July 14, 2017

How CMS plans to change clinician pay next year: 6 takeaways

Daily Briefing

By Hamza Hasan and Krista Teske

On Thursday, CMS released its 2018 proposed rule on the Medicare Physician Fee Schedule (MPFS)—which determines Medicare payment rates each year.

The agency is accepting comments on the proposal through September 11, and we expect a final rule to be released in the late fall.

Here are takeaways for provider organizations based on our early analysis of the 815-page proposed rule:

1. The proposal would dramatically reduce payments for hospital outpatient departments affected by 'site-neutral' provision

At the start of this year, CMS began implementing the controversial site-neutral payment provision that became law under Section 603 of the 2015 Bipartisan Budget Act. As a result, newer off-campus hospital outpatient departments (specifically, those that began furnishing services billable under the Hospital Outpatient Prospective Payment System (HOPPS) after November 1, 2015) cannot bill under HOPPS. Instead, they receive reimbursement at a site-specific MPFS rate, which in CY 2017 is equal to 50 percent of the HOPPS rate for each service.

That meant a big payment cut for affected hospital outpatient departments, and represented CMS' first big step toward equalizing payment rates across the hospital outpatient and freestanding outpatient settings.

In the new MPFS proposed rule for 2018, CMS has put forward an even bigger cut. Specifically, CMS has proposed cutting the payment rate for non-excepted providers in half, to 25% of the HOPPS rate in CY 2018.

Need a 'site-neutral' refresher? See our Q&A.

However, it appears the agency may be open to persuasion for more provider-favorable payment terms depending on public feedback. CMS indicated that it might be willing to finalize a less dramatic cut—for example, a site-specific MPFS rate at 40 percent of the HOPPS rate—based upon the comments submitted for the MPFS proposed rule.

2. Diagnostic testing facility payment would be hit the hardest, while behavioral health specialists would see the greatest gains

Each year, the proposal outlines CMS' estimated total impact of its proposed payment changes on specific types of clinicians and facilities. This year, diagnostic testing facilities face the greatest possible payment cuts of an estimated negative 6 percent due to reductions in their practice expense relative value units (RVUs). Alternatively, behavioral health specialists, including clinical social workers and psychologists, would see an increase in payment of 3 percent and 2 percent, respectively, to address high overhead costs for providing face-to-face behavioral health services.

Estimated impact of the 2018 proposed rule on select specialties

3.The Medicare Diabetes Prevention Program (MDPP) is on track for 2018 roll out, with important new payment details

In the 2017 MPFS rulemaking cycle, CMS finalized its proposal to expand the National Diabetes Prevention Program—an educational and coaching program developed by the CDC that successfully prevented participants from developing type two diabetes--into Medicare starting in 2018.

In the 2018 proposed rule, CMS offered more details on the rollout of this program, including a proposed payment structure, guidelines for beneficiary participation incentives, and billing requirements.  The proposed payment structure still links some payment to weight loss, as proposed in the 2017 rule.  To reduce the financial risk for MDPP suppliers with beneficiaries who don't meet weight loss goals, payments for sessions in the first six months of the program would be based entirely on attendance.  However, over the course of the three-year program, payments for patients who not only attend sessions but also achieve at least a 5% weight loss goal would be $660 higher than for patients who meet only attendance goals—a significant payment differential that signals CMS' continued commitment to outcomes-based payment arrangements.

4. CMS wants to simplify and streamline the physician fee schedule payment system and ease the clinician documentation burden

In the fact sheet released with the rule, CMS explicitly stated that it wants "to start a national conversation about… how Medicare can contribute to making the delivery system less bureaucratic and complex."

Many of CMS' proposals in this rule seek to re-assess and evaluate prior regulations with an eye toward simplification and minimizing clinician burden. For example, in response to provider complaints that Evaluation and Management (E/M) documentation guidelines are medically outdated, complex, and do not account for EHR use, CMS plans to embark on a multi-year effort to revise E/M guidelines—which have not been updated in over 20 years—to reduce clinical burden. Similarly, CMS also proposes to reduce the burden for providers submitting initial Shared Savings Program applications.

5. Once again, the proposed MPFS conversation factor increases only ever so slightly

CMS set the proposed 2018 conversion factor at $35.99, only about 11 cents greater than the 2017 conversion factor. Critically, this conversion factor takes into account the 0.50 percent update factor as mandated under MACRA. However, similar to what we've seen in previous years, this update factor was cut short by the cuts imposed under the Misvalued Codes Initiative.

Calculation of the CY 2018 Physician Fee Schedule Conversion Factor

6. The Imaging Appropriate Use Criteria (AUC) Program would be delayed to 2019

The agency proposed (another) delay to the Imaging AUC Program, which will require providers to consult AUC via clinical decision support mechanism for all advanced imaging orders. Furnishing providers, namely radiologists and imaging offices, will be required to document that consultation on claims for Medicare reimbursement. While the program was set to take effect in six short months, CMS responded to stakeholder concerns by delaying provider requirements until 2019, which the agency proposes to use as an educational and testing year, with claims denials setting in the following year.

Despite the delay, CMS remains committed to incentivizing early use of advanced imaging appropriate use criteria as providers can still earn credit in the Merit-Based Incentive Payment System (MIPS) for using clinical decision support tools.

Medicare Payment Update: Proposed Rule for Hospital Outpatient Payments for CY 2018

Kenna Hawes, Senior Analyst

Examine CMS’s proposed changes to Hospital Outpatient and Ambulatory Surgical Center Payments in CY 2018, including potential updates to payment structure, payment rates, quality updates, and the broader implications of these changes.

Register Here

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