CMS Releases 2023 Proposed Medicare Physician Fee Schedule (PFS) Rule Announcing and Soliciting Comments on Planned Payment and Policy Changes

On July 7, 2022, the Centers for Medicare & Medicaid Services (CMS) issued the 2023 Physician Fee Schedule (PFS) Proposed Rule. CMS publishes the PFS annually, informing healthcare providers about federal reimbursement and policy developments across healthcare. PFS changes often spill over into the private sector, as private payors typically consult the PFS when evaluating their own payment and policy arrangements. The recently issued PFS Proposed Rule (the Proposed Rule) offers a window into CMS’s plans for reimbursement and healthcare policy. The Proposed Rule also solicits input from key industry stakeholders, allowing providers and industry to make their case for and against planned reimbursement and policy arrangements. The deadline for submitting comments responding to the Proposed Rule is 5 p.m. EDT on September 6, 2022.

The Proposed Rule addresses widely varied topics, including, an overall provider fee cut, changed policies relating to Evaluation and Management Visits, and new fees connected to discard of unused amounts of certain physician administered drugs and specimen collection for clinical laboratory services on behalf of homebound patients and inpatients. Below, this alert focus on three topics in the Proposed Rule that are of particular interest for our clients: changes to telehealth policies; new behavioral health coverage; and a new rule denying payment to Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) suppliers who violate applicable state licensing requirements.

Changes to Telehealth Policies

Due to the COVID-19 related public health emergency, CMS revised its billing policies to allow for increased use—and reimbursement—of telehealth services for Medicare patients. For example, billable services requiring the “direct supervision” of a physician (i.e., physical presence in the same office suite as the supervisee and the ability to immediately provide assistance and direction) were made reimbursable in virtual settings provided that the supervising professional was available in real-time via interactive audio-video technology. In its recent PFS Proposed Rule, CMS rejected calls by stakeholders to make virtual direct supervision a permanent feature of Medicare. The agency has proposed allowing the temporary rule change to expire at the end of the same calendar year that the public health emergency ends. Direct supervision will once again have an in-person requirement, likely limiting the growth and breadth of telehealth services.

Additionally, CMS has proposed limiting the reimbursement available for telephone-only Evaluation and Management (E/M) Services. CMS does not view telephone-only visits to be a wholly satisfactory substitute for face-to-face encounters. The proposal would restore two-way interactive audio-video telecommunications technology as a requirement for Medicare reimbursement, based on the agency’s interpretation of section 1834(m)(2)(A) of the Social Security Act. This departure from pandemic-era policies may make virtual medicine more difficult for rural providers and patients who often do not have access to reliable broadband.

However, not all proposed changes to telehealth codes would result in stricter reimbursement policies for physicians. Physicians are currently required to directly supervise Remote Therapeutic Monitoring (RTM) services billed under the physician’s enrollment, in which clinical staff use data from medical devices to manage and monitor patient health. CMS proposes relaxing this requirement and allowing physicians to provide some such RTM services under general supervision. Physicians would not need to be in the same building as clinical staff to satisfy the “general supervision” requirement and would be able to supervise virtually under the proposed new rules. This change is part of a broader CMS effort to allow general supervision in lieu of direct supervision for specified services. The agency seeks comments, for example, on whether “facilitation and coordination of any necessary behavioral health treatment, chronic pain related crisis care, and ongoing communication and care coordination between relevant practitioners furnishing care might be appropriate activities to be considered under general supervision.”

In addition, CMS is proposing to add more telehealth services to the “Category 3 list” of codes that the agency has agreed to reimburse until the expiration of the public health emergency. These Category 3 codes are deemed likely by CMS to have a clinical benefit when provided via telehealth, but there is not enough evidence to justify permanent coverage. In all, CMS has proposed including 54 additional codes on the list, including: psychophysiological therapy, comprehensive hearing tests, speech/hearing therapy, wheelchair management training, aphasia assessments, and tinnitus assessments. CMS has declined to further extend the duration of these temporary codes, and, as a result, Category 3 services will not be reimbursable past December 31, 2023.

Medicare also added temporary telehealth codes at the beginning of the pandemic, but unlike the Category 3 inclusions, these services have little prospect of “promotion” into the permanent codes based on additional evidence. These previously included codes include physical and occupational therapy support, radiation treatment management, and initial and continuing neonatal intensive care services. Temporary-added telehealth codes are currently slated to expire when the public health emergency ends, but the CMS is proposing extending the temporary codes until 151 days after the end of the emergency. This change would give providers the opportunity to adapt to the rollbacks in coverage and petition CMS for further coverage.

New Behavioral Health Coverage

In its 2022 Behavioral Health Strategy, CMS pledged to “improve access to high quality, affordable, person-centered behavioral health care, and ensure parity in access, coverage, and quality for physical and mental health services, including care enabled through telehealth and technology.” The agency has incorporated these goals into the Proposed Rule, which contains multiple provisions expanding access to behavioral healthcare.

