My Top Takeaways from Medicare's New Physician Payment Rules

As July turns into August this week, if anyone needs a new summer reading list, CMS is here to help! In the past 48 hours, the Centers for Medicare and Medicaid Services (CMS) has issued over 3,000 pages of regulations that will impact how hospitals, ambulatory surgical centers, skilled nursing facilities, inpatient psychiatric facilities, dialysis centers, and physicians will care for our nation’s seniors in 2020.

And for physicians, CMS even released its 1,704-page proposed 2020 Medicare Physician Fee Schedule (PFS) regulation under the headline: “Trump Administration’s Patients over Paperwork Delivers for Doctors.” How ironic. 

But as always, reading beyond the press releases and into the details of these regulations reveals a multitude of critically important policy reforms. The PFS itself includes a long list of Medicare payment policies, payment rates, and quality programs that will take weeks for physician organizations to fully digest. 

However, for those who can’t stand to wait that long - or for those who already have a more enjoyable summer reading list to get to - here are my top takeaways from the proposed rule:

• Baseline FFS payment rates will remain flat next year. Based on previous legislation, the proposed 2020 PFS conversion factor is $36.09, a slight increase above the 2019 PFS conversion factor of $36.04. Overall, this amounts to a proposed 0.14% across-the-board payment rate increase for all fee-for-service (FFS) codes in 2020. While preferable to a pay cut, this negligible FFS increase follows last year’s 0.11% increase in failing to keep pace with rising administrative costs in healthcare. In turn, the transition to value-based reimbursement continues to accelerate. 
• CMS is ditching its previous plan to overhaul its 5-level payment system for office visits. In an effort to reduce the documentation requirements tied to Evaluation & Management (E/M) office visits, last year CMS announced a new plan to create uniform documentation requirements and a single payment rate for level 2-4 visits starting in 2021. Despite CMS’s good intentions, many physicians strongly opposed this plan, arguing that it was too complex and could lead to unfair changes in payment. In response, CMS listened: the agency’s new proposal for 2021 would maintain a five-tier system for established patients and a four-tier system for new patients. 
• CMS is adopting a new plan developed by the AMA’s CPT Editorial Panel to overhaul its 5-level payment system for office visits. After diching its own plan, CMS proposed to replace it with another one that was developed by the American Medical Association’s CPT (Current Procedural Terminology) Editorial Panel. Starting in 2021, the new proposal would revise code definitions, require performance of history and exam documentation only as medically appropriate, and allow clinicians to choose a visit level based solely on either medical decision making or time. Additionally, in an effort to “increase payment for office/outpatient E/M visits,” CMS proposed to adopt new AMA-recommended values for these codes and a new add-on code for prolonged service time.
• The performance requirements and financial impact of MIPS will continue to gradually increase next year. 2020 will be the fourth performance year for the Merit-based Incentive Payment System (MIPS) and as in the previous three years, CMS plans to continue to gradually “transition” clinicians into the program. Next year, the cost category will account for 20% of an overall MIPS score (up from 15% in 2019), the overall performance threshold will be 45/100 points (up from 30/100 in 2019), and the maximum payment penalty will be -9% (up from -7% in 2019). While these changes do continue to slowly raise the bar for success in MIPS, high-performing practices will also likely continue to see limited financial rewards due to the high number of program exemptions and the low performance threshold.  But, as noted by CMS, “our goal is to continue incrementally increasing the performance threshold to meet the requirements established by Congress.” As mandated by Congress, the program will be fully implemented in its sixth year, the 2022 performance year.
• CMS is proposing a major MIPS program overhaul (and name change) for 2021. CMS is proposing a new “conceptual participation framework” for MIPS that would apply to all eligible clinicians and groups starting in 2021. Labeled “MIPS Value Pathways (MVPs),” the framework would align and connect measures across the 4 existing MIPS performance categories (Quality, Cost, Promoting Interoperability, Improvement Activities) for different specialties or conditions. Then, based on specialty and/or other factors, a clinician or group would be assigned to an MVP and required to report those measures. According to CMS, clinicians would lose the ability to select their measures, but face fewer measure requirements overall. Like previous CMS efforts to rebrand or reform meaningful use, MIPS, and other programs, these proposed changes are likely to be highly confusing and controversial for physicians. As such, physician groups should try to participate in the public comment process to try to steer CMS’s efforts in the right direction before these reforms are finalized for the 2021 performance year. 
• CMS continues to add policies to support telehealth, chronic care management, and remote patient monitoring services. Through several new policies included in this rule, CMS is continuing its multi-year effort to improve payment for telehealth, care management, care coordination, and remote patient monitoring services. To address the opioid epidemic and enable the remote delivery of group therapy and counseling, CMS would add a new bundled episode of care for the treatment of opioid use disorders to its list of covered telehealth services. Other key reforms include proposals to increase payment for transitional care management, add new chronic care management codes, and loosen the supervision requirements for the delivery remote patient monitoring (RPM) services.
• CMS wants to require hospitals to publish their payer-negotiated prices. In likely the most controversial proposal included in any of this week’s rules, CMS’s 2020 proposal for hospital outpatient departments and ambulatory surgical centers would require all hospitals to make public their “payer-specific negotiated charges” for “all items and services provided by the hospital.” In order to ensure compliance, the rule also proposes new enforcement tools including monitoring, auditing, corrective action plans, and civil monetary penalties of $300 per day. In response, hospitals and insurers are certain to fight the proposals with lobbying and legal challenges. For physicians, the question is: will price transparency mandates hit us next?

Following the close of the public comment period for the PFS rule on September 27, CMS is expected to release its final 2019 Medicare physician payment regulation in early November.