Groups Pan Proposed Medicare Changes on Office Visits, Drugs

Kerry Dooley Young

September 13, 2018

The Trump administration in the weeks ahead must decide whether to proceed with widely derided Medicare proposals for changing payments for medical office visits and for new drugs that are administered by physicians.

The Centers for Medicare & Medicaid Services (CMS) received a barrage of negative feedback about the proposals ahead of the September 10 deadline for public comments on its draft 2019 physician fee schedule update. The final version of this rule is due to be released around November 1, 2018.

Although CMS drew praise for its attempts within the rule to reduce healthcare professionals' administrative burden, the agency faces tough opposition to plans that groups say would cut Medicare reimbursement for evaluation and management (E/M) services.

"The proposed restructuring has generated a groundswell of opposition from individual physicians and nearly every physician and health professional organization in the country, including those whose members are projected to see increases in their Medicare payments," said James L. Madara, MD, the American Medical Association's (AMA's) chief executive officer, in a September 10 letter to CMS.

The AMA asked CMS to set aside this proposal and allow an expert physician work group to develop an alternative that could be implemented in 2020.

Office or outpatient E/M services are the most common set of services billed through the giant federal health program's payments to physicians. They accounted for 27% of the physician fee schedule in 2016, according to the Medicare Payment Advisory Commission (MedPAC). The E/M proposal in the draft rule would collapse what's now a five-step range into two (level 1 covers initial contacts with patients often handled by other staff in a medical office, leaving levels 2 to 5 of the E/M codes of most interest to physicians). CMS' proposal would change payment for care of new patients from a current range of $76–$211 to a single rate of $135, while pay for this care of established patients would change from a current range of $45–$148 to $93, MedPAC said in comment letter to CMS.

In August, the AMA joined 50 state medical societies and 120 national organizations, including the American Academy of Family Physicians, in a letter to CMS protesting the E/M changes. The proposal also has sparked dissent from consumer groups such as the nonprofit Families USA and AARP, the nonpartisan, nonprofit organization that represents people aged 50 years and older in policy debates.

AARP, which claims nearly 38 million members, asked CMS to stick with its existing policy until data are collected or a pilot program is conducted to see how the E/M changes would affect care of patients.

Geriatricians, neurologists, and endocrinologists, who serve many patients with serious medical conditions, would see a significant drop in payments under the new E/M rules, said David Certner, AARP's legislative counsel, in a comment to CMS. Changing reimbursement this way could lead to cutting the time spent with patients who have complex conditions, or it could cause a shift in the amount of time a physician spends with a patient per visit, so that what is now covered in a single, lengthier visit would be covered over multiple, short visits, Certner said.

"The proposed changes may lead to individuals with complex needs having their visits cut short (thus, reducing quality of care), or they may have difficulty finding physicians who will treat them," Certner told CMS.

Marc Weisman, DO, of Michigan Healthcare Professionals, told CMS in a comment that enacting the proposal "would be a shame for thousands of physicians" but, "much more importantly," for millions of patients.

Weisman, who is a gerontologist, said this approach would unfairly tax the physicians who treat people with the most serious conditions. Although dermatologists do at times encounter patients with life-threatening ailments, much of their work consists of seeing people with rashes, acne, and less serious cases of skin cancers, Weisman said. "This is what allows them to operate at a clip of nearly sixty patients per day," he said.

Gerontologists, on the other hand, routinely see people who have developed new symptoms or illnesses and who already have four or five major medical conditions.

On an average day, Weisman may see 18 people, three of whom having recently left the hospital and in need help with transition care. Although these patients may also see specialists, gerontologists must address the status of their chronic diseases and medications during visits. About one in three patients are accompanied by a family member or professional caregiver. He estimates that he spends more than 40 minutes on average with patients, not counting the time his staff spends tracking down medical information from hospitals and the patients' other physicians.

Weisman sought to rebuff CMS' argument that the collapsing of the E/M codes would produce significant administrative savings.

"The model, if I understand it, is predicated on the idea that if CMS requires less documentation to support the now emasculated reimbursements, we will save so much time in reduced charting that we come out ahead," Weisman wrote. "The truth is that robust documentation will still be necessary both for medical (sharing data with other providers) and legal reasons, so there will be very little change in our administrative burden but a whopping" drop in reimbursement.

Congressional Questions

MedPAC also found fault with CMS' E/M proposal, even after pressing the agency for years to address flaws in this billing approach.

The influential advisory panel said it supports efforts to reduce the administrative burden on physicians. MedPAC also has raised questions about "coding intensity," or a tendency to seek more reimbursement through the E/M systems. "Just in the last five years, billing for Level 4 established patient office visits has increased — as a percentage of all such visits — from 39 percent to 45 percent while billing for Levels 1 through 3 has decreased," wrote MedPAC Chairman Francis J. Crosson, MD, in a letter to CMS.

Still, MedPAC doesn't support the proposed switch to a single composite rate for levels 2–5 E/M codes. Even though CMS has proposed a number of add-on codes by which most specialties would see aggregate payment changes of less than 3%, "the effect for any given clinician could be substantial," Crosson writes.

"In particular, clinicians may be less willing to see complex patients because they would be paid the same amount for less complex and more complex patients," writes Crosson.

CMS already is facing questions from lawmakers about the E/M proposal, Anders Gilberg, senior vice president for government affairs for the Medical Group Management Association, told Medscape Medical News.

"Congress can very much influence the outcome of this proposal in its oversight capacity, and I expect CMS will take its concerns seriously," Gilberg said.

Two of the most influential lawmakers for health policy, for example, already have publicly raised questions about the E/M plan. Kevin Brady (R-TX), chairman of the House Committee on Ways and Means, and Rep. Peter Roskam (R-IL), chairman of that committee's health panel, praised many of CMS' efforts to reduce the administrative burden on physicians in a September 4 letter to CMS Administrator Seema Verma. But they said the E/M proposal may be "an oversimplification that could have unintended consequences."

"We ask that you take a more deliberate approach working with stakeholders, and consider a policy with at least three coding categories, including considerations such as patient risk scores in addition to time spent, to ensure higher levels of accuracy while still reducing burdens," Brady and Roskam write.

Brady and Roskam also raised concerns with CMS' plan to alter how Medicare pays for new medicines administered by physicians.

For most drugs, CMS pays a nominal premium of 6% to the reported average sales price (ASP) of a drug. Federal budget cuts reduce the actual payment to about 4.4%. For newer drugs, CMS rules call for adding a 6% add-on to the wholesale acquisition costs (WAC), as there is not yet enough data for the ASP price. In the draft physician fee rule, CMS is proposing to drop the additional payment to a 3% add-on to WAC during an initial phase-in period. Brady and Roskam told CMS that this proposed cut "could create incentives to use less innovative drugs."

Medical groups, including the AMA and the American Society of Clinical Oncology, told CMS that they oppose this proposal. In a comment to CMS, the American Association of Clinical Urologists said CMS' attempt to reduce costs of new drugs for Medicare and the people covered by it would put independent medical practices in financial jeopardy. The group instead urged a closer look at the complex system of rebates linked to pharmacy benefit managers, which can result in higher prices for medicines.

"The ever-increasing launch prices for drugs and biologics are a direct result of the broken system that allows corporate players to exploit the various complex and opaque relationships to increase their own profits at the expense of physicians and patients," the urologists' group said.

CMS did get support, though, for the proposed change to Medicare payment for new drugs covered by its Part B program. MedPAC's Crosson called this approach "a modest, positive step toward lowering drug costs for beneficiaries and the Medicare program."

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