CMS Proposes Changes to Quality Payment Program, Reimbursement for New Drugs

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CMS Administator Seema Verma said the changes are designed to reduce administrative burdens for physicians so they can spend more time with patients. A group representing community oncologists said a reimbursement change for new drugs could have unintended consequences.

CMS on Thursday proposed sweeping changes to the way doctors bill Medicare, which its top administrator said are designed to make life less bureaucratic for physicians and give them more time with patients.

But in exchange, Trump administration officials call for scaling back what physicians get paid to administer brand-new drugs through Medicare Part B, cutting the “add-on” percentage to the wholesale acquisition cost (WAC) from 6% to 3%. The change will mean savings for CMS, although officials declined to say how much, as well as lower out-of-pocket costs for patients.

The proposals, contained in the 2019 Physician Fee Schedule (PFS) and changes to the Quality Payment Program (QPP), were unveiled in a press call CMS Administrator Seema Verma had with reporters. Verma said the proposed changes were a direct result of conversations with providers across the country, which she said revealed widespread frustration with the amount of time spent dealing with paperwork and billing codes.

“If we are serious about improving quality and access for patients, we have to address the concerns of physicians on the front lines,” she said. Time spent at the computer is time not spent with patients, Verma said.

Changes proposed for the QPP include changes to streamline interoperability reporting, changes to benefit small practices, and an ability for some low-volume practices to “opt in” to reporting under the Merit-based Incentive Payment System (MIPS).

Among the proposals released yesterday:


Telemedicine. A key change to the PFS would allow doctors to bill Medicare for brief “check-ins” with beneficiaries done virtually, by “phone or video chat.” A patient who just wants to ask about the effects of a medication could avoid a time-consuming trip to the office, for example. The change “is not intended to replace office visits, but augment them,” Verma said. Another change would reimburse physicians for evaluating a patient photo of a skin condition.

CMS’ steps into telemedicine did not extend into changes to expand telemedicine reimbursement to genetic counselors, which cancer specialists have identified as a barrier to administering some new therapies.

E/M Payments. Documentation guidelines for “evaluation and management” would be overhauled, allowing physicians to account for time spent with patients. Instead of the current 5 levels of visits, CMS is proposing a blended rate for levels 2 through 5 with add-on codes, as well as other changes to reduce required documentation. Physicians would have some choices about how they document visits, which Verma said would allow them to record more clinically meaningful data.

Verma said that CMS expects that for most physicians, the changes will result in revenue changes of 1% to 2% “up or down,” and that any negative effects will be “outweighed by the dramatic reduction in administrative burden.”

CMS estimates that its overall proposal will save physicians 51 hours per clinician per year.

Billing for new drugs. CMS expects that changes to Medicare Part B billing will bring some pushback, as Verma referred to it a “proposal.” Reducing the add-on percentage will also mean less revenue for physicians for new drugs, including chemotherapy and biologics. Verma said this is part of the administration’s broader effort to reduce what patients pay for prescription drugs, and that more pieces of that effort are on the way.

But savings to Medicare are clearly part of the picture, too. CMS’ information shows that Part B drug spending rose from $17.6 billion in 2011 to $28 billion in 2016, and per capita costs rose 54%. Verma noted that the lower percentage would only apply for the first 2 quarters a drug is on the market, after which point the average sales price (ASP) would be known, and billing would revert to the well-known ASP plus 6%.

The proposal seeks “greater parity” between the WAC and the ASP prices. “In the context of these concerns, we believe that implementation of these proposals will improve Medicare payment rates by better aligning payments with drug acquisition costs, especially for the growing number of drugs with high annual spending and high launch prices where single doses can cost tens or even hundreds of thousands of dollars.”

The Community Oncology Alliance (COA) said that the sequester means the add-on percentage will be 1.35% for the first 6 months a drug is on the market. COA fears this change will cause drug manufacturers to boost WAC prices to keep new products competitive.

“No words can adequately describe how puzzling the CMS proposals are,” said Ted Okon, executive director of COA. “At a time when the Trump administration is floating its blueprint to bring down drug prices, they are proposing a move that will actually fuel list prices of chemotherapy and other life-saving drugs. And their scheme to pay a physician the same amount for evaluating a case of sniffles and a complex brain cancer simply defies all logic. It is the antithesis of value-based healthcare and cheapens the medical care seniors are entitled to under Medicare.”

Clinical Laboratory Fee Schedule. CMS seeks to refine a recent overhaul to the CLFS and seeks comments on “alternative approaches to defining an applicable laboratory.” This could expand the number of eligible laboratories. CMS asked for additional comments on ways it can reduce billing burdens on small laboratories and physicians, as diagnostic tests play a bigger role in creating personalized treatment regimens.

Changes to the QPP. Put in place as part of the 2015 Medicare Access and CHIP Reauthorization Act (MACRA), the QPP is the vehicle for moving physicians from a fee-for-service to value-based reimbursement system, which uses MIPS as the bridge to moving physicians to alternative payment models, or APMs. Proposed changes include:

  • Expanding the definition of MIPS-eligible clinicians to include physical therapists, occupational therapists, clinical social workers, and clinical psychologists.
  • Adjusting the criteria for the low-volume threshold determination, which allows physicians who do not treat many Medicare patients to be exempt from reporting requirements. Criteria for 2019 would be (1) billing less than $90,000, (2) having 200 beneficiaries or fewer, and (3) having 200 professional services or fewer.
  • Clinicians who meet 1 or 2 of these elements could choose to report under MIPS; the opt-in policy is new for 2019.

Changes to MIPS reporting are also designed to mean less work for physicians and practices and to weed out measures that were process-driven. These include:

  • Changing the MIPS Promoting Interoperability category to align with the Promoting Interoperability Program for hospitals.
  • Requiring fewer measures, offering more flexibility in reporting quality measures, and incorporating scoring from the hospital interoperability performance category.
  • Allowing some facility-based reporting for physicians.

Price transparency. Although CMS has already taken steps to require more disclosure from hospitals, “challenges continue to exist for patients” due to insufficient transparency. CMS is seeking public comment on how it can further compel pricing transparency to reduce out-of-pocket costs for consumers, and how patients can be better informed.