Medicare Provider and Hospital Outpatient Reimbursement Proposals Set Stage for 2021 and Post-Pandemic Landscape; Accompanying Executive Order Focused on Telehealth, Rural Care

August 4, 2020

The Centers for Medicare & Medicaid Services (CMS) released its 2021 Medicare Physician Fee Schedule (MPFS) and Hospital Outpatient Prospective Payment System (HOPPS) proposed rules. The administration also released an accompanying Executive Order (EO) focusing on telehealth and rural healthcare.

Since the COVID-19 public health emergency (PHE) was declared earlier this year, the Administration has issued waivers to increase flexibility in the Medicare program and reduce regulatory burden. In the MPFS proposed rule, CMS proposes policies to make permanent, extend, or transition out of these COVID-19 flexibilities. Comments on the proposed rule are due on October 5, 2020. CMS indicated that the agency is waiving the 60-day publication requirement for the final rule and replacing it with a 30-day notification. The final rule will still be effective on January 1, 2021 but it may not be published until December 1, 2020, instead of when it is typically released on November 1, 2020.

Medicare Physician Fee Schedule: Payment Provisions

Overall Impact on Oncology
In the MPFS proposed rule, CMS estimates a plus-14% overall impact for hematology/oncology and a negative-6% impact for radiation oncology in 2021. While some of the differences in specialty impact may be the result of changes to individual Current Procedural Terminology (CPT®) codes, the wide range in specialty impact is largely a result of evaluation and management (E&M) payment changes slated to begin in 2021 and the statutory requirements for budget neutrality.


Calendar Year 2021 MPFS Rate-Setting and Conversion Factor
With the budget neutrality adjustment to account for changes in Relative Value Units (RVUs) of CPT® codes, as required by law, the proposed Calendar year (CY) 2021 MPFS conversion factor is $32.26, a decrease of $3.83 from the CY 2020 MPFS conversion factor of $36.09.


At this point, Congressional action would be required to avoid a reduction in the conversion factor in CY 2021. Numerous stakeholders, including ASCO, have been urging Congress to suspend budget neutrality for E&M changes effective in CY 2021. Certain clinicians will also be subject to an additional plus or negative- 7% payment adjustment based on their performance in the 2019 performance year of Merit-based Incentive Payment System (MIPS) in 2021.


Medicare Telehealth and Other Services Involving Communications Technology
For CY 2021, CMS proposes adding services to the Medicare telehealth list on a Category 1 basis— which is similar to services already on the telehealth list—but CMS also proposes creating a third temporary category of criteria for adding services to the Medicare telehealth list. Category 3 describes services added to the Medicare telehealth list during the COVID-19 PHE that will remain on the list through the calendar year in which the PHE ends.

In March 2020, CMS established separate payments for audio-only telephone E&M services. The agency is not proposing to continue to recognize these codes for payment under the MPFS in the absence of the COVID-19 PHE but recognizes that the need for audio-only interactions could remain as beneficiaries continue to try to avoid sources of potential infection. CMS is seeking comment on whether it should develop coding and payment for a service similar to the virtual check-in but for a longer unit of time and subsequently with a higher value and on the duration of the services and amount associated with furnishing this service. CMS is also seeking comment on whether this should be a provisional policy to remain in effect until a year after the end of the COVID-19 PHE or if it should be in place permanently.

Direct Supervision by Interactive Telecommunications Technology
For the duration of the COVID-19 PHE CMS adopted an interim final policy revising the definition of direct supervision to include virtual presence of the supervising physician or practitioner using interactive audio/video real-time communications technology.

CMS proposes allowing direct supervision to be provided using real-time, interactive audio and video technology (excluding telephone that does not also include video) through December 31, 2021.  CMS is seeking information from commenters as to whether there should be any guardrails in place as the agency finalizes this policy, whether the agency should consider it beyond the time specified, and what risks this policy might introduce to beneficiaries as they receive care from practitioners that would supervise care virtually in this way. 

