CMS recently issued its proposed changes to the 2019 Medicare Physician Fee Schedule, which include a controversial change to the reimbursement rates for Level 2-5 evaluation and management (E/M) services and some notable changes to the Quality Payment Program.  This post highlights some key aspects of the Proposed Rule that will affect medical practices.

Red stethoscope with a pile of hundred dollar bills.CMS views the Rule as one of “several proposed rules that reflect a broader Administration-wide strategy to create a healthcare system that results in better accessibility, quality, affordability, empowerment and innovation.”  Once finalized after public comment, the changes will be effective for calendar year 2019.

Notable Changes to the Medicare Physician Fee Schedule

Consolidation of Level 2-5 E/M Visits.  Probably the most significant change proposed to the Physician Fee Schedule in 2019, and the most controversial, is the consolidation of the reimbursement rates for Level 2 through 5 E/M visits into one flat base rate for new patients and one flat base rate for established patients.  The consolidated reimbursement rate for Level 4 and 5 visits would be approximately $50-75 less for new patients; and approximately $16-32 less for established patients.  For Level 2 and 3 visits, the consolidated rate would be substantially more.  CMS has also provided for a number of potential modifiers to account for additional time spent, and visits related to certain specialties, such as oncology.

However, the proposed change has drawn significant criticism because a visit for a minor health issue (such as an earache) would be reimbursed at the same base rate as a visit for stage IV cancer.  Further, the American College of Physicians has recently stated that the proposed rate model would result in lesser reimbursement for Level 4 and 5 visits overall, even considering the new modifiers.

Revised Documentation Requirements. In connection with the newly consolidated rates, CMS has proposed to streamline the documentation that physicians must provide for reimbursement for E/M visits.  The purpose of these proposals, and others which CMS says it plans to make in future years, is to allow physicians more flexibility to exercise clinical judgment in documentation.  The documentation changes:

  • Would allow physicians to document E/M visits based on medical decision-making and/or time, regardless of whether counseling or care coordination dominates the visit.
  • Would not require physicians to re-document information from prior visits, only what has changed for the patient (or what pertinent items have not changed) since the last visit.
  • Would be able to review and verify certain basic information entered into the medical record by physician extenders and other ancillary staff, instead of having to re-enter the information every time.

These revised documentation requirements are intended to lead to a lesser administrative burden on physicians, which could lead to fewer audit issues and overpayments.  In that regard, the proposal is seen by some as a trade, by which CMS relieved physicians and their practices of cumbersome documentation requirements in exchange for reduced reimbursement for level 4 and 5 E/M codes.  We expect that CMS will receive substantial commentary on these documentation and rate changes in advance of the Final Rule.

Additional Changes.  Other notable changes are as follows:

  • Medicare would pay for a virtual check-in service for which the physician would check-in with a patient by phone or other device to decide whether an office visit or other service is needed.  CMS believes that this will increase efficiency for practitioners and convenience for beneficiaries.
  • Medicare would pay for a Remote Evaluation service based on recorded video or images, so that a physician could be separately paid for reviewing a patient-transmitted photo or video to assess whether a visit is needed.
  • CMS will implement updated medical supply and equipment prices for purposes of determining the practice expense portion of its reimbursement rates.  The rates for supplies and equipment used in their payment formula had not been updated since 2005.  Based on a study conducted by a contractor, CMS will implement the new rates over a 4-year period beginning in 2019.
  • CMS plans to increase the overall reimbursement rate per RVU by $0.06.

Changes to the Quality Payment Program

Beginning with the 2019 calendar year, physicians and practices will be paid under Medicare Part B based on the standard rate for reimbursement for the service, plus or minus a bonus or penalty calculated on their performance under the Quality Payment Program during the 2017 calendar year.  For more information on the Quality Payment Program, please see our prior blog post here: https://physicianlaw.foxrothschild.com/2016/12/articles/medicare/are-you-ready-for-the-new-medicare-quality-payment-program-part-2-basics-of-the-mips-and-how-to-qualify-in-2017/.

