WSGR ALERT

CMS Releases Key 2020 Payment and Policy Proposals

August 8, 2019

On July 29, 2019, the Centers for Medicare & Medicaid Services (CMS) issued three proposed rules on payment updates and policy changes for calendar year 2020 under 1) the Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System (the OPPS Proposed Rule);1 2) the Medicare Physician Fee Schedule (the PFS Proposed Rule);2 and 3) the Medicare End Stage Renal Disease and Durable Medical Equipment, Prosthetics, and Orthotics (the DMEPOS Proposed Rule).3 Interested parties should submit comments to CMS for consideration during the rulemaking process by 5 p.m. EDT on September 27, 2019.

Below we summarize portions of each proposed rule that are particularly noteworthy.

The OPPS Proposed Rule

Payment Update. CMS proposes increasing OPPS payment rates by 2.7 percent.

Price Transparency. CMS proposes defining "standard charges" to include hospitals' gross charges and payer-specific negotiated charges, and requiring hospitals to make public a machine-readable file that contains all standard charges. CMS also proposes requiring hospitals to provide a publically available list of 300 "shoppable" health care items and services—those items and services that are routinely provided in non-urgent situations that do not require immediate action or attention to the patient, thus allowing patients to price shop. Hospitals that fail to publish standard charges could be subject to monetary penalty of up to $300 per day.

Device Pass-Through Payment. CMS proposes an alternative pathway to the substantial clinical improvement criterion for devices approved under the FDA Breakthrough Devices Program to qualify for device pass-through status beginning with applications received on or after January 1, 2020. This proposal is similar to the one made in the FY 2020 Inpatient Prospective Payment System Proposed Rule. CMS is evaluating seven applications for device pass-through payments and is seeking public comments on whether these meet the criteria for device pass-through payment status.

340B-Acquired Drugs. CMS proposes to continue to pay Average Sales Price (ASP) minus 22.5 percent for drugs acquired under the 340B Program during CY 2020. CMS is soliciting public comments on the appropriate OPPS payment rate for 340B-acquired drugs, including retrospective remedy for CYs 2018 and 2019, in preparation for the outcome of an appeal to American Hospital Association et al. v. Azar et al. There, the District Court for the District of Columbia concluded that the Secretary exceeded statutory authority in adjusting Medicare payment rates for 340B-acquired drugs.

ASC Covered Procedures List. CMS proposes adding eight procedures to the ASC list of covered surgical procedures, including a total knee arthroplasty, a mosaicplasty, and six coronary intervention procedures. CMS is soliciting public comments on whether certain other surgical procedures related to the cardiovascular system should be added.

Supervision of Outpatient Therapeutic Services. CMS proposes lowering the minimum required level of supervision from direct to general supervision for all outpatient therapeutic services that hospitals and critical access hospitals provide, thus establishing a standard minimum level of supervision for each hospital outpatient service furnished incident to a physician's service.

Prior Authorization Requirement for Certain Hospital Outpatient Department Services. CMS proposes establishing a prior authorization process as a means for controlling unnecessary increases in the volume of the following five categories of services: 1) blepharoplasty, 2) botulinum toxin injections, 3) panniculectomy, 4) rhinoplasty, and 5) vein ablation.

Cost Thresholds for Packaged Skin Substitutes. CMS proposes continuing the policy established in CY 2018 to assign skin substitutes to the low-cost or high-cost group. Any skin substitute product that was assigned to the high-cost group in CY 2019 would be assigned to the high-cost group for CY 2020. CMS proposes to continue determining the high-cost/low-cost status for each skin substitute product based on whether a product's geometric mean unit cost (MUC) exceeds the geometric MUC threshold or the product's per day cost (PDC) (the total units of a skin substitute multiplied by the mean unit cost and divided by the total number of days) exceeds the PDC threshold. CMS is proposing to assign each skin substitute that exceeds either threshold to the high-cost group. In addition, CMS is proposing to assign any skin substitute with a MUC or a PDC that does not exceed either threshold to the low-cost group.

The PFS Proposed Rule

Open Payments Program. CMS proposes the following changes to reduce burden under Open Payments, which would first impact data collected beginning in CY 2021 and reported in CY 2022: 1) expanding the definition of "covered recipient" to include the categories specified in the SUPPORT Act (i.e., to include physician assistant, nurse practitioner, clinical nurse specialist, certified registered nurse anesthetist, and certified nurse-midwife); 2) expanding the "nature of payment" categories by consolidating two categories for continuing education programs and by adding three new categories (to be applied prospectively): i) debt forgiveness (or transfers of value related to forgiving the debt of a covered recipient, a physician owner, or the immediate family of a physician owner or investor; ii) long-term medical supply or device loans (or loans of covered devices or medical supplies for longer than 90 days); and iii) acquisitions (or buyout payments made to covered recipients in relation to the acquisition of a company in which the covered recipient has an ownership interest); and 3) standardizing data on reported covered drugs, devices, biologicals, or medical supplies, including requiring the submission of device identifiers (DIs) and mandatory fixed portion of the unique device identifier (UDI) assigned to devices and clarifying that National Drug Codes (NDCs) are required for both research and non-research payments associated with applicable drugs and biologics in Open Payments reporting. If finalized, the NDC requirement will be effective 60 days following the publication of the final rule.

