Medicare Plans to Phase in Changes for Office-Visit Payments

Kerry Dooley Young

November 01, 2018

The Centers for Medicare & Medicaid Services (CMS) said it will phase in changes to payments to physicians for office visits, proceeding over the objection of many medical groups with its overhaul of reimbursement for evaluation and management (E&M) services.

CMS on Thursday released the final version of its 2019 update of the physician fee schedule. Through this rule, CMS plans to implement several documentation policy changes in 2019 and 2020, while holding off on others. For example, CMS will finalize codes for telehealth services related to home dialysis and acute stroke effective January 1, 2019.

But CMS said it will wait until 2021 to implement a simplification of payments for evaluation and management office/outpatient visits, delaying the start of the controversial proposal. CMS had planned to collapse the level 2 to 5 billing codes into one. It now plans to use a single rate for E&M office/outpatient-visit levels 2 through 4 for established and new patients, keeping level 5 in place to better account for the care and needs of complex patients. (Level 1 covers simpler tasks that can be handled by staff other than physicians.)

"We talked about going to two codes," CMS Administrator Seema Verma said on a call with reporters on Thursday. "Now we are going to be going to three codes."

In response to a question from a reporter about the delay in implementation of the E&M overhaul, Verma signaled the possibility for further changes in the proposal. Major medical groups have criticized the E&M proposal. Verma maintained that the intention with the overhaul of E&M codes is to reduce the administrative burden on physicians and give them more time with their patients. The extra implementation time for the E&M code overhaul will allow CMS to make needed changes in the plan, she said.

"It gives us an opportunity to continue to work with stakeholders," Verma said on the call.  "We know that this is going to have a tremendous impact on many doctors in America. We want to make sure that we get it right."

Still, Verma appears unwilling to see the entire E&M overhaul derailed, as sometimes happens with CMS proposals that face significant opposition. In response to a reporter's question about whether Verma would support Medicare scrapping the planned changes and sticking with the current five-level system, she replied, "No."

Verma then added that the E&M system "hasn't been updated in the last 20 years."

"We've heard from providers across the nation that the current system is not working well," Verma said. "There's been a lot of discussion for many years and no one's done anything. This administration is committed to addressing physician concerns, addressing burnout."

Drug Payments

Also on Thursday, CMS said it is proceeding with its plan to shave the initial payment for newly introduced drugs that are administered by physicians and thus covered by the Part B program.

So, next year Medicare will change its formula for initial payments for new drugs, shaving the premium to the wholesale acquisition costs (WAC) to 3% for the first 3 months down from the current 6%. Medicare uses WAC as a temporary benchmark. In general, it applies a premium to the reported average sales price of drugs as the benchmark. On the call, Verma said this change is part of the Trump administration's attempts to rein in drug costs. Groups, including the Pharmaceutical Research and Manufacturers of America, have opposed this reduction in payment

Yet, on this proposal, CMS has an influential supporter. In a comment on the draft physician fee rule, the Medicare Payment Advisory Commission (MedPAC) said that it supports CMS's plan for lowering the add-on payment for newly introduced drugs. Lawmakers and their staff members often consider MedPAC's work in deciding how to respond to CMS's initiatives.

"As the Commission noted in its June 2017 report to the Congress, reducing the add-on for certain WAC-priced drugs is a modest, positive step toward lowering drug costs for beneficiaries and the Medicare program," wrote MedPAC Chairman Francis J. Crosson in a September 4 letter to CMS.

AMA Shows Support

The American Medical Association (AMA) offered a quick assessment of the final rule, thanking CMS for not proceeding in 2019 with the collapse of the E&M codes. 

"A two-year window for implementation of the proposal will give the AMA-convened work group — comprised of physicians and other health professionals — time to make recommendations on this complicated topic," said Barbara L. McAneny, MD, president of the AMA, in a statement.

The AMA panel, which includes members of various specialties, is analyzing these E&M coding issues and plans to work with CMS and the Trump administration on the overhaul. AMA also thanked CMS for other aspects of the physician fee rule, such as a move to eliminate the requirement for physicians to redocument information that has already been documented in the patient's record by practice staff or by the patient. The AMA also said it was pleased that CMS declined to advance a proposal to reduce payment for office visits when performed on the same day as another service. 

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