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November 7, 2024 – While we all are focused on the election results, let’s take a quick break to digest some regs and eggs. The Centers for Medicare & Medicaid Services (CMS) “spoiled” all of us in the health policy world with a huge buffet of regs last Friday, releasing all four Medicare calendar year (CY) 2025 payment regs at 4:15 pm EDT: the End-Stage Renal Disease, Home Health, Outpatient Prospective Payment System, and Physician Fee Schedule (PFS) final regs. We are still digesting this huge meal of regs, so my colleagues and I will highlight them piece by piece, starting with the PFS. To help me go over this massive 3,088-page final reg, I’m bringing in my colleague, Rachel Hollander.
The PFS is the major reg affecting payments for physicians and other clinicians. As we noted in a previous Regs & Eggs blog post, CMS received around 12,000 comments on the proposed reg, released in July. While CMS made some adjustments to policies based on these comments, overall the agency finalized most policies as proposed.
For more on the PFS final reg, read our key takeaways and access our updated, interactive data dashboard.
Let’s start with the major area of interest to clinicians and other stakeholders: the CY 2025 payment update itself. While CMS proposed a reduction to the conversion factor (CF) of 2.8%, CMS finalized a slightly bigger cut of 2.83%. The final CY 2025 CF is $32.3465, compared to the 2024 CF of $33.2875.
Why was the CF cut slightly bigger than proposed? One contributing factor is a budget neutrality adjustment that CMS makes each year to the PFS CF. CMS is required by law to ensure that any changes it makes to specific PFS codes do not increase PFS spending by more than $20 million. Since most changes to codes trigger this budget neutrality requirement, every year CMS makes an overall adjustment (usually negative) to the PFS CF. The PFS CF is the factor that turns relative value units, the building blocks of PFS codes, into a dollar figure. A previous Regs & Eggs blog post explored something unusual that we hadn’t seen in many years: a positive budget neutrality adjustment in the proposed reg. That positive budget neutrality adjustment (0.05%) slightly mitigated our expected CF reduction of 2.93% to “only” 2.8%. This final reg still includes a positive budget neutrality adjustment, but it is slightly lower – only 0.02%. Thus, the final cut to the CF is a bit larger than originally proposed.
CMS did not explicitly state why the positive budget neutrality adjustment is lower, but it may be due to the 90-day global surgical policy, as we explained in our previous post. CMS finalized the policy to broaden applicability of transfer of care modifiers to both formal and informal transfers of care (hence the positive budget neutrality adjustment) but for 90-day global surgical packages reported with modifier -54 only, not those reported with modifiers -54, -55 and -56, as proposed. Modifiers -54 is used to indicate that the proceduralist performed only the surgical procedure portion of the global package, while modifier -55 and modifier -56 refer to when the practitioner only performs the post-operative and pre-operative portions of the global package respectively. Thus, while CMS decided to expand the use of modifier -54 for CY 2025, CMS will maintain its current policy that modifiers -55 and -56 are billed exclusively in cases where there is a documented formal transfer of care. Expanding the transfer of care policy to 90-day global packages reported with modifier -54 only could be contributing to the slight change in the budget neutrality adjustment from proposed to final due to the payment reduction associated with the modifier -54. Again, while CMS’s decision to modify this policy could have reduced the positive budget neutrality adjustment, other factors could have driven the smaller adjustment as well.
All in all, this represents the fifth year in a row in which CMS finalized a cut to the PFS CF. This cut comes at a time when physician practices, hospitals that employ physicians, and other stakeholders are facing rising costs due to inflation, staffing shortages, and significant challenges posed by other regulatory burdens. There is bipartisan interest in addressing this ongoing reduction to PFS payments. On October 11, 2024, a group of 233 US House of Representatives members from both parties signed a joint letter to House leadership asking them to move legislation that would provide clinicians with a permanent annual inflationary update in Medicare equivalent to the Medicare Economic Index (MEI). And just a few weeks ago, a group of House members introduced the Medicare Patient Access and Practice Stabilization Act, which would provide a one-year fix in 2025 covering the PFS CF cut and increasing the CF by an additional amount equal to half of the MEI.
Despite this interest, it is unclear whether Congress will provide any sort of inflationary update to clinicians in 2025. However, Congress is likely to step in (as it has done the previous four years) and avert at least part of the 2.83% reduction to the CF before the cut goes into effect on January 1, 2025.
