Highlights from the Medicare Physician Fee Schedule proposal for CY 2021: Remote physiologic monitoring clarity, telehealth expansion, drug and vaccine pricing and more

On August 3, the Centers for Medicare and Medicaid Services (CMS) issued several proposed Medicare payment rules for calendar year 2021, including the Physician Fee Schedule (PFS) proposed rule.  This rule dictates how (and how much) the Medicare program will pay for the services of physicians and other professionals and staff across a variety of care settings.  The CMS Fact Sheet, summarizing the key aspects of the 1,353 page rule, notes that the rules collectively “reflect a broader Administration-wide strategy to create a healthcare system that results in better accessibility, quality, affordability, empowerment, and innovation.”  These policies are highly influential even beyond their direct effects on the 60 million elderly and disabled Americans enrolled in traditional Medicare and the healthcare professionals who provide their services.  This year, some of the key areas where CMS has announced significant changes or solicited ideas for resolving policy challenges include evaluation and management (E/M) visit billing, remote physiologic monitoring (RPM), telehealth and drug pricing.  In several of these areas, CMS is proposing to take certain policy changes that it initially implemented on a temporary basis during the present novel coronavirus disease (COVID-19) public health emergency (PHE) and carry them forward permanently. 

We expect many of the proposals and open questions in the proposed rule will be of interest to our clients. You can submit comments through October 5, 2020.  More information about the process for submitting comments is included at the end of this alert. 

Remote physiologic monitoring (RPM) services

The proposed rule resolves some longstanding questions regarding RPM reimbursement.  CMS began adding RPM-specific Current Procedural Terminology (CPT) codes to the PFS in its final rules for CY 2018 and CY 2019, and the CY 2019 rule promised subregulatory guidance to address a number of open questions from commenters about RPM practices and how to bill for them.  However, the CY 2020 PFS final rule came and went without such guidance; CMS addressed several confusing aspects of certain RPM code descriptors simply by acknowledging “the frustration commenters expressed” and stating their intent “to consider these and other questions related to RPM in future rulemaking.” 

In the new PFS proposed rule, CMS finally proposes to resolve several of the payment puzzles that have troubled clinicians and technology companies for the last few years.  The rule provides a code-by-code walkthrough of the RPM process: 99453 for the clinical staff time needed for patient set up and education on the RPM device; 99454 for the device supply with daily recording for a 30-day period; (the older) 99091 for a professional’s analysis and interpretation of the digitally stored and transmitted data for a minimum of 30 minutes each 30 days; and 99457 for treatment planning and management through interactive communication with the patient for at least 20 minutes per month (with the possibility of 99458 for additional 20-minute increments of such treatment management).  Under the proposed rule, devices used for RPM and billed under 99453 would need to (i) meet the FDA definition of a “medical device” as defined by Section 201(h) of the Federal Food, Drug, and Cosmetic Act (but not necessarily be cleared by the FDA or ordered by a prescriber); (ii) automatically digitally collect physiological data (not just permit patient self-reporting); and (iii) generate “reliable and valid physiologic data that allow understanding of a patient’s health status to develop and manage a plan of treatment.”  RPM would be billable in acute-care contexts, not just chronic care management as suggested in some materials.  Care planning would be reimbursable (under 99457 and possibly 99458) whether performed by a physician or by clinical staff under a physician’s general supervision, but only if it involved “a real-time synchronous, two-way audio interaction that is capable of being enhanced with video or other kinds of data transmission.” 

Earlier this year, CMS made several temporary allowances in its RPM payment rules for the duration of the PHE.  Building on those changes, the proposed rule would permanently allow consent for RPM to be obtained at the time of service and would permanently allow physicians to bill for RPM services provided through non-clinical staff, employees and contractors under general supervision.  However, CMS is proposing that after the PHE, certain other temporary permissions will end.  RPM will again be covered only for established, rather than new, patients.  Code 99454 will require 16 days of data collection within the 30-day period covered by the claim, rather than the 2 days of data collection currently allowed on an emergency basis (but CMS is soliciting comments as to whether this creates gaps for things like short-term post-acute monitoring that should be covered).  Finally, in response to the President’s Executive Order issued on May 19, 2020, “Regulatory Relief To Support Economic Recovery,” CMS is seeking comment regarding whether the current RPM codes accurately and adequately describe the full range of clinical scenarios where RPM services may be of benefit to patients.

