2019 CMS Proposed Physician Fee Schedule Includes Serious Cuts to Medicare Part B Drug Reimbursement

On July 12, the Centers for Medicare & Medicaid (CMS) released its proposed Medicare Physician Fee Schedule for 2019. The proposed rules updates rates and policies applicable to Medicare physicians and other professionals under Medicare. This rule includes updates to Medicare rates and policies under Part B (fact sheet) and updates to the Quality Payment Program (fact sheet) which implements the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APMs). Comments on the proposed rule are due by September 10, 2018, and available to submit online in the Federal Register July 27, 2018.

Changes to Evaluation and Management

CMS proposes several changes to improve payment accuracy for E/M visits. Specifically, the agency wishes to allow practitioners to choose to document office/outpatient E/M visits using medical decision-making or time instead of applying the current E/M documentation guidelines. Additionally, the proposed rule seeks to expand current options by allowing practitioners to use time as the governing factor in selecting visits level and documenting the E/M visit, regardless of whether counseling or care coordination dominate the visit.

The agency is also looking to expand current options regarding the documentation of history and exam, allowing practitioners to focus on documentation related to what changed since the last visit or on pertinent items that have not changed, rather than re-documenting information. CMS further wants to allow practitioners to review and verify certain information in the medical record that is entered by ancillary staff or the beneficiary, rather than re-entering the information. CMS additionally seeks comment on how documentation guidelines for medical decision-making might be changed in subsequent years.

CMS is also proposing new, single blended payment rates for new and established patients for office/outpatient E/M level 2 through 5 visits and a series of add-on codes to reflect resources involved in furnishing primary care and non-procedural specialty generally recognized services.  The agency is seeking comment on the implementation timeframe of several other proposals, and how it might update E/M visit coding and documentation in other care settings in future years. CMS states it believes the proposals will allow practitioners more flexibility to exercise clinical judgment in documentation so focus is placed on what is clinically relevant and medically necessary for the beneficiary.

Communication Technology-Based Services

CMS proposes to pay separate for two newly defined physicians’ services furnished using communication technology, including Brief Communication Technology-based Services (HCPCS code GVCI1) and Remote Evaluation of Recorded Video and/or Images Submitted by the Patient (HCPCS code GRAS1). Practitioners could be separately paid for the Brief Communication Technology-based Service when they check in with beneficiaries via telephone or other telecommunications device to decide whether an office visit or other service is needed. CMS believes this will increased efficiency for practitioners and convenience for beneficiaries.

Part B Drugs

Many Part B drug payments are based on ASP methodology and includes a 6 percent add-on payment. Some Part B drug payments are based on wholesale acquisition cost (WAC) such as single-source drugs without ASP data. WAC-based payment rates typically exceed rates based on ASP amounts. CMS intends on reducing the 6 percent add-on for WAC-based Part B drug payments would help curb excessive spending by better aligning payments and drug acquisition costs, particularly for drugs with high launch prices. The proposed rule seeks to make WAC-based payments for new Part B drugs during the period first quarter of sales when ASP is unavailable, the drug payment add-on would be 3 percent in place of the 6 percent add-on that is currently being used.

However, as pointed out by the Community Oncology Alliance (COA), the ultimate reimbursement level is even lower. COA’s press release notes: “CMS is proposing to cut Medicare Part B reimbursement for new cancer drugs and other specialty therapies to the rate of list price plus 1.35%, factoring in the sequester cut, for the first six months on the market. This is a payment cut from the current rate of wholesale acquisition cost (WAC) plus 6%, or what is really plus 4.3% when factoring in the sequester. COA believes that this payment cut for new cancer therapies will result in drug manufacturers actually increasing WAC list prices so that their new products will not be at a competitive disadvantage to existing products which are reimbursed at average sales price (ASP) plus 6%.” (emphasis added)

Request for Information on Price Transparency

Under current law, hospitals are required to establish and make public a list of their standard charges. In an effort to encourage price transparency by improving public accessibility of charge information, in the fiscal year (FY) 2019 Hospital Inpatient Prospective Payment System (IPPS) proposed rule, CMS announced it is updating its guidelines to specifically require hospitals to make public a list of their standard charges via the Internet. However, CMS is concerned that challenges continue to exist for patients due to insufficient price transparency. The agency is seeking information from the public regarding barriers preventing providers and suppliers from informing patients of their out-of-pocket costs; what changes are needed to support greater transparency around patient obligations for their out of pocket costs; what can be done to better inform patients of these obligations; and what role providers of health care services and suppliers should play in this initiative.

Quality Payment Program

This is the first year CMS included updates to the Quality Payment Program (QPP) in the Proposed Fee Schedule. For 2019, CMS continues to increase the Merit-based Incentive Payment System (MIPS) and alternative payment model (APM) requirements. MIPS category weights are changed, with Quality at 45% of the performance year weight, Cost at 15%, Promoting Interoperability (formerly Advancing Care Information) at 25%, and Improvement Activities at 15%. Additionally, CMS is modifying the small and solo practitioner bonus. Instead of 5 points added toward an overall MIPS score, small and solo practitioners who submit at least one measure would receive 5 points towards their quality score.