CMS can create its own Healthcare Common Procedure Coding System (HCPCS) codes and does not need to rely solely on coding and payment recommendations from the American Medical Association CPT Editorial Panel and/or Relative Value Scale Update Committee. This year CMS proposed to establish coding and payment more than 20 new HCPCS “G” codes (a high number compared to previous years).
Notably, CMS proposed and finalized a set of three new G-codes for advanced primary care management (APCM) services (G0556, G0557, and G0558). The APCM services incorporate elements of several existing care management and communication-technology-based services into a bundle of services that reflect the essential elements of the delivery of advanced primary care, including principal care management, transitional care management, and chronic care management. The codes are stratified into three levels based on the number of chronic conditions and enrollment as a qualified Medicare beneficiary, reflecting both patient medical and social complexity. In response to public comments, CMS slightly increased valuation of the Level 1 APCM services code (G0556) from a proposed payment of approximately $10 to a final payment of approximately $15. CMS said it may revisit the valuation of this and other APCM codes in future rulemaking.
CMS finalized its proposal to expand the add-on code for complexity in CY 2025. As background, in the CY 2024 PFS final reg, CMS finalized a new office/outpatient evaluation and management (E/M) visit complexity add-on code, G2211. CMS established requirements for when the code could be billed, including restricting the use of the code when the underlying office/outpatient E/M visit is reported with CPT modifier -25, which denotes a significant, separately identifiable office/outpatient E/M visit by the same provider on the same day as a procedure or other service. Some commenters expressed concern about this restriction because some preventive services such as the annual wellness visit or a preventive vaccine are often provided on the same day as a separately identifiable office/outpatient E/M visit, billed with modifier -25. After considering these concerns, CMS proposed and finalized an expansion in the use of this add-on code to allow for payment when the underlying office/outpatient E/M base code is reported by the same practitioner on the same day as an annual wellness visit, vaccine administration, or any Medicare Part B preventive service furnished in the office or outpatient setting.
CMS finalized several policies aimed at improving access to behavioral health services. Within opioid treatment programs, CMS finalized coding and payment for conducting ongoing social determinants of health risk assessments, allowing initial visits for treatment with methadone to be provided virtually, and allowing audio-only periodic assessments. CMS also finalized its proposal, with some modifications, to pay for safety planning interventions and follow-up services post-discharge from an emergency department for a crisis encounter. Based on public comments, CMS established that the safety planning intervention code, G0560, will be a standalone code rather than an add-on code as proposed, and CMS will allow billing in units of 20 minutes rather than only allowing one 20-minute code.
Stakeholders interested in telehealth policies are still waiting with bated breath for Congress to step in and extend the “originating site” and “geographic” waivers that are set to expire at the end of 2024. Without further congressional action, Medicare telehealth services will return to a more limited benefit for most Medicare beneficiaries come January 1, 2025, as beneficiaries will only be able to receive these services from designated facilities in rural areas (they won’t be able to receive them in urban areas or from their homes). As discussed in a previous Regs & Eggs blog post, CMS can’t assume that these waivers will continue and therefore finalized policies in this reg under the operating assumption that the waivers expire at the end of the year.
While CMS is limited in some respects in this space, it did finalize several policies that are not dependent on further action by Congress, such as virtual components of direct supervision and teaching physicians, as well as the updated definition of “interactive telecommunication.” CMS also will keep many “temporary” codes on the Medicare telehealth list for at least another year, and promised to conduct a comprehensive analysis of all these codes to decide which should be made permanent and which should eventually be removed from the list. The agency did, however, reverse course on several requests to add codes to the lists. CMS also finalized its proposal not to reimburse the 16 new audio-visual and audio-only telemedicine E/M codes created by the CPT Editorial Panel. CMS continues to believe that the existing office/outpatient E/M codes, which are on the Medicare telehealth services list, already describe these services. Finally, CMS finalized its proposal to continue to permit distant site practitioners to use their currently enrolled practice location address (instead of their home address) on Medicare enrollment forms when providing telehealth services from their home through CY 2025.
Under the Quality Payment Program established by the Medicare Access and CHIP Reauthorization Act, most Medicare-participating clinicians can be subject to payment adjustments based on performance under a quality and cost performance program called the Merit-based Incentive Payment System (MIPS), or they can participate in the Advanced Alternative Payment Model (APM) track. Most clinicians are subject to MIPS. Eligible clinicians in MIPS have payments increased, maintained, or decreased based on relative performance in four performance categories: quality, cost, promoting interoperability, and improvement activities.
