CMS Issues Proposed Rules for 2021 Medicare Physician Fee Schedule and the Outpatient Prospective Payment System

The Centers for Medicare and Medicaid Services (CMS) has issued two new proposed rules. First, CMS has issued a proposed rule for the 2021 Medicare Physician Fee Schedule (PFS Proposed Rule). The rule will be published on August 17, 2020. You can access the unpublished version here. Second, CMS issued a proposed rule for the Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Centers (ASCs) (OPPS Proposed Rule). This rule will be published on August 12, 2020. You can access the unpublished version here. Below is an overview of major updates from each proposed rule.


Telehealth Expansion

CMS is proposing to expand telehealth services permanently, consistent with President Trump’s Executive Order (EO) to improve rural health and telehealth access. CMS is proposing to permanently add a number of telehealth services to the Medicare telehealth list that were initially added in response to the COVID-19 public health emergency (PHE). These include, but are not limited to, the following: prolonged office or other outpatient e/m services; group psychotherapy; neurobehavioral status exams; care planning for patients with cognitive impairment; and home visits. While CMS does not intend for telehealth to replace in-person care, it does serve as a valuable additional access point for patients.

Further, CMS clarified that licensed clinical social workers, clinical psychologists, physical therapists, occupational therapists, and speech-language pathologists may furnish the online assessment, management services, virtual check-ins, and remote evaluation services for telehealth.

Direct Supervision via Telecommunications Technology

The PFS Proposed Rule also seeks to permit direct supervision of procedures to be provided via telecommunications technology until December 31, 2021. CMS had revised the definition of direct supervision for the duration of the COVID-19 PHE. CMS’s proposed rule would simply extend the application of that definition until December 31, 2021. To meet the definition, the telecommunications technology must provide real-time interactive audio and video technology.

E/M Service Payments for Office/Outpatient Evaluations

CMS intends to align its E/M visit coding and documentation policies with the proposed changes by the CPT Editorial Panel. These changes would become effective on January 1, 2021. Specifically, CMS is proposing to revalue the following code sets: End-Stage Renal Disease Monthly Capitation Payment Services; Transitional Care Management Services; Maternal Services; Cognitive Impairment Assessment and Care Planning; Initial Preventive Physical Examination and Initial and Subsequent Annual Wellness Visits; Emergency Department Visits; Therapy Evaluations; and Psychiatric Diagnosis Evaluations and Psychotherapy Services.

Professional Scope of Practice

CMS also proposed to make the COVID-19 PHE policy permanent which permits certain nonphysician practitioners (NPPs) to supervise the performance of diagnostic tests. If finalized, the following NPPs would be permitted to supervise diagnostic tests: nurse practitioners, clinical nurse specialists, physician assistants, and certified nurse-midwives. Prior to the COVID-19 PHE policy, these NPPs could order and furnish diagnostic tests, but only a physician was authorized to supervise the performance.


Choice and Site Neutrality

CMS’ OPPS Proposed Rule seeks to give beneficiaries more affordable choices for healthcare. First, CMS has proposed to eliminate the Inpatient Only (IPO) list over a 3-year transitional period. By removing services from the IPO, the procedures will be eligible to be paid by Medicare in the hospital outpatient setting as well as the hospital inpatient setting. The physician will determine which setting is appropriate. Note that the procedures removed from the IPO list will become subject to the 2-midnight rule. CMS intends to implement a 2-year exemption period for the 2-Midnight rule for services removed from the IPO list beginning CY 2020. Therefore, if finalized, the 2-Midnight rule will apply to procedures removed from the IPO list two years after it has been removed from the list.

Expansion of Medicare-Covered Services in ASCs

The OPPS Proposed Rules would also add eleven (11) procedures to the ASC Medicare-covered procedures list. These procedures include, but are not limited to total hip arthroplasty, vaginal colpopexy (extra-peritoneal and intra-peritoneal approach), and laparascopy. CMS found that procedures performed in ASCs are typically less costly than procedures performed in hospital outpatient settings. Ultimately, CMS believes this policy will lower patient out-of-pocket costs.

Updates to OPPS Payment Rates

The OPPS Proposed Rule also seeks to update OPPS payment rates for hospitals meeting applicable quality requirement requirements. To be eligible, the hospital must meet these requirements by 2.6 percent. The Proposed Rule would also increase Medicare payment rates to eligible hospitals for partial hospitalization program (PHP) services furnished to patients in hospital outpatient departments and community mental health centers. It would also increase PHP per diem rates based on updated cost data. However, note that the proposed rule excludes cancer-related protein-based multianalyte assays with algorithmic analyses from the OPPS packaging policy, which were previously included. As such, these procedures will need to be billed to Medicare directly rather than the hospital.

Updates to ASC Payments

CMS also proposed to update ASC payment rates for CY 2021 by 2.6 percent. Similar to the OPPS payment rate update, the ASC must meet relevant quality reporting requirements. CMS anticipates this update to further promote site-neutrality between hospitals and ASCs and encourage patients to seek services from the lower cost setting – ASCs.

Hospitals Qualifying as “High Medicaid Facilities”

Typically, physician-owned hospitals that receive payments from Medicare are prohibited from increasing the aggregate number of operating rooms, procedure rooms, and beds beyond what the hospital was licensed for on March 23, 2010. Such hospitals may only expand if they meet a certain exception. CMS has proposed to remove certain provisions in the expansion exception applicable to hospitals that qualify as “high Medicaid facilities.” CMS is seeking to remove the cap on the number of additional operating rooms, procedure rooms, and beds that can be approved for high Medicaid facilities. It is also seeking to remove the restriction that the expansion must occur in the hospital’s main campus for such facilities. CMS anticipates this update will provide additional flexibility for high Medicaid facilities to serve more Medicaid inpatients than other hospitals in the surrounding area.

For any questions regarding CMS’ Proposed Rules, please contact your regular HLP attorney, or, or call (212) 734-0128 or (248) 996-8510.

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