CMS recently issued its proposed rules for the CY 2019 Medicare Physician Fee Schedule (MPFS) and Outpatient Prospective Payment System (OPPS). Both rules propose significant reimbursement changes. Please note that these changes are merely proposed changes and have not yet been finalized. Key reimbursement cuts include:

  • New single payment rate for Level 2-5 Evaluation and Management (E/M) visits;
  • Reduced payment for clinic visits at grandfathered off-campus provider-based departments;
  • Limitations on service line expansion at grandfathered off-campus provider-based departments;
  • Expansion of 340B payment cuts; and
  • Reduced Medicare Part B drug reimbursement.

Other proposals bring more positive changes, particularly for primary care physicians. Key positive changes include:

  • Increased payments to primary care physicians for E/M visits;
  • Streamlined documentation requirements for E/M visits;
  • New payment mechanisms for virtual care visits; and
  • Expanded telehealth services.
  1. Overhaul of Evaluation and Management Reimbursement

Together, the MPFS and OPPS Proposed Rules seek changes to both the professional and facility component of E/M reimbursement in a continued shift to site neutrality.

Professional (Physician) Reimbursement

The MPFS Proposed Rule seeks to eliminate separate payments for Level 2 through Level 5 E/M visits. Instead, it proposes a single rate that would apply to all Level 2 through Level 5 visits for new and established patients. New patient visits would be reimbursed at a rate of $135 for Level 2-5 visits; established patient visits would be reimbursed at a rate of $93.

This new payment methodology brings good news to primary care providers. Providers would see higher reimbursement rates for lower level visits—up to a 78% increase for Level 2 visits. However, physicians who typically see more complex patients would see significantly decreased reimbursement for these visits. Under the existing structure, Level 4 and Level 5 visits for new patients are reimbursed respectively at rates of $167 and $211. The physicians’ professional reimbursement for those visits would be reduced by 19% and 36%. The impact to new patient visit reimbursement is summarized below:

Physician Reimbursement for New Patient Visits

 Level 1Level 2Level 3Level 4Level 5

Please note that the above changes only apply to Medicare Part B physician reimbursement. Hospitals will continue to bill the facility component of the patient visit on the UB-04 with G0463 for provider-based departments (PBDs). However, as discussed below, CMS is proposing to expand its reimbursement reductions to the clinic E/M visits at both excepted and non-excepted PBDs for G0463.

In conjunction with the shift to single-rate payments, the MPFS Proposed Rule also seeks to reduce some documentation burdens for E/M visits by only requiring history and exam documentation for any changes noted since a patient’s last visit. The rule also eliminates the requirement to duplicate certain documentation that has already been entered by other staff members or the patient.

Facility (Hospital) Reimbursement

In addition to the single-rate E/M reimbursement proposal for physicians, CMS is also proposing to reduce payments for patient visits at excepted (grandfathered) off-campus PBDs. CMS would extend site neutrality beyond that approved by Congress in Section 603 of the Bipartisan Budget Act. This proposal arguably exceeds CMS’ rulemaking authority.

In other words, CMS proposes to expand the current non-excepted off-campus PBD reimbursement reductions to all off-campus PBDs. As a result, all E/M clinic visits at off-campus PBDs would now only receive 40% of the OPPS reimbursement for G0463. For example, the OPPS payment for a clinic visit is approximately $116; payment under the new PFS equivalent rates would be approximately $46. For most PBDs, clinic reimbursement is a significant source of revenue. This is another blow to the financial viability of off-campus PBDs.

Please note that this does not apply to (1) on-campus PBDs located within 250 yards of the main hospital, (2) off-campus PBDs located within 250 yards of a remote hospital location, or (3) any hospital dedicated emergency departments.

  1. Limitations on Excepted (Grandfathered) PBD Service Line Expansion

CMS seeks to limit the ability of grandfathered PBDs receiving OPPS reimbursement to expand their service lines. Under the current rules, PBDs established prior to November 2, 2015 may change or expand services, and even expand space, as long as the address of the grandfathered PBD location does not change. Expanded services at an established address would still receive the higher OPPS reimbursement rate.

