Health Headlines – November 11, 2024

CMS Issues CY 2025 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Final Rule 

On November 1, 2024, CMS issued a final rule with updates to the Medicare payment rates for the Hospital Outpatient Prospective Payment System (OPPS) and the Medicare Ambulatory Surgical Center (ASC) Payment System for calendar year (CY) 2025 (the Final Rule). The Final Rule revises payment rates for the OPPS and the Medicare ASC payment systems and updates the requirements for the Hospital Outpatient Quality Reporting Program, Ambulatory Surgical Center Quality Reporting Program, and Hospital Inpatient Quality Reporting Program, as well as the conditions of participation (CoPs) for facilities that offer obstetrical services in an effort to improve the outcomes related to maternal health. The provisions of this rule will be effective January 1, 2025. Below is a summary of the updates set forth in the Final Rule.

Updates to the OPPS and ASC Payment Rates

The Final Rule updates the OPPS payment rates for hospitals by 2.9%, which is based on the projected hospital market basket percentage increase of 3.4% reduced by a productivity adjustment of 0.5%. The Final Rule also updates ASC rates for ASCs by 2.9%, which is based on the projected hospital market basket percentage increase of 3.4% reduced by a productivity adjustment of 0.5%. In both cases, this update will apply to facilities that meet relevant quality reporting requirements.

OPPS Wage Index Will Not Match IPPS

The Final Rule will utilize a different wage index for the OPPS than that used for the IPPS. Namely, for the OPPS, for hospitals with a wage index value below the 25th percentile, the hospital’s wage index will be increased by half the difference between the otherwise applicable wage index value for that hospital and the 25th percentile wage index value for all hospitals. The D.C. Circuit previously determined CMS lacked the statutory authority to adopt this policy for the IPPS in Bridgeport Hospital v. Becerra, 108 F.4th 882 (D.C. Cir. 2024), but the Final Rule will keep the policy in place for the OPPS for FY 2025.

Updates to IOP Payment Rates

The Final Rule updates the Medicare payment rates for intensive outpatient program (IOP) services furnished in hospital outpatient departments and community mental health centers (CMHCs). The IOP is a distinct outpatient program of psychiatric and behavioral health services paid on a per diem basis for a minimum of nine hours of IOP services per week under the OPPS when furnished in hospital outpatient departments, CMHCs, federally qualified health centers, and rural health clinics.

The Final Rule keeps existing rate structures for IOPs. One structure applies for CMHCs and hospitals with three-service days and another structure applies for CMHCs and hospitals with four-service days. CMS will use 2023 claims data combined with the latest information available from cost reports beginning from three fiscal years prior to determine the 2025 rate.

Partial Hospitalization Program

The Final Rule also updates the Medicare payment rates for partial hospitalization program (PHP) services furnished in hospital outpatient departments and CMHCs. The PHP, which is an outpatient alternative to psychiatric hospitalization, consists of mental health services paid on a per diem basis for at least twenty (20) hours of PHP services per week under the OPPS.

The Final Rule keeps existing rate structures for PHP ambulatory payment classifications (APCs). One structure applies for PHP APCs with three-service days and another structure applies for PHP APCs with four-service days. CMS will use 2023 claims data combined with the latest information available from cost reports beginning from three fiscal years prior to determine the 2025 rate.

Access to Non-Opioid Treatments for Pain Relief

The Final Rule also implements Section 4135 of the Consolidated Appropriations Act (CAA). The CAA provides temporary additional payments from January 1, 2025, through December 31, 2027, for non-opioid treatments for pain relief in the hospital outpatient department and ASC settings. In order to implement a statutory payment limitation pursuant to which the additional payment must not exceed 18% of OPPS payment for OPPS services for which this non-opioid treatment is furnished, CMS is utilizing the top five OPPS procedures by volume for each non-opioid drug to calculate an applicable 18% limitation.

Update for High-Cost Diagnostic Radiopharmaceuticals

Although payment under OPPS for diagnostic radiopharmaceuticals is bundled into the payment for concurrently provided nuclear medicine tests, the Final Rule allows that payment will be made separately for any diagnostic radiopharmaceutical with a cost greater than $630 per day.

Obstetrical Services Conditions of Participation

The Final rule adopts new CoPs for hospitals and critical access hospitals (CAHs) with respect to obstetrical services, including the following:

• Organization and Staffing. Hospitals and CAHs providing obstetrical services must provide such obstetrical services in accordance with nationally recognized acceptable standards of practice for the health care of pregnant and postpartum patients. This includes ensuring adequate integration with other service departments of the hospital, such as the laboratory, surgical, and anesthesia departments. OB patient care units also must be supervised by an individual with necessary education and training, such as an experienced registered nurse, certified midwife, nurse practitioner, physician assistant, or doctor.

• Delivery of Service. The Final Rule requires that labor and delivery rooms have certain basic equipment, including a call-in system, cardiac monitor, and fetal doppler or monitor. Based on feedback to the proposed rule, the Final Rule requires only that this equipment be available in the facility where it is readily accessible when needed.

• Staff Training. The Final Rule requires that hospitals and CAHs providing obstetrical services to develop policies and procedures to ensure that staff are trained on certain topics to improve maternal care. Based on public comments, under the Final Rule, hospitals and CAHs will be required every two years to identify which staff must complete the required trainings, document such training, and be able to demonstrate staff knowledge on the training topics.