Payment for Office/Outpatient Evaluation and Management (E/M) Visits
As finalized in the CY 2020 MPFS final rule, in 2021 CMS will largely align its E&M visit coding and documentation policies with changes laid out by the CPT® Editorial Panel for office/outpatient E&M visits, beginning January 1, 2021. CMS proposes a refinement to clarify the times for which prolonged office/outpatient E&M visits can be reported and proposes revising the times used for rate-setting for this code set.

CMS is soliciting public comment regarding how the agency might clarify the definition of Healthcare Common Procedure Coding System (HCPCS) add-on code GPC1X, previously finalized for office/outpatient E&M visit complexity, and whether utilization assumptions for this code should be refined.


Proposals Regarding Professional Scope of Practice and Related Issues
CMS proposes making permanent a policy finalized under the May 1 COVID-19 interim final rule allowing nurse practitioners, clinical nurse specialists, physician assistants and certified nurse-midwives to supervise the performance of diagnostic tests. Prior to the interim final rule, these nonphysician practitioners (NPPs) were authorized under Medicare regulations to order and furnish diagnostic tests, but generally only physicians were authorized to supervise the performance of such tests. 

CMS’ proposal reiterates clarification provided in the May 1 COVID-19 interim final rule that pharmacists fall within the regulatory definition of auxiliary personnel under “incident to” regulations. As such, pharmacists may provide services incident to the services, and under the appropriate level of supervision of the billing physician or NPP, if payment for the services is not made under Medicare Part D and in accordance with the pharmacist’s state scope of practice and applicable state law.

Medical Record Documentation
In the 2020 MPFS final rule, CMS finalized broad modifications to the medical record documentation requirements for physicians and certain NPPs.  In the 2021 proposed rule, CMS clarifies that physicians and NPPs, including therapists, can review and verify documentation entered into the medical record by members of the medical team for their own services that are paid under the MPFS. CMS also clarifies that therapy students, and students of other disciplines, working under a physician or practitioner who furnishes and bills directly for their professional services to the Medicare program, may document in the record so long as it is reviewed and verified by the billing physician, practitioner, or therapist.

Electronic Prescribing of Controlled Substances
CMS proposes implementing section 2003 of the SUPPORT Act, which requires that prescribing Schedule II, III, IV, or V controlled substances under Medicare Part D be done electronically in accordance with an electronic prescription drug program, subject to any exceptions, which HHS may specify. To help inform CMS’ implementation of section 2003, the agency issued a Request for Information entitled “Medicare Program:  Electronic Prescribing for Controlled Substances; Request for Information” in July 2020.   

CMS’ proposal would also require Electronic Prescriptions for Controlled Substances (EPCS) by January 1, 2022 to allow for sufficient time for the agency to implement feedback from its Request for Information and to help ensure that the agency is not burdening providers during the COVID–19 pandemic.

Medicare Shared Savings Program
For performance year 2020, CMS proposes providing automatic full credit for Consumer Assessment of Healthcare Providers and Systems (CAHPS) surveys and is seeking comment on an alternative scoring methodology approach under the extreme and uncontrollable circumstances for performance year 2020. 

Removal of Outdated National Coverage Determinations (NCDs)
CMS is seeking stakeholder feedback on the removal of nine outdated or obsolete National Coverage Determinations (NCDs). Removing NCDs means Medicare Administrative Contractors (MACs) would no longer be required to follow those coverage policies when covering services for beneficiaries. The MACs would determine coverage for beneficiaries in their geographic areas based on more recent evidence and information.

Quality Payment Program

CMS previously determined that MIPS Value Pathways (MVPs) would begin with the 2021 performance period. However, due to stakeholder concerns about this timeline and with clinicians working hard to address the spread of COVID-19 within their practices and communities, CMS will not introduce any MVPs for the 2021 performance period.