CMS proposes allowing marriage and family therapists, licensed professional counselors, and other types of behavioral healthcare providers to provide their services to patients under general rather than direct supervision. As explained in the preceding section, this would allow providers to furnish services to patients without the need to be physically present for immediate assistance. However, the general supervision standard still requires that the services be performed under the supervisory practitioner’s “overall direction and control” (see, for example, 42 C.F.R. § 410.32(b)(3)(i)). Supervisory practitioners are still responsible for the training of the non-physician personnel performing the procedure and ensuring the quality and reliability of services performed.

CMS also proposes reimbursing clinical psychologists and licensed clinical social workers comprising a patient’s primary care team. This integrated care model is reflected in proposed code GBHI1, which would require “at least 20 minutes of clinical psychologist or clinical social worker time, per calendar month, with the following required elements: initial assessment or follow-up monitoring, including the use of applicable validated rating scales; behavioral health care planning in relation to behavioral/psychiatric health problems…” The proposed code further stipulates that, to be reimbursed, services must involve treatment coordination with and/or referral to physicians and practitioners authorized by law to prescribe medications, provide emergency services, and counseling and/or psychiatric consultation.

In implementing an integrated care model for behavioral healthcare services, CMS considered multiple comments proposing different funding/bundling arrangements. For example, some interested parties suggested allowing clinical psychologists to serve as primary practitioners integrating medical care and psychiatric expertise. Other commentors agreed with this approach and focused on expanding the scope of “eligible initiating visits” to include psychiatric diagnostic evaluation services provided by clinical psychologists. These suggestions provided by interested parties are informative, as the CMS intends to consider them in future rulemaking. Whether expanded reimbursement for a variety of integrated care models will lead to better patient outcomes is an open question, and the agency is sure to study the question in more detail in future PFS rulemaking.

Additionally, CMS is proposing to increase its funding for opioid treatment programs to address the continuing nationwide addiction and overdose crisis. CMS proposes increasing payment rates to bring reimbursements in line with counseling service costs, which have hindered patient access and prevented continuing treatment. The agency also proposes to reimburse buprenorphine initiation via telehealth, marking a break from the current, in-person requirement. Notably, such reimbursement is contingent on exemptions issued by the U.S. Drug Enforcement Agency and the Substance Abuse and Mental Health Services Administration for the public health emergency. These exemptions would need to be codified for such reimbursement to continue after the end of the emergency.

To further increase flexibility, CMS has clarified in the Proposed Rule that Opioid Treatment Programs may bill Medicare for services provided in mobile units (e.g., vans) in some circumstances. CMS explains that this clarification is an opportunity to expand access to medications for treatment of Opioid Use Disorder for Medicare beneficiaries by extending the reach of Opioid Treatment Programs, particularly in remote or underserved areas. While the agency has cautioned that these billing changes are only one part of a broader, national effort against opioid addiction, expanded reimbursement will benefit at-risk patients and the behavioral healthcare providers serving them.

New Rule Denying DMEPOS Payments When Licensing Requirement Violated

The Proposed Rule states CMS’s assessment that DMEPOS suppliers continue to present to the Medicare program extraordinary risk of fraud, waste, and abuse. To address this threat, CMS requires singular safeguards to help ensure that Medicare enrolls and pays only those DMEPOS suppliers that are legitimate businesses capable of serving as reliable program partners. In the past, CMS established particularly stringent requirements that DMEPOS suppliers must meet in order to enroll and maintain enrollment in Medicare (e.g., supplier accreditation, mandatory site visits, maintenance of a surety bond). One enrollment standard, codified in 42 C.F.R. § 424.57(c)(1)(ii)(A), provides that the DMEPOS supplier must comply with any applicable state licensure requirements to furnish items or services.

The Proposed Rule states that CMS has developed heightened concerns about situations encountered where enrolled—but unlicensed—DMEPOS suppliers furnish items for an extended period. The agency therefore proposes that a new condition of payment be inserted into 42 C.F.R. § 424.57(b)(6), which would explicitly require DMEPOS suppliers to be in compliance with state licensure requirements at the time an item or service is furnished in order to receive payment.

The Proposed Rule offers a view in CMS’s thinking about the underlying policy issues. State licensure, CMS states, is a uniquely important program integrity protection relating to DMEPOS supply because it helps ensure that the supplier meets applicable minimum requirements of competency. Further, DMEPOS licensure, constitutes an additional level of “vetting” (at the state level) beyond federal provider enrollment screening. Multiple levels of verification arising from state licensure combined with federal enrollment requirements can help ensure that the DMEPOS supplier is a bona fide and legitimate business. CMS estimates that, based on data collected, the proposed change will result in 6,100 claim denials for unlicensed DMEPOS suppliers—approximately $1.3 million in denied/unpaid claims—per month.

The Proposed Rule, which is more than 2,000 pages long, can be accessed via the following link: CMS prepared a helpful summary of highlights from the Proposed Rule, which can be accessed here:

For More Information

For more information, please contact Jamie Ravitz, David Hoffmeister, Georgia Ravitz, Paul Gadiock, Jeff Weinstein or Eva Yin, or any other member of Wilson Sonsini’s FDA regulatory, healthcare, and consumer products practice.

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