• Quality Assessment and Performance Improvement (QAPI) Program. Under the Final Rule, hospitals and CAHs will be required to use the QAPI program to assess and improve health outcomes among obstetrical patients, including conducting at least one annual performance improvement project focused on improving health outcomes and disparities among the hospital’s obstetrical patients. If a Maternal Mortality Review Committee (MMRC) is available at the state or local jurisdiction where the facility is located, the facility must have a process for incorporating publicly available information from the MMRC into the hospital or CAH QAPI program.

• Emergency Services Readiness. The Final Rule revises the Emergency Services CoP to require hospitals and CAHs providing emergency services to have adequate provisions and protocols to meet the emergency needs of patients. The Final Rule also requires, for hospitals only, that hospitals set aside emergency equipment, supplies, and medication such as drugs and blood products used in lifesaving procedures for emergencies.

• Transfer Protocols. The Final Rule also requires hospitals to have written policies and procedures for transferring patients to the appropriate level of care as needed to meet the patients’ needs and to provide annual staff training on the transferring of patients.

In light of public comments, CMS will implement these provisions in three phases over the next two years:

• Phase One: Within six months following the effective date of the final rule, facilities must comply with the emergency services readiness protocols. Hospitals must also comply with the transfer protocol.

• Phase Two: Within one year, facilities must comply with the organization, staffing, and delivery of services protocol.

• Phase Three: Within two years, facilities must comply with the QB staff training and QAPI protocols.

Hospital Inpatient Quality Reporting Program

The Hospital Inpatient Quality Reporting (IQR) Program is a quality program that reduces payments to hospitals that do not meet program requirements. Hospitals that fail to meet all IQR requirements are subject to a one-fourth reduction in their annual payment update under the IPPS. The Final Rule continues voluntary reporting of the core clinical data elements and linking variable for both the Hybrid Hospital-Wide Readmission and Hybrid Hospital-Wide Standardized Mortality measures for the performance period from July 1, 2023, through June 30, 2024. In light of public comments, CMS will extend voluntary reporting of CCDEs and linking variables for the July 1, 2024, through June 30, 2025, performance period, which will impact the FY 2027 payment determination.

Hospital Outpatient Quality Reporting Program

The Hospital Outpatient Quality Reporting (OQR) Program is a quality program for hospital outpatient departments that reduces a hospital’s annual payment update by two percentage points if the hospital fails to meet quality reporting requirements. The Final Rule adopts the following quality measures with respect to the OQR:

• Hospital Commitment to Health Equity measure starting with the CY 2025 reporting period/CY 2027 payment determination;

• Screening for Social Drivers of Health measure starting with voluntary reporting in the CY 2025 reporting period, followed by mandatory reporting beginning with the CY 2026 reporting period/CY 2028 payment determination;

• Screen Positive Rate for Social Drivers of Health measure starting with voluntary reporting in the CY 2025 reporting period, followed by mandatory reporting beginning with the CY 2026 reporting period/CY 2028 payment determination;

• Patient Understanding of Key Information Related to Recovery After a Facility-Based Outpatient Procedure or Surgery, Patient Reported Outcome-Based Performance measure starting with voluntary reporting in the CY 2026 reporting period, followed by mandatory reporting beginning with the CY 2027 reporting period/CY 2029 payment determination.

The Final Rule removes the following quality measures with respect to the OQR:

• MRI Lumbar Spine for Low Back Pain measure, starting with the CY 2025 reporting period/CY 2027 payment determination; and

• Cardiac Imaging for Preoperative Risk Assessment for Non-Cardiac, Low-Risk Surgery measure, starting with the CY 2025 reporting period/CY 2027 payment determination.

Ambulatory Surgical Center Quality Reporting Program

The ASC Quality Reporting (ASCQR) Program is a quality reporting program under which Ambulatory Surgical Centers must report data on certain quality measures required by CMS. If an ASC fails to report on such measures, the ASC will receive a two-percentage point payment penalty to its annual payment rate update. The Final Rule adopts the following additional measures with respect to the ASCQR:

• Facility Commitment to Health Equity measure, beginning with the CY 2025 reporting period/CY 2027 program determination;

• Screening for Social Drives of Health measure beginning with voluntary reporting in the CY 2025 reporting period, followed by mandatory reporting with the CY 2026 reporting period/CY 2028 payment determination; and

• Screen Positive Rate for Social Drives of Health measure beginning with voluntary reporting in the CY reporting period, followed by mandatory reporting beginning with the CY 2026 reporting period/CY 2028 payment determination.

Reduced Time for Prior Authorization Requests for Certain Outpatient Services

The Final Rule changes the review timeframe for prior authorization requests for certain hospital outpatient department (OPD) services from ten business days to seven calendar days for standard reviews.

Medicaid and CHIP Eligibility

The Final Rule requires states to provide twelve months of continuous eligibility for the Children’s Health Insurance Program (CHIP) for children under nineteen years of age enrolled in Medicaid and CHIP and removes the ability for states to disenroll children from separate CHIP coverage for failure to pay premiums.

The Final Rule is scheduled to be published in the Federal Register on November 27, 2024. A copy of the Final Rule can be downloaded here. 

Reporter, Will Mavity, Los Angeles, + 1 213 218 4043, wmavity@kslaw.com.