Telehealth services

The new proposed rule calls for adding the Healthcare Common Procedure Coding System (HCPCS) codes for 22 services to the list of telehealth services that Medicare covers.  For over 15 years, CMS has considered whether to add codes to its telehealth services list through a tiered model: services that are similar to existing telehealth services (in terms of technology and relationships between the parties to the interaction), which are considered “Category 1” and receive more streamlined consideration, and services that are more novel, which are considered “Category 2” and require additional evidence that they are appropriate for telehealth reimbursement.  The services that CMS is proposing to add on a Category 1 basis are:

• Care Planning for Patients with Cognitive Impairment HCPCS Codes 99483
• Domiciliary, Rest Home, or Custodial Care services HCPCS Code 99334 and 99335
• Group Psychotherapy HCPCS Code 90853
• Home Visits HCPCS Codes 99347 and 99348
• Neurobehavioral Status Exam HCPCS Code 96121
• Prolonged Services HCPCS Code 99XXX and
• Visit Complexity Associated with Certain Office/Outpatient E/Ms HCPCS Code GPC1X

This list includes two “home visit” services that under normal circumstances would only be applicable to telehealth for substance use disorder treatments (due to a special exemption from the highly restrictive Medicare telehealth statute, Social Security Act Section 1834(m)). 

Earlier this year, as part of its interim final rule with comment period for the COVID-19 PHE (the COVID IFC), CMS temporarily cleared various services for telehealth reimbursement on a Category 2 basis, which, in conjunction with certain emergency waivers of certain statutory restrictions on telehealth reimbursement, meant that dramatically more services are eligible for Medicare payment when performed remotely. 

The COVID IFC also changed how CMS goes about maintaining the telehealth services list itself: for the duration of the PHE, CMS announced that they would modify the list through subregulatory guidance rather than full notice-and-comment rulemaking, in order to give themselves flexibility to respond to rapidly changing care modes developed in response to the need for distanced care.  The new PFS proposed underscores that these temporary expansions in the telehealth service list could create a major disruption in coverage if the PHE ends at a time that does not conveniently align with a PFS notice-and-comment rulemaking cycle, depriving stakeholders of the chance to argue for continued coverage through the highly evidence-driven “Category 2” process.  CMS is therefore proposing to create a new “Category 3” track for adding telehealth services: certain temporarily covered services will remain covered through the end of the calendar year when the PHE expires in order to let the public submit additional evidence to support permanent changes.  However, not all of the codes added to the telehealth service list on a temporary basis will qualify for Category 3 protection: the proposed rule sets out criteria for identifying services “for which we could foresee a reasonable potential likelihood of clinical benefit when furnished via telehealth outside the circumstances of the PHE and that we anticipate would be able to demonstrate that clinical benefit in such a way as to meet our Category 2 criteria in full.” The services that CMS is proposing to add on a Category 3 basis are:

• Domiciliary, Rest Home, or Custodial Care services, Established patients HCPCS Codes 99336 and 99337
• ED Visits HCPCS Codes 99281, 99282, and 99283
• Home Visits, Established Patient HCPCS Codes 99349 and 99350
• Nursing facilities discharge day management HCPCS Codes 99315 and 99316 and
• Psychological and Neuropsychological Testing HCPCS Codes 96130, 96131, and 96132, and 96133

We briefly note some other clarifications and potential shifts in Medicare telehealth payment policy set forth in the PFS proposed rule:

• CMS is considering easing limits on how often physicians can check on their patients in nursing homes via telehealth and is seeking comment about whether such frequency limits should be removed altogether.  Because frequency limitations are meant to ensure periodic in-person visits, and CMS believes that in-person visits are important in hospitals, CMS does not intend to ease the frequency limits on telehealth visits to hospital inpatients.
• Physicians may bill for auxiliary personnel’s “incident-to” services where certain supervision requirements are met through telehealth and the physician is at a qualifying distant site.
• Telehealth restrictions (and telehealth billing codes) are not applicable where the clinician and the patient are at the same institution but interact via audio/video technology, such as when a clinician uses telehealth technologies to avoid potential viral exposure.
• Virtual direct supervision is currently permissible on an emergency basis for some procedures, such as diagnostic imaging, that require physician supervision.  CMS is extending this rule through at least the end of next year and may adopt more lasting changes (but notes several hypothetical scenarios where an on-site physician could be necessary).  CMS is seeking input on “guardrails” for any permanent changes to the supervision rules.
• More clinicians may perform covered communication technology-based services under a combination of new codes and permanent extension of PHE flexibilities for existing codes.
• CMS decided to cover certain audio-only visit codes for the duration of the PHE, and does not anticipate being able to continue covering them through its current telehealth service framework beyond the PHE due to restrictions in SSA 1834(m) but is seeking comment on how to reimburse for certain valuable audio-only check-ins.

These changes, in part, act on the President’s Executive Order, also issued on August 3 and separately addressed in a prior Alert, calling for CMS to expand the list of telehealth services covered under the Medicare Program. CMS is also seeking public comment on other services added to the Medicare telehealth services list under the PHE that CMS has not suggested adding to the list on a potential or temporary basis under the proposed rule.