Based on how that score compares to a pre-established performance threshold, a clinician receives an upward, downward, or neutral payment adjustment two years after the performance period. For example, performance in 2025 will impact Medicare payments in 2027. CMS again maintained the MIPS performance threshold of 75 points for performance year 2025/payment year 2027. Historically, CMS has increased the MIPS performance threshold, but during the COVID-19 public health emergency, the agency maintained a 75-point threshold for consecutive years, allowing MIPS participants to avoid additional quality reporting challenges.
CMS finalized most other MIPS policies as proposed, including changes to how the cost category is scored. Based on the policies in the reg, CMS believes that more than three-quarters of clinicians (77.5%) will receive a positive adjustment in performance year 2025/payment year 2027 and the mean score will be 86.4 points. MIPS is a budget-neutral program, so CMS uses the negative payment adjustments to fund the pool of positive payment adjustments. Since CMS estimates that most clinicians will avoid a negative payment adjustment and receive a positive payment adjustment, CMS estimates that the mean positive adjustment will only be 1.31% in performance year 2025/payment year 2027. For context, CMS recently released performance numbers for performance year 2023/payment year 2025 and found that the mean 2023 MIPS final score was 82.91 points and the mean payment adjustment was 0.56%. The maximum 2025 MIPS positive payment adjustment was only 2.15% (for clinicians who received a final score of 100 points).
CMS previously implemented an alternative to traditional MIPS, the MIPS Value Pathways (MVPs). While MVPs are currently optional, CMS has signaled its intent to sunset traditional MIPS and make MVPs mandatory at some point going forward. MVPs are supposed to represent a more streamlined reporting option for clinicians, where clinicians can report on an aligned set of measure options designed to be meaningful to patient care, better connect measures across MIPS categories, and be more relevant to a clinician’s scope of practice. However, many stakeholders have expressed concerns about MVPs, including their use of “population-based” measures and the fact that CMS will eventually require “subgroup reporting” in MVPs (starting in 2026):
Thus, stakeholders have argued that the MVPs still have all the underlying deficiencies of MIPS, and have opposed making the MVPs mandatory. Despite these stakeholder objections, CMS stated again in this final reg that it will eventually make MVPs mandatory (the timeline will be established in a future reg). CMS also finalized six new MVPs: ophthalmology, dermatology, gastroenterology, pulmonology, urology, and surgical care. A total of 21 MVPs are now available for the CY 2025 performance period.
CMS finalized several changes to the Medicare Shared Savings Program (MSSP), the national accountable care organization (ACO) program in Medicare. The policies are aimed at increasing program participation and success to help meet CMS’s goal of having 100% of traditional Medicare beneficiaries in a care relationship with accountability for quality and total cost of care by 2030.
CMS will establish a new “prepaid shared savings” option for eligible ACOs with a history of earning shared savings. Eligible ACOs that apply and are approved will receive advances (in quarterly payments) of earned shared savings that they can use to make investments to aid beneficiaries, such as direct beneficiary services and improved care coordination and quality through staffing or healthcare infrastructure. CMS finalized a health equity benchmark adjustment to encourage ACOs to serve rural and underserved communities. The final rule also includes:
CMS made changes to the program’s eligibility requirements to give ACOs that fail to maintain the minimum number of beneficiaries more time to remedy the issue. CMS finalized proposed revisions to the definition of primary care services, with one modification, to capture more of the services rendered by primary care providers. On the quality reporting side, CMS finalized (with some modifications) the adoption of an APM Performance Pathway quality measure set that aligns with the Universal Foundation quality measures and extends current incentives to report via electronic clinical quality measures.
Expanding access to dental care has been a Biden Administration priority. In the CY 2023 final reg, CMS clarified and codified that Medicare payment under Parts A and B can be made when dental services are furnished in either the inpatient or outpatient setting when the dental services are “inextricably linked” to, and substantially related and integral to, the clinical success of other covered services. In this reg, CMS finalized its proposal to expand the list of clinical scenarios under which Medicare payment may be made for dental services to include certain dental services associated with dialysis services for beneficiaries with end-stage renal disease.
Well, that’s a ton of information, and we only scratched the surface. Other policies we didn’t touch on include:
Reach out to us at McDermott+ if you want a deeper dive into any of these policies!
Until next week, this is Jeffrey (and Rachel) saying, enjoy reading regs with your eggs.
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