CMS Issues Final 2025 Calendar Year Medicare Physician Fee Schedule Final Rule

On November 1, 2024, CMS issued a rule finalizing changes to Medicare payments under the Physician Fee Schedule (PFS) and other Medicare Part B policies effective on or after January 1, 2025 (the Final Rule). Section 1848 of the Social Security Act requires CMS to establish payment under the PFS based on national uniform relative value units (RVUs) that account for the relative resources used in furnishing a service, as well as geographic adjustments to reflect variations in the costs of furnishing those services in different geographic areas.  The Final Rule establishes RVUs for Calendar Year (CY) 2025 and includes many updates to the PFS affecting a wide range of practitioners and providers, including suppliers of technical services in situations where payment is not made to an institution.  Below is a summary of key changes to the PFS under the Final Rule.

CY 2025 PFS Rate Setting and Conversion Factor

Under the Final Rule, average payment rates under the PFS will be reduced by 2.93% in CY 2025 compared to the average for most of CY 2024.  This change incorporates the expiration of the temporary 2.93% payment increase for CY 2024 required by statute, and an estimated 0.05% adjustment upward necessary to account for changes in work RVUs for some services.  This change results in an estimated PFS conversion factor of $32.35, down $0.94 from the CY 2024 conversion factor.

Caregiver Training Services

The Final Rule establishes new coding and payments for caregiver training for direct care services and support, and for caregiver behavior management and modification training.  Trainings can include techniques to prevent decubitus ulcer formation, wound care, and infection control.  The Final Rule allows these caregiver training services to be furnished via telehealth.

Services Addressing Health-Related Social Needs

The CY 2025 PFS proposed rule included a broad request for information on the newly implemented Community Health Integration services, Principal Illness Navigation services, and Social Determinants of Health Risk Assessment to consider additional refinements for CMS to consider, including requesting information on other factors for CMS to consider.  The Final Rule summarizes the comments received by CMS.

Office/Outpatient (O/O) Evaluation (E/M) Visits

The Final Rule allows for payment of the Office/Outpatient Evaluation and Management visit complexity add-on code G2211 when the base codes 99202-99205 or 99211-99215 is reported by the same practitioner on the same day as an annual wellness visit, vaccine administration, or any Medicare Part B preventive service.

Telehealth Services Under the PFS

Without Congressional action, the statutory limitations in place for Medicare telehealth services prior to COVID-19 will retake effect for most services.  These include geographic and location restrictions on where services are provided and limitations on the scope of practitioners who can provide Medicare telehealth services.  The Final Rule includes the following modifications to Medicare telehealth services in CY 2025 that would preserve some of the telehealth services that were permitted under the COVID-19 public health emergency legislation:

• Several services were added to the Medicare Telehealth Services List, including caregiver training services on a provisional basis, PrEP counseling, and safety planning interventions on a permanent basis, and the suspension of frequency limitations was continued for subsequent inpatient visits, subsequent nursing facility visits, and critical care consultations;

• Interactive communications systems may include two-way, real-time, audio-only communication technology for any Medicare telehealth service furnished to a beneficiary in their home if the patient is not capable of or does not consent to the use of video technology;

• Distant site practitioners will continue to be permitted to use their currently enrolled practice locations instead of their home addresses when providing telehealth services from their home;

• For a certain subset of services required to be supervise by a physician or supervising practitioner, the Final Rule adopts a permanent definition of direct supervision that allows the supervision practitioner to provide supervision via virtual presence through real-time audio and visual interactive telecommunications.  For services furnished incident to a physician or other practitioner’s professional service, when provided by auxiliary personnel employed by the billing physician or supervising practitioner and working under his or her direct supervision, and for which the underlying HCPCS code has been assigned a PC/TC indicator of “5” and services described by CPT code 99211, and for office or other outpatient visits for the evaluation and management of an established patient who may not require the presence of a physician or other qualified health care professional, this new definition of virtual supervision is being made permanent.  For all other services that require direct supervision of a physician or supervising practitioner, direct supervision may be provided virtually only through December 31, 2025.

• The Final Rule allows teaching physicians to have a virtual presence for purposes of billing for services furnished involving residents in all teaching settings, but only in clinical instances when the service is furnished virtually (for example, a three-way telehealth visit, with the patient, resident, and teaching physician in separate locations) through December 31, 2025. This virtual presence will continue to meet the requirement that the teaching physician be present for the key portion of the service.

Advanced Primary Care Management Services (APCM)

The Final Rule establishes coding and payment under the PFS for a new set of APCM services described by new HCPCS codes G0556, G0557, and G0558.  Unlike existing care management codes, there are no time-based thresholds included in the service elements, which is intended to reduce the administrative burden associated with current coding and billing. Instead, the new APCM codes are stratified into three levels based on an individual’s number of chronic conditions and status as a Qualified Medicare Beneficiary, reflecting the patient’s medical and social complexity:  (i) Level 1 (G0556) is for persons with one chronic condition; (ii) Level 2 (G0557) is for persons with two or more chronic conditions; and (iii) Level 3 (G0558) is for persons with two or more chronic conditions and status as a Qualified Medicare Beneficiary.

Cardiovascular Risk Assessment and Management

The Final Rule includes coding and payment for Atherosclerotic Cardiovascular Disease (ASCVD) risk assessment and risk management services.  The risk assessment will be performed in conjunction with an E/M visit when a practitioner identifies a patient at risk for CVD who does not have a CVD diagnosis.  The risk assessment tool used includes demographic data, CVD risk factors, possible risk enhancers, and lab data, and the output must include a 10-year estimate of ASCVD Risk.  The risk management services include service elements relating to CVD risk reduction.