Drug-related updates

The proposed rule proposes retaining the national payment amount from 2019 for administration of influenza, pneumococcal disease, and hepatitis B.  For other related services, including counseling and different types of administration such as transdermal, CMS acknowledges that payment amounts are significantly below CDC regional maximum charges and that sufficient payment is critical to maintain and restore vaccination rates.  CMS is therefore proposing an updated payment based on a benchmark CPT code (36000 introduction of needle or intracatheter, vein) that more accurately reflects the costs and effort of these services.  CMS further recommends that the add-on codes should be set at half the value of CPT 36000.  CMS also proposes using this valuation approach for related and add-on services when a vaccine becomes available for COVID-19.

CMS proposes expanding the codes recently finalized for Opioid Use Disorder including reimbursement for office-based treatment, care coordination, and therapy and counseling to include all substance use disorders and without limitation to the type of physician administering the services.  In acknowledgment of the significant cost and time involved for substance use treatment in the emergency department (ED), CMS proposes creating an add-on code for ED initiation of treatment, referral, and other supportive services for medication treatment for substance use.  The ED code would be based off of the existing code for alcohol substance intervention (G0397).

The SUPPORT Act required electronic prescribing of controlled substances (schedule II-V) in Medicare Part D with limited exceptions by January 1, 2021.  CMS is in the process of rulemaking and is seeking input on which exceptions should be permitted and whether there should be penalties for providers who do not e-prescribe controlled substances.

Finally, the rule proposes a new payment method for certain generic-like drugs in Part B, approved through pathway 505(b)(2) of the FFDCA.  While not exactly generic, these physician-administered drugs share significant portions of labeling with approved drugs and may rely on the approved drugs for which FDA has established safety and efficacy.  CMS proposes to assign these drugs to the same payment code as the multi-source drugs they are related to.

Other notable proposals

Under the proposed rule, CMS would also:

• Address COVID-19 challenges for Merit-based Incentive Payment System (MIPS) Alternative Payment Model (APM) participants by allowing entities that have experienced extreme hardships to submit an application to reweight the MIPS performance categories beginning with the 2020 performance period.   Further, for the 2020 MIPS performance period only, the total possible points available through the complex patient bonus points will increase to 10 points from 5 points.  For 2021, the proposal sets the performance threshold to avoid the MIPS penalty at 50 points, a 5-point increase rather than the planned 15-point increase to 60 points.
• Delay CMS’s proposal last year to update the MIPS through the MIPS Value Pathways until at least 2022.  In the meantime, CMS is seeking public comment on its proposed principles and criteria for how the agency will work with stakeholders to create MIPS Value Pathways options.
• Propose several key changes to Accountable Care Organization reporting and scoring, including sunsetting the CMS Web Interface, used to report quality measures, beginning in 2021.  CMS also proposes to eliminate the MIPS APM scoring standard beginning in 2021 and replace it with the APM Performance Pathway (APP).  The APP takes a similar approach to MIPS Value Pathways in that it aims to include a fixed set of measures for each performance category.  Similar to the MIPS APM scoring standard, cost will be weighted at 0% in the APP.
• Apply a budget neutrality adjustment that accounts for changes in relative value units (RVUs) that are converted into PFS payments rates. The PFS conversion factor for 2021 would be set at $32.26 when accounting for the budget neutrality adjustment – a 10%+ decrease from the 2020 conversion factor of $36.09.  CMS stated that its proposals include "standard technical proposals involving practice expense, including the implementation of the third year of the market-based supply and equipment pricing update, and standard rate-setting refinements to update premium data involving malpractice expense and geographic practice cost indices."  Notably, Medicare payment reallocations may benefit primary care providers but specialists would likely see a decrease.
• Extend on a permanent basis, professional scope-of-practice allowances under the PHE to allow nurse practitioners, physician assistants, certified nurse midwives, and certified nurse specialists – in addition to physicians – to supervise the administration of diagnostic tests in accordance with their state laws, as long as they maintain relationships with supervising physicians.  CMS is seeking public comment on whether to extend additional flexibilities, including for services rendered by teaching physicians.
• Revise data reporting periods and CMS’s planned phase-in of payment reductions for clinical diagnostic laboratory tests.
• Simplify certain billing and coding requirements for E/M and outpatient hospital visits by incorporating revisions recommended by the American Medical Association.

How to comment

As of the date of this alert, the draft text of the proposed rule remains in “public inspection” status with the Office of the Federal Register. The official text of the proposed rule is scheduled to be posted here on August 17, but the 60-day period for submitting comments is already running: all comments must be received by CMS no later than 5 pm Eastern time on Monday, October 5, 2020 to be guaranteed consideration. 

Commenters will be able to lodge their views electronically here or mail hard copies to one the following addresses:

If submitting via mail, please be sure to allow time for comments to be received before the closing date.

Please contact any of the authors or your DLA Piper attorney for additional information or for assistance in submitting comments.

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This information does not, and is not intended to, constitute legal advice. All information, content, and materials are for general informational purposes only. No reader should act, or refrain from acting, with respect to any particular legal matter on the basis of this information without first seeking legal advice from counsel in the relevant jurisdiction.