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August 6, 2020

It’s Here: The 2021 Physician Fee Schedule Proposed Rule Has Been Released!

For weeks now, the health policy community has been eagerly waiting for the Centers for Medicare & Medicaid Services (CMS) to release the 2021 Physician Fee Schedule (PFS) and Quality Payment Program (QPP) proposed regulation—and on Monday night the reg finally dropped! As a reminder, this is the major annual reg that impacts Medicare payments for physicians and other health care practitioners for the next calendar year. The rates included in the PFS often serve as the basis for which many private payors revise their reimbursement levels. The reg also includes updates to the Merit-based Incentive Payment System (MIPS)—the quality performance program established by the Medicare Access and CHIP Reauthorization Act (MACRA). We are still digging our way through the 1,300+ page reg, but we posted a high-level overview of the major proposals the day it was released. We also will share a more comprehensive summary of the proposed policies in the coming days.

As noted in a previous Regs & Eggs post, there were a few key issues we were looking for in the proposed reg.

The major one relates to how the office and outpatient evaluation and management (E/M) policy that CMS finalized for 2021 in last year's PFS would impact emergency medicine reimbursement. There is an existing budget neutrality requirement under the Medicare PFS, which forces CMS to make an overarching negative adjustment to physician payments in order to counterbalance any increases in code values that CMS implements. CMS usually does this by adjusting the Medicare “conversion factor”—which converts the building blocks of PFS codes (relative value units or RVUs) into a dollar amount.

We expected that the significant increases in the office and outpatient E/M values that CMS previously finalized for 2021 would lead to a significant downward adjustment to the conversion factor. And we were right. To preserve budget neutrality, CMS is proposing to reduce the conversion factor by nearly 11 percent in 2021—dropping it to one of the lowest levels it has been in 25 years!

The approximate 11 percent cut to Medicare reimbursement affects all physicians’ reimbursement, but ACEP was able to shave off some of that reduction for emergency medicine. Prior to the release of the reg, we had advocated to CMS that the emergency department (ED) E/M codes (the most commonly billed codes in emergency medicine) should be increased in 2021 to appropriately align with the newly valued office and outpatient E/M codes. We are happy to report that CMS is proposing to adopt our recommended values for the ED E/M codes.  According to CMS, the increase in the value of these codes will cause your payments to bump up by approximately 3 percent. After taking into account this increase and other adjustments, the overall reduction to emergency medicine is expected to be 6 percent, significantly less than the 11 percent cut to the conversion factor. All in all, ACEP got you a raise, but CMS’ budget neutrality rules cancelled it out.

So what happens next? It is important to remember that this is just a proposed reg, and in our formal comments on the reg, we will urge CMS to do everything that it can to mitigate the impact of the budget neutrality adjustment to the conversion factor. However, we know it is unacceptable for you as emergency physicians to experience a 6 percent reduction to your Medicare reimbursement in 2021, and we have already taken action to try to stop this from happening. Just hours after CMS released the proposed rule, ACEP sent a letter to key committees in Congress requesting that it waive the budget neutrality requirement, since it is the only entity with authority to do so. The letter expresses our strong concerns on this proposed cut and notes the unprecedented strain emergency physician practices already are facing due to the ongoing COVID-19 pandemic. If Congress acts, emergency medicine reimbursement would actually increase by around 3 percent, instead of decrease by 6 percent.

Moving on, another key issue we were closely tracking was whether CMS planned on maintaining some of the telehealth flexibilities temporarily granted during the COVID-19 public health emergency (PHE). Key administration officials have repeatedly said that some of the temporary telehealth flexibilities should be made permanent, with the CMS Administrator Seema Verma noting that the “genie is out of the bottle” on telehealth.

As you may know, one of the temporary telehealth flexibilities CMS has granted during the COVID-19 PHE  allows you to bill all five E/M codes you typically use in the ED setting from any location. We had formally requested that CMS permanently add the ED E/M codes to the list of approved Medicare approved telehealth services. In the proposed reg, CMS is proposing to keep ED E/M code levels 1-3 (CPT codes 99281-99283) on the approved telehealth list for the remainder of the year in which the PHE ends (i.e. if the PHE is extended into 2021, the codes would remain on the list until December 31, 2021). However, CMS is not proposing to include ED E/M levels 4 and 5 (CPT codes 99284 and 99285) on the list of approved Medicare services past the duration of the PHE. CMS considers those services to be too intense to be routinely performed via telehealth. With respect to the ED E/M codes levels 1-3, CMS will consider adding them permanently to the list of approved Medicare services based on additional analysis after the pandemic ends, data collected from the PHE, and feedback from commenters.

Another important policy CMS includes in the reg relates to Medicare payment for medication-assisted treatment (MAT) in the ED. Based on our advocacy, CMS is proposing to pay for MAT delivered in the ED starting in 2021. Specifically, CMS is proposing to create an add-on code to be billed along with ED E/M codes during an ED visit. This add-on code would include payment for assessment, referral to ongoing care, follow-up after treatment begins, and arranging access to supportive services. This is a significant victory for emergency medicine, as it will hopefully provide you with the reimbursement you need to provide essential MAT services to Medicare patients with opioid use disorder.

While there are many other important proposals in the reg, the last area I want to touch upon relates to MIPS updates. In the reg, CMS does not make too many additional changes to current 2020 MIPS policies to account for the COVID-19 pandemic—focusing more on policies affecting 2021 and future years. With respect to 2020, CMS had already announced a hardship exemption process for clinicians who are unable to report due to COVID-19. Under this process, if clinicians submit a hardship exception application for all four MIPS performance categories, and their application is approved, they will be held harmless from a payment adjustment in 2022—meaning that they will not be eligible for a bonus or potentially face a penalty based on their MIPS performance in 2020.

In the reg, CMS proposes changes to the performance weights of the Quality and Cost categories for 2021. Specifically, CMS is proposing to reduce the quality category weight from 45 to 40 percent and increase the Cost category from 15 to 20 percent. Under current law, the quality and cost categories must each be weighted at 30 percent starting in 2022. CMS is also proposing to set the threshold that clinicians need to achieve to avoid a penalty in 2021 at 50 points. Last year, CMS had stated that the performance threshold would be 60 points in 2021, but CMS is now proposing a lower threshold. The additional performance threshold for exceptional performance will remain at 85 points in 2021. As required by statute, the maximum negative payment adjustment is -9 percent, and the positive payment adjustment can be up to 9 percent (before any exceptional performance bonus).

Of note, CMS is delaying the implementation of MIPS Value Pathways (MVPs) due to COVID-19 and is establishing new criteria to assess MVP proposals going forward. CMS is proposing to allow qualified clinical data registries (QCDRs) to support MVPs starting in 2022. ACEP is working with CMS on developing an MVP for emergency medicine and is examining how ACEP’s QCDR, the Clinical Emergency Data Registry (CEDR), can help emergency physicians participate in an MVP.

As a reminder, all of the policies in the rule are proposed, and stakeholders, including ACEP, have an opportunity to formally comment by October 5, 2020 on the proposals before they are finalized and become effective on January 1, 2021.

If you have any questions about these policies or any others in the proposed reg, feel free to email me. Until next week, this is Jeffrey saying, enjoy reading regs with your eggs, and tune in today at 3pm ET during our live Capital (30) Minutes to hear more about our federal advocacy efforts and to get your questions answered!

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