Behavioral Health Services

For CY 2025, the Final Rule includes separate coding and payment under the PFS for safety and planning and interventions for patients in crisis, including those with suicidal ideation or at risk of suicide or overdose, in the form of a G-code billable in 20-minute increments.  The Final Rule also includes payment for a monthly billing code for specific protocols in furnishing post-discharge follow-up contacts in conjunction with an emergency department discharge for a crisis encounter as a bundled service describing four calls in a month.

In collaboration with the FDA, CMS has also finalized Medicare payment for digital mental health treatment devices furnished incident to professional behavioral health services and used in conjunction with ongoing behavioral health treatment.  The Final Rule also includes six G codes to be billed by practitioners in specialties whose covered services are limited by statute to the diagnosis and treatment of mental illness that mirror current interprofessional consultation CPT codes used by practitioners eligible to bill E/M visits.

Opioid Treatment Programs (OTPs)

The Final Rule includes several telecommunication technology flexibilities for opioid use disorder (OUD) treatment services furnished by OTPs.  First, the current flexibility for providing periodic assessments via audio-only telecommunications is being made permanent. Second, CMS is allowing the OTP intake add-on code to be furnished via two-way audio-video technology when billed for the initiation of treatment with methadone. 

CMS is also finalizing payment increases for social determinants of health (SDOH) risk assessments as part of activities within OUD treatment services furnished by OTPs if medically necessary to adequately reflect additional effort for OTPs, identify a patient’s unmet health-related social needs (HRSNs) or the need and interest for harm reduction interventions and recovery support services critical to treatment of OUD.  The Final Rule also updates payments for periodic assessments, which includes payments for SDOH risk assessments that OTPs may conduct throughout treatment, to monitor potential changes in a patient’s HRSNs, or support services.  The Final Rule includes new add-on codes to account for coordinated care and referral services, patient navigational services, and peer recovery support services provided in OTP settings.

CMS has also finalized payments for new opioid agonist and antagonist medications approved by the FDA, including nalmefene hydrochloride nasal spray and a new injectable buprenorphine product.

Finally, the Final Rule clarifies that OTPs must append an OUD diagnosis code on claims for OUD treatment services.

Hospital Inpatient or Observation (I/O) Evaluation and Management (E/M) Add-On for Infectious Diseases

The Final Rule includes a new HCPCs add-on code describing the intensity and complexity inherent to hospital inpatient or observation care associated with a confirmed or suspected infection disease which describe service elements including disease transmission risk assessment and mitigation, public health investigation, analysis and testing, and complex antimicrobial therapy counseling and treatment.

Strategies for Improving Global Surgery Payment Accuracy

For CY 2025, the applicability of transfer of care modifier 54 is being broadened for all 90-day global surgical packages in any case when a practitioner expects to furnish only the surgical portion of the global package.  CMS has also finalized the new add-on HCPCS code G0559 for post-operative care services furnished by a practitioner other than the one who performed the surgical procedure in order to more appropriately reflect the time and resources involved in post-operative follow-up visits by practitioners who were not involved in furnishing the surgical procedure.

Supervision Policy for Physical Therapists (PTs) and Occupational Therapists (OTs) in Private Practice

The Final Rule includes a regulatory change allowing for general supervision of physical therapist assistants and occupational therapy assistants by PTs in private practice and OTs in private practice.

Certification of Therapy Plans of Treatment with a Physician or NPP Order

The Final Rule provides an exception to the physician/NPP signature requirement on the therapist-established treatment plan for purposes of the initial certification in cases where a written order or referral from the physician/NPP is on file and the therapist has documented evidence that the treatment plan was transmitted to the physician/NPP within 30 days of the initial evaluation.  For cases meeting the exception to the signature requirement policy, payment is available for any therapy services furnished prior to a physician/NPP-modified treatment plan if all payment requirements are met.

Dental and Oral Health Services

The Final Rule amends CMS regulations at § 411.15(i)(3) to add to the list of clinical scenarios under which FFS Medicare payment is available for dental services inextricably linked to covered services, including: (1) dental or oral examination prior to or contemporaneous with Medicare-covered dialysis services for end-stage renal disease and for medically necessary diagnostic and; (2) treatment services to eliminate an oral or dental infection prior to or contemporaneous with Medicare-covered dialysis for end-stage renal disease.  The Final Rule also requires submission of the KX modifier on claims for dental services that clinicians believe to be inextricably linked to covered medical services and requires that diagnosis code 837D be used on such claims.

Drugs and Biological Products Paid Under Medicare Part B

Section 90004 of the Infrastructure Investment and Jobs Act established a refund for discarded amounts of certain single-dose container or single-use package drugs under Part B. The Final Rule includes clarifications to several policies implemented in the CY 2023 and CY 2024 PFS final rules, including: (1) exclusions of drugs, for which payment has been made under Part B for fewer than 18 months from the definition of refundable single-dose container or single-use package drug; and (2) identifying single-dose containers. The Final Rule also requires the use of the JW modifier if a billing supplier is not administering a drug, but there are amounts discarded during the preparation process before supplying the drug to the patient.  The Final Rule also clarifies that skin substitutes will not be included in the identification of refundable drugs for the calendar quarters in 2025.

When calculating payment limits when manufacturers report negative or zero average sale price (ASP) data to CMS, the Final Rule clarifies that such data will be considered “not available” for purposes of calculating a payment limit.  Altogether, CMS is finalizing its policies for calculating the payment limit when a manufacturer reports negative or zero ASP data for a drug, with a modification relating to biosimilars, such that the finalized payment limit calculation will use the biosimilar’s own, most recently available, positive manufacturer’s ASP data.