Additionally, CMS proposes a new APM (Alternative Payment Model) Performance Pathway (APP) reporting option in 2021 to align with the MVP framework. As part of the APP introduction, CMS will sunset the CMS Web Interface as a collection type beginning in the 2021 performance period.

Participation Options
CMS will continue to allow MIPS eligible clinicians (ECs) to participate in MIPS as individuals or as part of a group or virtual group and is expanding the use of the APM Entity submitter type to allow the use of all MIPS submission mechanisms.

In previous years, ECs participating in MIPS APMs were required to participate in MIPS through their APM Entity for scoring under the APM Scoring Standard. CMS proposes ending the APM Scoring Standard beginning with the 2021 performance period. Additionally, CMS proposes adding the APM Entity as a submitter type which may report to MIPS on behalf of associated MIPS eligible clinicians.

Performance Threshold and Performance Category Weights
CMS proposes the following performance threshold and category weights for the 2021 performance period:

  • Performance threshold of 50 points
  • Quality performance category weighted at 40% (5% decrease from 2020)
  • Cost performance category weighted at 20% (5% increase from 2020)
  • Promoting Interoperability performance category weighted at 25% (no change from 2020)
  • Improvement Activities performance category weighted at 15% (no change from 2020)

In the 2020 MPFS, CMS had finalized a performance threshold of 60 points for 2021 but is proposing and soliciting comment on a lower performance threshold of 50 points.

Performance Category Proposals
Quality Performance Category—CMS proposes using performance period, not historical, benchmarks to score quality measures for the 2021 performance period. CMS is concerned that the agency may not have a representative sample of historic data for 2019 because of the COVID-19 public health emergency, which impacted data submission in 2020 and which could skew benchmarking results.

CMS is also proposes including two new administrative claims-based measures and ending the CMS Web Interface as a quality reporting option for Accountable Care Organizations, registered groups, virtual groups, or other APM Entities beginning with the 2021 performance period.

Cost Performance Category—CMS proposes updating existing measure specifications to include telehealth services that are directly applicable to existing episode-based cost measures and the Total Per Capita Cost measure.

Improvement Activities Performance CategoryCMS proposes making minimal updates to the Improvement Activities Inventory but will establish policies in relation to the Annual Call for Activities including an exception to the nomination period timeframe during the PHE and a new criterion for nominating new improvement activities. CMS also proposes establishing a process for agency-nominated improvement activities.

Promoting Interoperability Performance CategoryCMS proposes retaining the Query of Prescription Drug Monitoring Program (PDMP) measure as an optional measure and proposes making it worth 10 bonus points.

Scoring Proposals (COVID-19 Flexibilities for performance year 2020)
CMS is proposes changing the maximum number of points available for the complex patient bonus to account for the additional complexity of treating patients during the COVID-19 Public Health Emergency. As proposed, clinicians, groups, virtual groups, and APM Entities could now earn up to 10 bonus points towards their final score for the 2020 performance year. CMS is proposing this increase for the 2020 performance period only.

CMS also proposes allowing APM Entities to submit an application to reweight MIPS performance categories as a result of extreme and uncontrollable circumstances, such as the public health emergency. This policy would begin with the 2020 performance period.

Hospital Outpatient Prospective Payment System

Annual HOPPS Update
In accordance with Medicare law, CMS proposes a 2.6% increase for hospital outpatient payment rates. This update is based on the projected hospital market basket increase of 3.0% minus a 0.4% adjustment for multi-factor productivity (MFP).

340B-Acquired Drugs
Beginning January 1, 2018, Medicare policy reimbursed certain separately payable drugs or biologicals acquired through the 340B Program at average sales price (ASP) -22%. This policy has been the subject of ongoing litigation, which was upheld by the D.C Circuit Court in July 2020.