However, under the proposed rule CMS seeks to limit the services that would be reimbursed under the OPPS to only those that meet its “clinical families of services” test. The test is described below (note: this is the same test as originally proposed yet not finalized in CY 2016). Any services that do not meet this test would be reimbursed under the lower PFS-equivalent rate, a reduction of approximately 60%.

Under the proposed rule, in order to continue to receive full OPPS reimbursement at grandfathered PBDs the following criteria must be met:

  • The item/service must fall within one of the 19 “clinical families of services”;
  • The item/service must be provided at an excepted (grandfathered) off-campus PBD; and
  • The item/service must have been furnished and billed at least once from the period of November 1, 2014 through November 1, 2015.

As a result, providers could no longer utilize their grandfathered off-campus PBDs as locations to expand or relocate high-margin service lines in order to receive the more beneficial OPPS rates.

  1. 340B Payment Cuts Expanded to Non-Excepted Off-Campus Provider-Based Departments

In the OPPS Final Rule for CY 2018, CMS implemented significant payment cuts to the 340B Program for DSHs, RRCs, and urban SCHs, reducing Medicare reimbursement for most 340B drugs by 26.89%. At the time CMS did not apply the payment cuts to non-excepted off-campus PBDs. In the CY 2019 OPPS Proposed Rule CMS intends to expand these cuts to all 340B drugs furnished at non-excepted off-campus PBDs. Therefore, all Child Sites enrolled in the 340B Program as DSHs, RRCs, or urban SCHs would be subject to the 26.89% reduction beginning January 2019.

However, rural SCHs, Children’s Hospitals, and PPS-exempt cancer hospitals would still be exempt from the payment reduction.

These expanded cuts would be another blow in the ongoing battle by providers to protect the 340B Program and challenge the reimbursement reductions from 2018.

  1. Reduced Reimbursement for Medicare Part B Drugs

Currently, Medicare Part B drugs are reimbursed based on either ASP plus 6% or WAC plus 6%. CMS proposes to cut WAC reimbursement rates to WAC plus 3%, beginning January 2019. While the stated intent of these cuts is to lower overall drug costs to beneficiaries, this action is more likely to lead to price increases for most manufacturers’ new drugs in order to match the reimbursement rates of competitors. However, this only applies to the first few months of a new drug’s release, until the ASP is available. The ripple effect could well continue across the industry, driving up prices as new drug therapies are introduced to the market.

  1. New Reimbursement for Virtual Care and Telehealth

The MPFS proposed rule seeks to encourage and improve access to care by creating new reimbursement mechanisms for certain virtual care visits. Physicians could now be separately paid for virtual check-ins with patients when determining whether an in-person visit is needed.  In addition, practitioners could also receive payment for the evaluation of photos or videos submitted by patients through portals or other types of communication technology.

Telehealth services would also be expanded by eliminating the originating site geographic requirements for ESRD-related assessments performed at renal dialysis facilities and beneficiary homes, in addition to services provided to evaluate and treat acute stroke victims in mobile stroke units.

These are positive developments and signal the continued importance for providers to establish a strong telehealth strategy and infrastructure.

  1. Increased Payment Rates for OPPS, ASC, and MPFS

CMS also proposes to implement the following rate increases for 2019:

  • OPPS rates would be increased by 1.25%;
  • ASC rates would be increased by 2.0% for those that meet the quality reporting requirements under the ASCQR Program; and
  • MPFS conversion factor would be increased to $36.05, up from $35.99.

Comments on these proposed changes must be submitted to CMS by the following deadlines:

  • For the MPFS: September 10, 2018.
  • For the OPPS: September 24, 2018.

For any questions regarding the CY 2019 OPPS or MPFS Proposed Rules, or for any organizational assistance with any other health care regulatory or operational matters, please contact Advis, or call 708.478.7030.

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