For clarity on which methodologies are available to Medicare Administrative Contractors (MACs) for pricing of radiopharmaceuticals in the physician office setting, the Final Rule establishes that for radiopharmaceuticals furnished in a setting other than a hospital outpatient department, MACs shall determine payment limits for radiopharmaceuticals based on any methodology used to determine payment limits for radiopharmaceuticals in place on or prior to November 2003. Such methodology may include, but is not limited to, the use of invoice-based pricing.

The Final Rule includes revisions to regulations to include certain compounded formulations of FDA-approved drugs that have approved immunosuppressive indications in the immunosuppressive drug benefit, or for use in conjunction with immunosuppressive drugs, or that have been determined by a MAC to be reasonable and necessary to prevent or treat rejection of a transplanted organ or tissue. In addition, the Final Rule makes two changes regarding supplies of immunosuppressive drugs to align with current standards of practice and reduce barriers to medication adherence: (1) to allow payment of a supplying fee for a prescription of a supply of up to 90 days; and (2) to allow payment for refills of prescriptions for these immunosuppressive drugs.

Finally, CMS has updated regulatory text to clarify existing CMS policy that, for purposes of determining whether a treatment is eligible for the blood clotting factor furnishing fee, blood clotting factors must be self-administered and must not be therapies that enable the body to produce clotting factors and do not directly integrate into coagulation cascade in order to be considered clotting factors for which the furnishing fee applies.

Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs)

Care Coordination Services in RHCs and FQHCs. The Final Rule includes several changes for reporting care coordination services in RHCs and FQHCs to better align payment to RHCs and FQHCs with other entities furnishing similar care coordination.  Starting in 2025, RHCs and FQHCs will report the individual CPT and HCPCS codes describing care coordination services instead of the single HCPCS code G0511, while allowing for a transition period of 6 months (until July 1, 2025) to enable RHCs and FQHCs to update their billing systems.  The Final Rule also permits billing of the add-on codes associated with these services.

The Final Rule also adopts the coding and policies regarding APCM services for RHC and FQHC payments, which would make payments to RHCs and FQHCs at the national, non-facility, PFS amounts when the individual code is on an RHC or FQHC claim, either alone or with other payable services and payment rates.  These services would be paid in addition to the RHC All-Inclusive Rate or FQHC prospective payment system and would be updated annually based on the PFS amounts for these codes.

Telecommunication Services in RHCs and FQHCs. The Final Rule also clarifies current CMS policy that direct supervision via interactive audio and video telecommunications is permitted in RHCs and FQHCs, and that the definition of “immediate availability” includes real-time audio and visual interactive telecommunications through December 31, 2025.  Under the Final Rule, RHCs and FQHCs can continue to bill for services furnished using telecommunication technology by reporting HCPCS code G2025 on the claim.  For non-behavioral health visits furnished via telecommunications technology, CMS will calculate the payment amount based on the amount for all PFS telehealth services on the telehealth list, weighted by the volume for those services reported under the PFS.

CMS is also delaying the in-person visit requirement for mental health services furnished via communication technology by RHCs and FQHCs to beneficiaries in their homes until January 1, 2026.

Intensive Outpatient Program Services (IOP) in RHCs and FQHCs. The Final Rule includes a new payment rate when four or more Intensive Outpatient Program (IOP) services per day are furnished in the RHC or FQHC setting in addition to the current payment amount based on only three services rates. The four or more IOP payment rate will be aligned with the same payment rate for four or more IOP in hospital outpatient departments, which will be updated annually.

Payment Rate for Preventive Vaccine Costs in RHCs and FQHCs.  The Final Rule allows RHCs and FQHCs to bill and be paid for Part B preventive vaccines and their administration at the time of service.  The payments will be made according to Part B preventive vaccine payment rates in other settings, to be annually reconciled with the facilities’ actual vaccine costs on their cost reports.

Clarification for Dental Services Furnished in RHCs and FQHCs.  CMS has clarified that when RHCs and FQHCs furnish dental services inextricably linked to other covered medical services, those services will be considered RHC and FQHC services and will be paid under the RHC AIR methodology and FQHC PPS, respectively.  The Final Rule also clarifies that a dental service can be billed separately from a medical visit provided on the same day if the dental service is inextricably linked to other covered medical services.

RHC Productivity Standards. The productivity standards that RHCs are currently subject to and which can impact an RHC’s all-inclusive rate (AIR) have been removed effective for cost reporting periods beginning on or after January 1, 2025.

Rebasing and Revising the FQHC Market Basket.  CMS rebases and revises the FQHC market basket used to update PPS payments approximately every four years.  The market basket was last updated in 2021.  For CY 2025, CMS is rebasing and revising the market basket to reflect a 2022 base year, resulting in a 3.4% update.

RHC Conditions for Certification. The Final Rule no longer includes as a requirement for certification that an RHC be “primarily engaged” in providing primary care services but instead simply requires that RHCs provide primary care services.  CMS is also removing the requirement that RHCs directly perform hemoglobin and hematocrit (H&H) and examination of stool specimens for occult blood, which would allow these lab tests to be performed by outside labs.

Ambulance Fee Schedule Reimbursement for Prehospital Blood Transfusion (PHBT)

The Final Rule modifies the definition of ALS2 at §414.605 by adding the administration of PHBT, which now includes low titer O+ and O- whole blood transfusion therapy (WBT), packed red blood cells (PRBCs), plasma, or a combination of PRBCs and plasma. A ground ambulance transport that provides one of these PHBTs would itself constitute an ALS2 level transport.