In the face of doubts regarding the future of the Quality Payment Program and the Merit-based Incentive Payment System (MIPS), CMS is making substantial efforts to encourage participation of physicians.   A number of changes are focused specifically on making participation easier for small practices, including applying the existing small practice bonus to the Quality category (instead of overall score) and providing for an additional small practice bonus for meeting certain quality measures.  CMS has also proposed that small practices meeting certain requirements have the ability to opt-in to the MIPS, as opposed to being required to participate.  In addition, CMS continues to remind all practices that it offers free consulting services from its technical assistance network for any physician seeking to meet the MIPS requirements.

Practices should also note that CMS has proposed to require physical therapists, occupational therapists, social workers and clinical psychologists enrolled in Medicare to participate in the MIPS beginning in 2019.

With respect to scoring under the MIPS, CMS proposed to remove certain quality measures which physicians have complained are of low priority in their practice.  CMS also proposed a new scoring system for the EHR Incentive Program category, and proposed to change the title of the category from “Advancing Care Information” to “Promoting Interoperability.”  The change in name reflects CMS’s emphasis on increasing accessibility of health information to patients and their providers.  The new scoring system also matches up with the newly proposed Promoting Interoperability EHR incentive program for hospitals.

Finally, CMS proposed modifying the overall scoring weights for the MIPS during 2019 as follows:

  • Quality (45%)
  • Promoting Interoperability (25%)
  • Improvement Activities (15%)
  • Cost (15%)

…and increasing the bonuses and penalties from +5%/-5% to +7%/-7%.

 

Critics of the MIPS say that efforts to minimize penalties in the hopes of encouraging participation put the entire program at risk, as the MIPS is required by law to be budget-neutral.  When the penalties are reduced, so are the bonuses.  This is probably the biggest threat to the viability of the MIPS long-term.  However, the proposed changes show that CMS is committed to making the MIPS easier to comply with, even though it is still a complicated program.  Stay tuned to Fox Rothschild’s Physician Law Blog for an update on the Final Rule, once issued this Fall.

There are big changes coming to the Medicare incentive programs as we know them.  Beginning on January 1, 2017, the new Quality Payment Program (the “Program”) will replace all existing Medicare incentive programs with a comprehensive incentive model.  The Program will involve a modified set of EHR Meaningful Use requirements, new quality of care metrics, new cost efficiency goals and “clinical practice improvement activities” (for which physicians will be rewarded for care coordination, beneficiary engagement and patient safety).  The Program will also have a separate track for incentive payments associated with participation in Advanced Alternative Payment Models (such as Accountable Care Organizations) (“APMs“).

Congress provided for the development of the Program in the 2015 Medicare Access and CHIP Reauthorization Act (the “MACRA”).  Under the MACRA, the Program must be “budget-neutral” each year.  In other words, the rewards paid by Medicare to well-performing physicians and practices must be equally offset by the penalties levied against poor-performing providers.  The rewards will continue to take the form of payment adjustments to the Medicare Physician Fee Schedule.  The first year of payment adjustments will be 2019, based on data from the 2017 reporting year.  For 2019, the reward paid to (or penalty levied against) any provider may not exceed a 4% adjustment to the Medicare Physician Fee Schedule.  However, in subsequent years, the limits are set to increase, reaching a maximum of 9% in 2022.

The potential for substantial penalties under the Program has led to concerns that the Program will make it difficult for smaller practices with higher numbers of Medicare patients to be financially viable.  Foreseeing these economic issues, Congress earmarked $100 million over five years to help small practices successfully participate in the Program.

In June, the U.S. Department of Health and Human Services (“HHS”) announced that the first $20 million of these earmarked funds will be awarded by the end of 2016.  The recipients of the funding will be organizations that provide education, training and consultation on the Program to small practices.  In particular, these organizations will assist small practices in understanding what quality measures, EHR options and clinical practice improvement activities are most appropriate for their practices.  The organizations will also help small practices evaluate their options for joining an APM.  HHS has not announced when the organizations will begin training and educating small practices.

While the intention behind such training and education is laudable, it does not lay to rest the concern that small practices serving substantial Medicare populations will be under greater pressure and financial strain to continue to operate independently.  After all, the Program itself must remain budget-neutral.  If practices improve their compliance and quality of care metrics, payment adjustments will have to be reduced or compliance standards raised.  In the long-term, this may lead to small practices being forced to join an APM in order to continue to serve Medicare patients.

Stay tuned for updates on the Program from CMS, including details on the final regulations for the Program.  If you have specific questions about how the Program may affect your practice, be sure to contact a knowledgeable healthcare attorney.