Payment Update. Payments made under the PFS are based on the relative resources typically used to furnish the service, as reflected in Relative Value Units (RVUs) applied to each service for physician work, practice expense, and malpractice. CMS proposes increasing physician payment rates by 0.14 percent in 2020. After applying the budget-neutrality adjustment required by law, the proposed CY 2020 PFS conversion factor is $36.09, a slight increase above the CY 2019 PFS conversion factor of $36.04.

Evaluation and Management (E/M) Coding and Payment. CMS proposes aligning E/M coding with changes laid out by the Current Procedural Terminology (CPT) Editorial Panel for office/outpatient E/M visits. Level 1 E/M visits would now only describe visits performed by clinical staff for established patients. Levels 2-5 E/M visits would be based on redefined medical decision making criteria or the total time personally spent by the practitioner during that visit. CMS proposes to establish a single add-on, CPT code that would only be reported when time is used for code level selection and the time for a level 5 office/outpatient visit (the floor of the level 5 time range) is exceeded by 15 minutes or more on the date of service. CMS also proposes adopting the American Medical Association/Specialty Society Relative Value Scale Update Committee (RUC)-recommended values for office/outpatient E/M visit codes for CY 2021.

Care Management Services. CMS proposes implementing a set of Medicare-developed HCPCS G codes for certain Chronic Care Management (CCM) services, which involve care coordination and management services for beneficiaries with multiple chronic conditions over a calendar month service period. CMS proposes replacing a number of the CCM codes with Medicare-specific codes to allow clinicians to bill incremental time and resources required in certain cases and to better distinguish complexity of illness. CMS also proposes creating new coding for Principal Care Management (PCM) services, which would allow clinicians to bill for care management for patients with a single serious and high-risk condition. CMS is also seeking comments on potential for duplicative payment between the proposed PCM services and other services, such as interprofessional consultation services (CPT codes 99446-99449), CPT code 99451, and CPT code 99452 or remote patient monitoring (CPT codes 99091, 99453, and 99457).

Remote Physiologic Monitoring (RPM) Services. CMS proposes adopting the CPT Editorial Panel's revised structure for CPT code 99457. Effective beginning in CY 2020, CMS proposes the following new code descriptors: CPT code 99457 (remote physiologic monitoring treatment management services, clinical staff/physician/other qualified health care professional time in a calendar month requiring interactive communication with the patient/caregiver during the month; initial 20 minutes); and CPT code 994X0 (remote physiologic monitoring treatment management services, clinical staff/physician/other qualified health care professional time in a calendar month requiring interactive communication with the patient/caregiver during the month; additional 20 minutes). CMS also proposes that RPM services reported with CPT codes 99457 and 994X0 may be furnished under general supervision rather than the currently required direct supervision. CMS also solicits comments on whether a single advance beneficiary consent could be obtained for a number of communication technology-based services and the appropriate interval of time or number of services for which consent could be obtained.

The DMEPOS Proposed Rule

Comparable Item Analysis. CMS proposes a framework for Medicare pricing of novel DMEPOS. For DMEPOS without a pricing history, the proposal establishes five main categories of components or attributes (physical, mechanical, electrical, function and intended use, and additional attributes and features) that would be evaluated to determine if a new item is comparable to older existing items for gap-filling purposes. If the new DMEPOS proves comparable to older existing items, CMS is proposing to use the fee schedule amounts for the older items to establish fee schedule amounts for the new DMEPOS. If there are no comparable existing items, CMS proposes that the Medicare fee schedule amounts for the new DMEPOS would be based on other, more accurate sources of commercial pricing data—such as internet retail prices or information from supplier invoices—deflated to the fee schedule base period and updated by the covered item update factors. When needed, CMS proposes to use technology assessments that determine the relative costs of older existing item(s) compared with the new DMEPOS to establish the fee schedule amounts for the latter. In order to avert fee schedule inflation, a one-time downward adjustment would later be performed on initial fee schedule amounts determined by comparable item analysis. CMS invites comments on whether fee adjustments (upward or downward) should be introduced where supplier or commercial prices used to establish original gap-filled fee schedule amounts change by 15 percent or more afterward, and possible mechanisms for such a procedure.

Conditions of Payment for Certain DMEPOS. CMS proposes to streamline the requirements for ordering DMEPOS items and to prepare a single list of DMEPOS potentially subject to a face-to-face encounter and written orders prior to delivery, or prior authorization requirements. CMS previously established face-to-face examination and written order prior to delivery requirements for power mobility devices (71 FR 17021). CMS separately created a list of Specified Covered Items to be subject to face-to-face encounter and written order prior to delivery requirements, based on criteria outlined in 43 CFR § 410.38 (77 FR 68892). CMS also created a Master List of items that are potentially subject to prior authorization upon selection (80 FR 81674). The latest proposal would create one standardized set of required elements for all DMEPOS orders. The proposal would harmonize the three existing lists noted above and develop one Master List of items potentially subject to a face-to-face encounter and written orders prior to delivery, or prior authorization requirements. It would also update the prior authorization program to more nimbly adapt to changes in billing, and to recognize and offer relief for specific suppliers when they demonstrate billing compliance.

For questions regarding the Proposed Rules or other CMS policies, reimbursement/coverage, Open Payments reporting, healthcare regulatory compliance, FDA Breakthrough Devices Program or device pass-through payment applications, or FDA compliance, please contact David Hoffmeister, James Ravitz, Georgia Ravitz, or any member of WSGR's Life Sciences—FDA Regulatory, Healthcare and Consumer Products Compliance practice.

Melissa Hudzik, Jeff Weinstein, and Eva Yin contributed to the preparation of this WSGR alert.