Medicare Part B Payment for Preventive Services

The Final Rule expands coverage of hepatitis B vaccinations to include individuals who have not previously received a completed hepatitis B vaccination series or whose vaccination history is unknown. The Final Rule also clarifies that a physician’s order will no longer be required for the administration of a hepatitis B vaccine under Part B and sets payment for hepatitis B vaccines and their administration at 100% of reasonable cost in RHCs and FQHCs, separate from payment under the FQHC PPS or the RHC AIR methodology.

CMS also adopted a fee schedule for Drugs Covered as Additional Preventive Services (DCAPS drugs), per section 1833(a)(1)(W)(ii) of the Act. Under the Final Rule, CMS will set a payment limit according to the ASP methodology set forth in section 1847A of the Act when ASP data is available and will use alternative payment mechanisms for calculating payment limits for DCAPS drugs if ASP data is not available. CMS will set payment limits for the supplying and administration of DCAPS drugs like those fees for drugs paid in accordance with the ASP methodology set forth in section 1847A of the Act.  CMS will use this same fee schedule for DCAPS drugs and any administration and supplying fee when those services are provided in RHCs and FQHCs. In RHCs and FQHCs, DCAPS drugs and any administration and supplying fee will be paid at 100% of the Medicare payment amount and will be paid on a claim-by-claim basis. 

Expanded Colorectal Cancer (CRC) Screening

The Final Rule removes coverage of barium enema as a method of CRC screening and expands coverage of CRC screening to include computed tomography colonography and Medicare covered blood-based biomarker CRC screening tests.

Medicare Prescription Drug Inflation Rebate Program

The Inflation Reduction Act of 2022 (IRA) (Pub. L. 117–169, enacted August 16, 2022) established new requirements under which drug companies must pay inflation rebates if they raise their prices for certain Part B and Part D drugs faster than the rate of inflation. The Final Rule codifies policies established in the revised guidance for the Medicare Part B Drug Inflation Rebate Program and Medicare Part D Drug Inflation Rebate Program.  The guidance for the Medicare Part B Drug Inflation Rebate Program can be found here.  The guidance for the Medicare Part D Drug Inflation Rebate Program can be found here.

The Final Rule also includes the following relating to the Medicare Prescription Drug Inflation Rebate Program:

• Establishes the method and process for reconciliation of a rebate amount for Part B and Part D rebatable drugs, including the circumstances that may trigger such a reconciliation;

• Establishes a civil money penalty process for when a manufacturer of a Part B rebatable drug or Part D rebatable drug fails to pay the rebate amount in full by the payment deadline for such drug, for such applicable calendar quarter or applicable period, respectively; and

• Clarifies rebate calculations for rebatable drugs in specific circumstances, including exclusion of Part B units of single-dose container or single-use package drugs subject to discarded drug refunds.

Electronic Prescribing for Controlled Substances (EPCS) for a Covered Part D Drug Under a Prescription Drug Plan or Medicare Advantage Prescription Drug Plan

The Final Rule extends the date after which prescriptions written for a beneficiary in a long-term care facility would be included in determining EPCS Program compliance from January 1, 2025, to January 1, 2028, and that related non-compliance actions would commence on or after January 1, 2028.

The Final Rule is scheduled to be published in the Federal Register on December 9, 2024. The full text of the Final Rule can be found here.  CMS’s Fact Sheet can be found here.

Reporter, David Tassa, Los Angeles, +1 213 443 4335, dtassa@kslaw.com.

 CMS Makes Modifications to the Medicare Shared Savings Program

In its Final Rule for the 2025 Medicare Physician Fee Schedule, CMS announced changes to the Medicare Shared Savings Program (the Program) targeted at incentivizing providers to both enroll and stay in the Program.  The Final Rule provisions reward Accountable Care Organizations (ACOs) with a strong track record of savings with up-front payments and makes it easier for prospective organizations—particularly those in underserved communities—to qualify for the Program, which has seen a decline in new ACOs over the past half decade. 

On the other hand, CMS is controlling for recent variables which it believes may skew the Program’s benchmark used in calculating the amounts that an ACO has actually saved Medicare, specifically giving it broader authority to account for suspicious billing activity and government settlements. Other provisions of the Final Rule address modifications intended to harmonize quality reporting and extend incentives to transition to digital quality measure reporting.

Background of the Shared Savings Program

The Medicare Shared Savings Program, added as part of the Affordable Care Act in a push toward a more value-based healthcare system, incentivizes providers to reduce costs and to improve quality for Medicare beneficiaries by allowing an ACO organized by participating providers and suppliers to share in Medicare program savings.  These savings are calculated based on care delivered to the beneficiaries attributed to the ACO (provided that quality standards were still met).  

In 2023, CMS reported that approximately sixty-nine percent of ACOs participating in the Program received performance payments, totaling $3.08 billion.  Nonetheless, and though the gross savings rate continues to increase for ACOs actually participating in the Program, the total number of ACOs has steadily decreased since 2018.  While also making changes in the benchmark to address emerging issues, the thrust of CMS’s recent updates is to drive growth in Program participation.  In addition, to achieve the agency’s goal of having all traditional Medicare beneficiaries in a care relationship with providers who are accountable for cost and quality by 2030, the most recent rules are intended to grow Program participation in rural and underserved areas, as well as promote health equity.