In the 2020 HOPPS final rule, CMS solicited comments on payment options in the event of an adverse ruling. These options are presented in the proposed rule and CMS is soliciting feedback:

  • Adopt a rate of ASP minus 34.7% with a 6% add-on payment for overhead and handling costs resulting in a proposed rate of ASP minus 28.7% for separately payable drugs or biologicals that are acquired through the 340B Program
  • Continue the current Medicare payment of ASP minus 22.5% for 340B acquired drugs for 2021 and subsequent years.
  • Rural sole community hospitals, children’s hospitals, and MPPS-exempt cancer hospitals would be excepted from either of the above proposed 340B payment policies. These hospitals would continue to report informational modifier “TB” for 340B-acquired drugs and continue to be paid ASP plus-6%.

ASCO will continue to monitor this situation.

Cancer Hospital Payment Adjustment
Since the inception of HOPPS, 11 hospitals have meet Medicare’s criteria for “cancer hospitals,” which are exempted from payment under the Inpatient Prospective Payment System (IPPS). For 2021 CMS proposes to continue providing additional payments to cancer hospitals so that cancer hospitals’ payment-to-cost ratios (PCR) become equal to the weighted average PCR for the other HOPPS hospitals. However, the 21st Century Cures Act requires that this weighted average PCR be reduced by 1.0 percentage point. Based on the data and the required 1.0 percentage point reduction, CMS proposes that a target PCR of 0.89 be used to determine the 2021 cancer hospital payment adjustment paid at cost report settlement. The estimated percentage increases in 2021 due to this payment adjustment range from 11.2% to 44.8%.

Clinical Laboratory Date of Service (DOS) Policy
CMS proposes excluding cancer-related protein-based Multianalyte Assays With Algorithmic Analysis (MAAAs), which are not generally performed in the hospital outpatient setting, from the HOPPS packaging policy, instead adding them to laboratory date-of-service (DOS) provisions. If finalized, this would mean that Medicare would pay for cancer-related protein-based MAAAs under the Clinical Laboratory Fee Schedule (CLFS) instead of the HOPPS and the performing laboratory would bill Medicare directly for the test if the test meets all the laboratory DOS requirements.

Proposed Elimination of the Inpatient Only (IPO) List
CMS maintains a list of services that are only paid for in the inpatient setting. CMS proposes eliminating this list, with complete phase-out by 2024, allowing these services to be performed in either the outpatient or inpatient setting as the physician deems appropriate. CMS proposes removing roughly 300 musculoskeletal services in 2021 and is seeking comment on other services to prioritize and the 3-year phase-out period.


Executive Order on Improving Rural Health and Telehealth Access

The EO outlines four broad policy proposals aimed at increasing access to healthcare services in rural areas: expanding certain temporary regulatory flexibilities beyond the COVID-19 public health emergency (PHE), creating a new payment model to help rural providers move to value-based arrangements, improving telecommunications infrastructure, and reducing regulatory burdens for rural providers.

In summary, the Executive Order:

  • Directs the Secretary of U.S. Department of Health and Human Services (HHS) to announce a new Medicare payment model within 30 days to give rural healthcare providers additional regulatory flexibilities, establish predictable payment streams, and encourage movement to value-based care.
  • Directs the Secretary of HHS, in coordination with the Secretary of Agriculture and the Federal Communications Commission, to develop and implement a strategy within 30 days to improve physical and communications healthcare infrastructure in rural areas.
  • Requires a report from the Secretary of HHS within 30 days regarding existing policy initiatives to eliminate regulatory burdens that contribute to provider shortages in rural areas, develop rural-specific efforts to improve health outcomes, reduce maternal mortality and morbidity, and improve mental health in rural areas.
  • Directs the Secretary of HHS to review certain regulatory flexibilities put in place during the COVID-19 PHE and propose a regulation within 60 days to extend these provisions, “as appropriate,” beyond the PHE. The Secretary will review the expanded list of telehealth services covered by Medicare, as well as the services, reporting, staffing, and supervision flexibilities offered to rural providers.

The Association for Clinical Oncology continues to analyze both proposed rules and the EO. The Association will provide updates and additional information in the coming days on ASCO in Action.