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PHYSICIAN FEE SCHEDULE FINAL RULE
Fact sheet here.
Federal Register here.
The typescript "inspection copy" talies 3088 pages; look for the final typeset publication December 9.
HOSPITAL OUTPATIENT POLICY FINAL RULE
Fact sheet here.
Federal Register here.
The typescript "inspection copy" tallies 1734 pages; look for the final typeset publication November 27.
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Below, I highlight some changes that might have particular policy interest (or curiousity).
BRIEF NOTES
PFS
- The RVU conversion factor drops by $1 (3%) unless stopped by Congress.
- Many Congressional benefits for Medicare telehealth will expire on January 1, 2025, unless modified by Congress.
- CMS finalizes a benefit for mental health apps, FDA approved, with a complex system of G-codes (opposed by AMA).
- Inspection copy, p 587ff (587-601).
- New term, DMHT digital mental health treatment. [Which abbreviation appears 87 times.]
- There were concerns that CMS did not define "mental health condition" clearly enough, p. 591.
- On page 593, they note that "one commenter remarked about our inconistent language using the phrase "incident to or integral to." (Statute specifically calls out services "incident to" a physician, and "integral to" seemed vague.) I think that writer was me.
- CMS writes, "First, we acknowledge the inconsistent use of the term “incident to or integral to professional behavioral health services.” (593).
- Payment as a supply is available only when the practitioner billing the G code incurred a cost (for monthly use of the software).
- Invoice prices vary considerably so CMS is leaving the G code G0552 "contractor priced." (601).
- See a separate section on requested public input, in general, on RVU cost methodology for software as a medical device and AI (page 71-78, esp 77).
- CMS finalizes a special add-on for hopsital inpatient (or observation) care releated to infectious diseases, WHEN, performed by a practitioner in that field.
- There have been numerous articles on difficulties with "single dose vials" and discarded amounts CMS modifies some rules in keeping with Section 90004 of the "Infrastructure Investment and Jobs Act."
- In another tweak to drug rulemaking, CMS will treat as "not available" ASP drug prices that are negative.
- A physician's order will not be required for the preventive service, hepatitis B vaccine.
- Last year, CMS allowed stool-based colorectal screening tests to trigger a copay-free service for colonoscopy. Now, CMS allows blood-based CRC tests to trigger the copay-free service, as well.
OPPS
- CMS finalizes a proposal to now pay separately for costly nuclear medicine tracers (e.g. for Alzheimer's disease) in the hospital outpatient setting. These had previously been bundled to one price (including the scan). That price had previously by set primarily by inexpensive FDG that dominates the service. Tracers over $630 will be paid separately.
- This proposal had been sought by industry and hospitals for at least 15 years.
- CMS continues to implement Section 4135 of the Consolidated Appropriates Act of 2023, which provides "temporary additional payments" for non-opioid treatments for pain relief, which might otherwise be bundled in the OPPS setting.
- CMS will make a "blended payment" for certain devices under CED, so that patients who have been randomized, will not receive different bills based on their position in a control or treatment group.
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AI Corner
Here's an AI reading from the PFS rule, regarding RVU criteria in general, and regarding mental health apps.
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- For years and years, like in the 2000-2010 period, there was some factor for the Medicare Physician Fee schedule that would result in major price reductions that were perennially delayed by Congress. (They may have ultimately reached 20% or more.) What was the CMS budget principle called?
The budget principle you're referring to is the Sustainable Growth Rate (SGR) formula. Implemented in 1997, the SGR was designed to control the growth of Medicare spending on physician services by setting annual targets. If spending exceeded these targets, the SGR would trigger automatic cuts to the Medicare Physician Fee Schedule. Over time, these cuts grew significantly, reaching over 20% by the early 2010s.
However, the looming cuts created a situation known as the "doc fix," where Congress would repeatedly step in to delay or override the cuts. This pattern of delays continued until 2015, when the Medicare Access and CHIP Reauthorization Act (MACRA) permanently repealed the SGR, replacing it with a new payment system that incentivizes quality and value.
- Interestly as in this weekend's PFS final rule, there will seems to be a 3% or more annual cut that is deferred again and again by Congress, much like the "old days" of SGR!
You're correct in observing parallels between the current Medicare Physician Fee Schedule (PFS) adjustments and the former Sustainable Growth Rate (SGR) system. The SGR, established in 1997, aimed to control Medicare spending by linking physician payment updates to economic growth. However, it often mandated significant payment cuts, leading Congress to enact annual "doc fixes" to prevent these reductions.
In recent years, the Centers for Medicare & Medicaid Services (CMS) have proposed reductions in the PFS conversion factor, which determines physician reimbursement rates. For instance, the 2024 PFS final rule included a 3.37% decrease in the conversion factor. In response, Congress intervened to mitigate the impact. The Consolidated Appropriations Act of 2024, signed on March 9, 2024, provided a 2.93% update to the CY 2024 PFS conversion factor for services rendered from March 9 through December 31, 2024, effectively reducing the cut to approximately 1.8% for that period.
This pattern of proposed cuts followed by legislative intervention mirrors the SGR era's cycle of scheduled reductions and subsequent congressional "fixes." The recurring need for such interventions highlights ongoing challenges in establishing a sustainable and predictable physician payment system within Medicare.
- Could you clarify that the current annual cuts (which remind readers of SGR) come out of some principle in MACRA, if so.
Yes, the current recurring Medicare Physician Fee Schedule (PFS) cuts have their roots in the Medicare Access and CHIP Reauthorization Act (MACRA), even though MACRA itself replaced the Sustainable Growth Rate (SGR). While MACRA eliminated the SGR's automatic cuts, it established new mechanisms and requirements that indirectly impact reimbursement rates.
MACRA introduced the Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs) as part of the Quality Payment Program (QPP). These programs aimed to shift the focus from volume-based to value-based care, incentivizing quality and outcomes. However, MACRA also created budget neutrality requirements and conversion factor adjustments:
Budget Neutrality Adjustments: MACRA requires the PFS to remain budget-neutral, meaning increases in payment for certain services or providers must be offset by reductions elsewhere. This contributes to periodic updates that may decrease the conversion factor.
Sequestration and PAYGO: Broader federal budget policies, including sequestration and statutory "Pay-As-You-Go" (PAYGO) rules, have also imposed additional cuts on Medicare payments, leading to cumulative reductions similar to those once seen under the SGR.
Expiration of Temporary Increases: In recent years, Congress has intervened to provide temporary relief from these scheduled cuts (like the Consolidated Appropriations Act provisions). However, as these increases expire, the base payment rates reset to lower levels, necessitating further interventions to prevent steep declines in reimbursement.
Though MACRA intended to create stability post-SGR, these combined factors have led to a scenario where Congress frequently steps in to prevent reductions, reminiscent of the annual "doc fixes" under SGR.