Medicare Shared Savings Program Changes in the 2025 Final Rule

Prepaid Shared Savings

To encourage CMS’s highest performing ACOs with a history of earning shared savings to maintain participation in the Program, CMS is effectively allowing ACOs to borrow against their estimated savings, implementing a system for paying ACOs up-front on the condition that they participate for the entire year and make up for those payments with realized savings (as opposed to being paid out at the end of the year).  Under the new § 425.640, ACOs will be required to spend at least half of the prepaid savings amount on direct services for beneficiaries not otherwise payable under traditional Medicare, while the other half can be spent on staffing and infrastructure.  The ACO will be required to submit to CMS a spending plan for the prepaid shared savings.  The Final Rule further sets out some prohibited uses for prepaid shared savings, which specifically include management company or parent company profit, performance bonuses, cash or cash equivalents to patients, or activities unrelated to ACO operations. 

If an ACO is unable to make up for the prepayments with realized savings against the benchmark, they will be required to directly repay CMS or stay in the Program for another year so that CMS can recoup those amounts.  For all intents and purposes, these changes could be characterized as a “buy now, pay later” approach to the Program, which CMS hopes will both reward its most effective ACOs while keeping them locked into the Program. 

Health Equity Benchmark Adjustment and Minimum Assigned Beneficiaries

Presumably because the vast majority of ACOs are located in higher-income areas and populated cities, CMS is targeting a market of providers that care for underserved communities to bolster the Program’s enrollment.  To do so, it is making upward adjustments to the benchmark to favor prospective ACOs that provide care to underserved communities, making it easier for those providers to come in below their benchmark when calculating shared savings. 

Through the Health Equity Benchmark Adjustment (HEBA), CMS will provide an option for making upward adjustments to an ACO’s benchmark if more than 15% of its beneficiaries are enrolled in the Medicare Part D low-income subsidy or are jointly eligible for both Medicare and Medicaid (which is down from CMS’s original proposal of 20% in the proposed rulemaking—indicating a strong push to secure the HEBA’s efficacy). This would be most beneficial for ACOs whose HEBA adjustment would be greater than their positive regional adjustment or prior savings adjustment, which are the other two options for an upward adjustment in the benchmark.  CMS hopes that the HEBA, operating (in CMS’ own words) “synergistically” with the prepaid savings option, will catalyze ACO enrollment.

In a similar vein and in an effort to further entice this market of prospective ACOs, CMS is adjusting eligibility requirements to encourage participation from more rural areas.  It is both ending a policy where ACOs must maintain at least 5,000 assigned beneficiaries to continue in the Program and enlarging the definition of “primary care services” used to calculate the number of an ACO’s assigned beneficiaries—a metric which it sees as a barrier to enrollment for these providers. 

Alternative Payment Model Performance Pathway Plus Quality Measure Set

CMS is adopting the Alternative Payment Model Performance Pathway Plus (APP Plus) quality measure set for making sure that ACOs participating in the Program are not achieving savings at the cost of care for beneficiaries.  CMS purports this adoption will further the goals of the “Universal Foundation” measure set to harmonize the criteria used by CMS in other programs, such as the Medicaid Core Sets, the Marketplace Quality Rating System, and Medicare Advantage and Part D Star Ratings.  The goal for the Universal Foundation is to make it easier for providers potentially subject to one or more of these programs to have a uniform set of standards.  The specific measures used by the APP Plus system will start off as a set of six and phase in over four years, increasing to a total of eleven. 

A primary focus is on electronic quality control measures (eCQMs), as CMS is providing ACOs with incentives for early adoption.  CMS commentary notes that ACOs have been slow to adopt digital quality measure reporting, often due to challenges presented by multiple participating practices having different EHRs.  To allow ACOs more time and flexibility in transitioning to digital reporting, CMS is allowing the use of MIPS CQMs as a collection type for reporting the APP Plus quality measure set in 2025 and 2026.  In addition, to promote the transition to eCQMs, CMS is extending the Program’s preexisting eCQM reporting incentive through 2025 and on, which allows an ACO to qualify for maximum shared savings and avoid maximum shared losses by meeting certain criteria:

• Reporting all eCQMs in the APP Plus quality measure set for the performance year and meeting the data completeness requirements; 

• Achieving a quality performance score at or above the 10th percentile of the benchmark on at least one of the four outcome measures in the APP Plus set; and

• Achieving a quality performance score at or above the 40th percentile of the benchmark on at least one of the remaining measures in the APP Plus set.

Other Modifications to the Benchmark and Program Calculations

In addition to the structural changes, CMS is making other notable adjustments to criteria relevant to a provider’s benchmark calculation.  Following up from a September 27, 2024 rule on Significant, Anomalous, and Highly Suspect (SAHS) billing activity relating to unusual catheter billing, CMS is taking another step to protect the benchmark and other Program calculations against outliers.  CMS is adopting a permanent policy to exclude SAHS, as necessary, from use in historic benchmarks, performance year expenditures and other Program calculations (including shared savings), rather than need to go through rulemaking as it did with the catheter issue.  Similarly, CMS will begin taking into account improper payments beyond the traditional three-month runout period when calculating an ACO’s benchmark and other Program calculations. 

