CLIENT ADVISORY: CMS Seeks Comment on Proposed Policy, Payment, and Quality Changes to the Medicare Physician Fee Schedule – E/M Payment and Coding, Telehealth, Off-Campus Payment, MACRA Reporting, PTA & OTA Payments Targeted

The Centers for Medicare & Medicaid Services (CMS) seeks comment on a proposed rule published on July 27, 2018 to update payment policies and rates and quality provisions for services provided under the Medicare Physician Fee Schedule (PFS) beginning January 1, 2019. The proposed rule is subject to comment until September 10, 2018.

PFS Payment Currently

Payments made under the PFS are based on the relative resources used to furnish a service. Relative Value Units (RVUs) are applied to each service for provider work, practice expense, and malpractice, and are then converted to payment rates. Concerns about how patient evaluation and management (E/M) codes are documented and reported have led to proposed rule changes. Other proposed rule provisions address site of service payment differentials, midlevel supervision and payment requirement for radiologic assistants and therapy assistants, ambulance fee schedule payments, and quality payment program measures.

Proposed Payment Provisions Highlights:

Streamlining E/M Payment and Reducing Administrative Burdens on Practitioners

A major stated goal of the CMS proposal is to improve E/M payment accuracy and reduce the administrative burden on clinicians. The proposed rule would give clinicians the option to document outpatient E/M visits using medical decision-making or time, rather than using the current documentation guidelines. Using practitioner-patient time to determine a visit level would allow practitioners to document a visit regardless of whether counseling or care coordination dominated. Practitioners would also be allowed to focus their history and exam documentation on what has changed or not changed since the last visit versus having to re-document everything at every visit. The proposal would also allow practitioners to review and verify certain medical information already entered into a patient’s record by ancillary staff or the beneficiary, cutting down on duplicative administrative work and potentially minimizing the impact of post-payment audits.

CMS also proposes new payment rates for patients for outpatient E/M visits levels 2 through 5, and a series of add-on codes to reflect the resources involved in furnishing these services. The proposed rule suggests a multiple procedure payment adjustment where E/M visits are provided in conjunction with other procedures, and new coding to more specifically and identify certain services. Additional proposals include eliminating a policy that prevents payment for same-day E/M visits by multiple practitioners in the same specialty within a group practice, creating a bundled payment for management and counseling of substance use disorders, and eliminating the requirement to justify the medical necessity of a home versus in-office visit.

Payment for Communication Technology Services

CMS proposes to pay separately for two newly-defined physician services that use communication technology: brief communication technology (e.g., virtual check-in) and remote evaluation of recorded video and/or images submitted by the patient. CMS also proposes to pay separately for new coding for chronic care remote physiologic monitoring and interprofessional internet consultation.

Outpatient PT and OT Services Provided by Therapy Assistants

The proposed rule suggests establishing new therapy modifiers when services are furnished either in whole or in part by a PT or OT assistant, to be used with the existing 1998 therapy modifiers. These new modifiers would not be required on claims until 2020.

Conversion Factor

CMS’s proposed 2019 PFS conversion factor is $36.05. The conversion factor for 2018 is $35.99.

Payment Differentials and Appropriate Use: Off-Campus Departments, Ambulances, Imaging

CMS proposes to leave payment rates for off-campus provider-based departments approved or developed after November 2, 2015 at current levels. Unless the off-campus provider-based department received timely certification or falls within an exception, it will continue to receive 40% of the Outpatient Prospective Payment rate paid for on-campus outpatient hospital services.

Ambulance service payments will continue to include temporary add-on payments for ground ambulance services. Proposed rules will also incorporate payment reductions for routine ESRD patient transport.

Advanced imaging services like CT, MRI and PET will require practitioners to consult clinical decision support mechanisms to support the appropriate use of each such service as of January 2020. The proposed rule offers some definitions of appropriate setting (IDTFs are accepted); allows the ordering physician to rely on staff consultations of appropriate use criteria; requires all practitioners to consult the criteria (not just physicians); and offers some exceptions for emergent conditions and other hardships that impede timely consultation.

Practice Expense Update

Practice expense (PE) is the portion of the resources used to furnish a service that reflects the general categories of physician and practitioner expenses but excludes malpractice expenses. CMS’s contractor report determined updated pricing recommendations for approximately 1,300 supplies and 750 equipment items currently used as direct PE inputs. This is available as a public use file displayed on the CMS website under downloads for the proposed rule. In response to the contractor report, CMS proposes the adoption of the updated pricing over a four-year transitional period beginning in 2019.

Quality Payment Program

To implement the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), CMS established the Quality Payment Program (QPP), which consists of two participation pathways for doctors and other clinicians. One is the Merit-based Incentive Payment System (MIPS), which measures performance in four categories to determine an adjustment to Medicare payment; the other is the Advanced Alternative Payment Models (Advanced APMs), in which clinicians may earn an incentive payment through sufficient participation and are excluded from MIPS reporting requirements.

CMS proposes to change QPP to reduce the burden on clinicians and promote the interoperability of electronic health records (EHRs). The proposal suggests removing MIPS process-based quality measures based on clinician feedback to focus on more impactful measures and supporting greater EHR interoperability and patient access to their health information. The proposed QPP changes are a result of feedback from clinician partners and stakeholders.

CMS also proposes to improve care quality through waivers of MIPS requirements while testing a demonstration project called the Medicare Advantage Qualifying Payment Arrangement Incentive (MAQI). The MAQI demonstration will waive MIPS reporting and payment adjustments for clinicians who actively participate in Medicare Advantage arrangements that are similar to Advanced APMs. From these data, CMS aims to decipher whether waiving these requirements will increase levels of participation in such Medicare Advantage payment arrangements and whether it will change how clinicians deliver care.

Request for Comment

CMS is seeking comment on the provisions set forth in this proposal, as well as on how such proposed guidelines might be changed in subsequent years. On July 17, 2018, CMS Administrator Seema Verma issued an open letter to doctors explaining CMS’s commitment to reducing distraction from patient care by alleviating the burden of unnecessary requirements for practitioners. Noting that the current system is “not fully leveraging [doctors’] expertise,” due to doctors’ many administrative responsibilities, Administrator Verma welcomed thoughts on these CMS proposals to ensure their success in improving the US health care system.

The full proposed rule may be viewed at Comments must refer to file code CMS-1693-P and be submitted electronically at or by mail at the addresses specified in the proposal. Comments must be received no later than 5:00 PM on September 10, 2018. Listening sessions with CMS experts answering questions and discussing key components of the proposed rule can be found at


This CMS proposed rule seeks to modernize Medicare payment policies to improve access, quality, and affordability of care. CMS’s request for comment allows practitioners and others in the field to offer their input into the rulemaking process. Should you or your organization have questions about this CMS proposed rule or need assistance in commenting, please contact Peter Mellette or Harrison Gibbs at Mellette PC at (757) 259-9200.

This Client Advisory is for general education purposes only. It is not intended to provide legal advice specific to any situation you may have. Individuals desiring legal advice should consult legal counsel for up-to-date and fact-specific advice.

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