomes rather than volume alone. A 5% bonus was available under the Medicare Access and CHIP Reauthorization Act to participate in an Advanced APM, but that bonus expired in 2024 (based on APM participation in 2022). Congress provided a 3.5% bonus to Advanced APM participants in 2025 (based on APM participation in 2023) in the Consolidated Appropriations Act, 2023.

So the question is, will CMS extend this bonus again? The Senate Finance Committee legislation highlighted above includes a 1.75% bonus to Advanced APM participants in 2026 (based on APM participation in 2024). But again, it is unclear if that legislation will pass. Going forward, clinicians participating in Advanced APMs have a slight bump in their payments. Starting in CY 2026, they will receive a 0.75% increase to the PFS CF, while others will only receive a 0.25% increase.

Policy Area 3: Telehealth

The use of telehealth dramatically increased during the COVID-19 pandemic, with both CMS and Congress temporally granting flexibilities and waivers. Although the public health emergency has ended, Congress and CMS are still trying to figure out which pandemic telehealth policies, if any, should be made permanent. In the meantime, many pandemic policies were temporarily extended through end of CY 2024 by the Consolidated Appropriations Act, 2023. The most significant of these extensions was the waiver of the originating site and geographic Medicare restrictions, which limit where Medicare beneficiaries can receive telehealth services.

Since Congress kicked the can down the road, delaying its decisions on how to treat telehealth policies in the long term, CMS for the most part decided to do the same in the CY 2024 PFS final reg. For example, CMS denied all of stakeholders’ requests to permanently add new codes to the Medicare telehealth list, but instead allowed many of the codes that were added to the list during the pandemic to remain on the list on a “provisional” or temporary basis. CMS cited the need for Congress to act on the originating site issue as a reason why it didn’t use its regulatory authority to make certain telehealth services permanent.

CMS also decided to allow higher payments for telehealth services received by patients at their homes—knowing that after CY 2024, if Congress doesn’t act, Medicare beneficiaries won’t be allowed to receive telehealth services from their homes any longer. Unless Congress extends the originating site and geographic Medicare waivers again, Medicare beneficiaries yet again must receive telehealth services from “originating sites” such as hospitals or critical access hospitals, and the use of telehealth will be restricted to rural areas only. Another policy that CMS temporarily addressed is allowing providers to continue reporting their work addresses in CY 2024 and not their home addresses if they are doing most telehealth services from their home. There was some fear among the provider community that providers would be forced to report their home addresses, which could create privacy and security concerns.

Overall, CMS temporarily extended many policies and is waiting to see how Congress responds before putting forward more permanent telehealth policies. That puts a lot of pressure on Congress to figure out a long-term telehealth strategy within the next year. If Congress chooses not to act, CMS is on its own to decide which policies, if any, to extend or make permanent in its CY 2025 rulemaking. Providers are anxious to know what the permanent policies will be, but it’s unclear how long they will have to wait to find out.

Policy Area 4: Price Transparency Initiatives

Congress may enact even more price transparency requirements, building on those that CMS has already implemented. In the CY 2024 Outpatient Prospective Payment System final reg, CMS requires hospitals to display standard charge information using a machine-readable file template similar to those it made available for voluntary use in 2022. CMS also requires hospitals to link to this information from their website homepage in 2024. CMS finalized a requirement that each hospital make a good-faith effort to ensure that the information in its machine-readable file is true, accurate and complete. The file must include an affirmation that the hospital, to the best of its knowledge and belief, has included all required standard charge information.

The agency’s actions on hospital price transparency can be seen as a reaction to congressional and stakeholder criticism that it hadn’t gone far enough in making pricing information usable to consumers, and in addressing noncompliance. But will it be enough? Language to codify and extend hospital price transparency requirements is included in the Lower Costs, More Transparency Act advanced by the US House of Representatives Energy and Commerce, Ways and Means, and Education and the Workforce Committees. That bill, which borrows heavily from the bipartisan PATIENT Act advanced by the Energy and Commerce Committee, would increase civil monetary penalties for noncompliance and require CMS to disclose enforcement actions against hospitals. But, that bill hasn’t yet made it to the House floor. Will Congress push it across the finish line before the end of the year? Or will CMS have the final say on hospital price transparency for the foreseeable future?

With the ball in Congress’s court, all stakeholders will be eyeing what legislation, if any, will address these issues:

• Will Congress enact another PFS CF fix?
• Will there be another Advanced APM bonus?
• Will Congress make permanent any telehealth policies?
• Will Congress institute any more price transparency requirements?

We’ll have to wait and see what happens.

Until next week, this is Jeffrey (and Leigh, Rachel and Kristen) saying, enjoy reading regs with your eggs!

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