CMS Releases E&M Updates, Expands Telehealth, Makes ACO Changes

August 4, 2020

Among the changes announced this week include the expanded use of telehealth in Medicare, giving payment parity to hospital outpatient surgery centers, simplifying evaluation and management codes, and changing performance measures for accountable care organizations (ACOs).

Among a swath of proposed policy and payment changes announced this week by the Trump administration, CMS continued its effort to simplify coding requirements, quality measurements, and focus on 340B drug costs. In addition, it wants Medicare beneficiaries to be eligible to have more surgeries performed in hospital outpatient surgery centers, and it expanded the list of allowable telehealth services in Medicare.

CMS Tuesday released the proposed calendar year 2021 Physician Fee Schedule, which includes how evaluation and management (E&M) services are billed, as well as Quality Payment Program changes affecting accountable care organizations (ACOs). E&M includes examinations, disease diagnosis, risk assessment, and care coordination.

In addition, CMS said it would allow payers to temporarily offer premium credits to help those affected by the loss of health insurance coverage for the 2020 benefit year due to coronavirus disease 2019 (COVID-19). A study released last month said more than 10 million people are estimated to lose their employer-sponsored health insurance because of a job loss due to the pandemic between April and December of this year.

Yesterday, in the wake of the ongoing COVID-19 public health emergency, President Trump signed executive orders to allow changes in telehealth for rural areas to become permanent. The boom in telehealth, enabled by flexibilities from CMS earlier this year, is seen as one silver lining amidst the consequences of the pandemic, but most changes cannot become permanent without an act of Congress.

Explaining some of the raft of changes Tuesday, CMS Administrator Seema Verma said E&M codes have not been updated in 2 decades and do not reflect the growing number of chronic conditions and medically complex patients or social determinants of health.

CMS, the American Medical Association, and other stakeholders began working in July 2018 to pare down the coding and documentation needed for E&M visits while making them suitable for more complicated visits.

“The value of E&M has decreased as complexity has increased,” Verma said Tuesday.

The changes also include ones impacting workforce issues. For example, physicians would be able to virtually supervise others, and nurse practioners, physician assistants, and pharmacists would be able to supervise others if they have a reporting relationship with a physician.

Changes to the 340B Drug Program

In the 340B drug program, CMS would, in 2021, cut the payment rate for drugs to the average sales price (ASP) minus 28.7%.

Verma cited Friday’s decision by the DC Circuit Court of Appeals that ruled 2-1 that the administration was within its rights when it cut reimbursements for a category of outpatient drugs used by hospitals enrolled in the discount program, which was created to support safety net hospitals serving Medicaid patients.

CMS said the change would save Medicare beneficiaries an additional $85 million on out-of-pocket payments for these drugs and that Outpatient Prospective Payment System payments would be cut by approximately $427 million. CMS said the savings would be reallocated among all hospitals on an equal percentage basis, while exempting certain cancer hospitals, rural sole community hospitals, and children’s hospitals.

“In the alternative, and in light of the court’s recent decision, we propose in the alternative to continue our current policy of paying ASP minus 22.5% for 340B drugs,” CMS said.

CMS said the change was made based on hospital survey data on drug acquisition costs.

It’s not fair that hospitals can buy the drugs at lower costs than competitors, Verma said, while Medicare reimbursement had historically accounted for that discount.

In a statement, 340B Health, which represents hospitals that take part in the program, said it was “disappointed but not surprised” and said the survey data was flawed.

“340B disproportionate share hospitals provide 75% of Medicaid hospital care to patients, services that are reimbursed at rates lower than what it costs to deliver them. It should go without saying that during a global pandemic, it is foolhardy for the administration to stubbornly push and worsen a Medicare payment policy that hurts safety net hospitals and their patients,” said Maureen Testoni, the group’s president and CEO.

Changes to the Quality Payment Program

CMS said it would make a variety of changes related to how ACOs are assessed and measured and how they report data, such as:

  • Implementing the Merit-based Incentive Payment System (MIPS) Value Pathways (MVPs) in 2022 instead of next year
  • Increasing the performance threshold from 45 points for the 2020 performance year to 50 points for 2021
  • Decreasing performance category weights for quality to 40% from 45%, while increasing the cost weight to 20%, up from 15%

In addition, CMS said it would create a new alternative payment model called the APP in 2021. CMS said it would be “complementary” to MVPs and be composed of a fixed set of measures for each performance category: 50% for quality, 30% for “promoting interoperability,” and 20% for “improvement activities.”

In the Medicare Shared Savings Program (MSSP), CMS said it would waive the requirement for ACOs to field a Consumer Assessment of Healthcare Providers and Systems (CAHPS) for ACOs survey and give ACOs automatic full credit for CAHPS for 2020.

In 2021, CMS would ask ACOs in the MSSP to report quality differently, reducing the number of measures to report from 10 to 3 while increasing the focus on patient outcomes. Reacting to the changes, the National Association of ACOs (NAACOS) said the changes to quality measures and a new reporting process are happening too soon, especially during COVID-19.

“It is a considerable undertaking for ACOs to move to a new reporting process, especially while they are focused on battling a pandemic,” NAACOS said in a statement.

CMS is accepting comments on the proposed rule until October 5.

Other proposed changes are:

Expanding outpatient surgeries: under this part of the proposal, CMS would eliminate the “Inpatient Only list,” where Medicare will only pay for a service if it takes place in the hospital inpatient setting. The decision where a patient would have the surgery would be up to the provider, CMS said. The move would phase in over 3 years, adding more than 1700 services to the hospital outpatient setting. In 2021, that would include 300 musculoskeletal services. Ambulatory surgery centers would also see 11 additional procedures they are allowed to bill for Medicare beneficiaries.

Insurance coverage: under federal law, issuers generally are not permitted to reduce premiums that are otherwise due after the start of the benefit year. Under a separate announcement Tuesday, CMS said it would allow health insurance companies in the individual and small group markets to temporarily offer premium credits for 2020 coverage.