For these purposes, an improper payment includes amounts (less penalties and damages) associated with a demanded overpayment determination, amounts identified in settlement agreements (such as a False Claims Act or Anti-Kickback Statute settlement), or judgments involving conduct by individuals or entities performing functions or services related to an ACO’s activities.  The Final Rule addresses reopening of shared savings determinations by CMS to adjust for improper payments and contemplates that CMS will issue guidance regarding the process for ACOs to request reopening. 

Summary

The changes in the Final Rule for the Program take direct aim at bolstering ACO enrollment, both by retaining high-performing savers with up-front payments and making the Program more approachable for providers who care for underserved communities.  Time will tell if these measures to encourage participation in the Program will actually result in increased participation, and whether the upcoming administration change will adopt different strategies for furthering the value-based healthcare system. 

A display copy of the Final Rule is available here and CMS’s press release regarding the Final Rule is available here.

Reporter, K. Tyler Dysart, Atlanta, +1 404 572 3532, tdysart@kslaw.com.

 OIG Releases Findings on Compliance with Hospital Price Transparency Rule

Earlier  this month, OIG’s Office of Audit Services released its latest report on providers’ compliance with the Hospital Price Transparency Rule (the HPT Rule). The HPT Rule requires hospitals to make public (1) a machine-readable file containing a list of all standard charges for all items and services the hospital provides, and (2) a consumer-friendly list of standard charges for a limited set of shoppable services.  OIG’s report titled, “Not All Selected Hospitals Complied With the Hospital Price Transparency Rule,” found—as the title suggests—that over a third of selected hospitals for the audit did not comply with the HPT Rule.  The report extrapolates the sample results and estimates that forty-six percent of the 5,879 hospitals required to comply with the HPT Rule are out of compliance. 

Methodology

OIG identified 5,879 unique hospitals that were both required to comply with the HPT Rule and had Medicare inpatient claims for hospital stays with ending dates of service from January 1, 2021, through June 30, 2022.  These hospitals were then separated into two categories. The first category included hospitals from the three largest hospital systems, which represented 375 hospitals. The second category included the remaining 5,504 hospitals, The audit sample consisted of thirty hospitals from the first category and seventy hospitals from the second category.  OIG accessed the websites of the sampled hospitals and obtained the machine-readable files and shoppable services files from those websites during searches conducted between January 17, 2023, and March 14, 2023.  If a hospital did not have a shoppable services file on its website, OIG analyzed its price estimator tool.

OIG’s Findings

The report found that not all of the selected hospitals made their standard charges available to the public as required under the HPT Rule. Of the 100 sampled hospitals:

• Sixty-three complied with the HPT Rule requirements; and

• Thirty-seven did not comply with one or more of the HPT Rule requirements.
  
  
  • Thirty-four hospitals did not comply with one or more of the requirements associated with publishing comprehensive machine-readable files.
  • Fourteen hospitals did not comply with one or more of the requirements associated with displaying shoppable services in a consumer-friendly manner.
  • Several of the selected hospitals were out of compliance with both requirements.

During the audit process, OIG contacted each of the sampled hospitals and sought comment about each hospital’s experience with its efforts to implement and comply with the provisions of the HPT Rule.  According to the report, many concerns generally addressed confusion or uncertainty that hospitals and their staffs had experienced in their understanding of the specific requirements.  Some smaller hospitals (fewer than 100 beds) said that their own limited resources, as well as inadequate assistance from contractors, contributed to their difficulties in complying with the HPT Rule.

OIG’s Recommendation

The report recommends that CMS take the following actions:

• Review noncompliant hospitals associated with OIG’s findings and, if CMS determines that the hospitals are noncompliant, execute CMS’s enforcement measures, to include issuing warning notices, corrective action plans, and/or civil monetary penalties as applicable;

• Use the information in the report and consider implementing changes suggested by hospitals, including providing written guidance clarifying the definition of “shoppable services” and developing a training and compliance program that is tailored for smaller hospitals; and

• Continue to strengthen its internal controls, to include allocating sufficient resources to maintain a robust program of reviews of the hospitals and their compliance with the HPT Rule.

CMS responded to each of the recommendations.  First, CMS said that it had begun its own compliance review of the noncompliant hospitals identified during OIG’s audit.  Second, CMS said that it had already published guidance related to its definition of “shoppable services.” CMS also stated that it would “conduct additional outreach to hospitals to educate them on [this] definition . . . .”  Third, CMS stated that the updated HPT Rule finalized in November 2023 strengthened its controls and review process.  (For a detailed summary of the latest changes to the HPT Rule, see the November 6, 2023 Edition of Health Headlines). 

Guidance for Providers

Given the continued and increased scrutiny of compliance with the HPT Rule, hospitals should remain mindful that CMS has published several helpful tools on its website to aid compliance. For example, CMS has created two tools that test a hospital’s machine-readable file against the required CMS template layouts and specifications.

• Online Validator:  CMS recommends this tool for nontechnical users.
• Command-Line Interface Validator:  CMS recommends this tool for technically-proficient users validating multiple files simultaneously or integrating the validator into a software pipeline.

CMS has confirmed that both tools use the same underlying code and will produce the same errors and/or warning for a machine-readable file.  Also, if a hospital comes under a compliance review by CMS, the agency will use the validator tool to assess compliance. 

A comprehensive list of resources, including the tools listed above, is available here. OIG’s report is available here. 

Reporter, Ahsin Azim, Washington, D.C., +1 202 626 5516, aazim@kslaw.com.

Senators Bill Cassidy and Maggie Hassan Release Site-Neutral Proposed Framework

On November 1, 2024, Senators Bill Cassidy (R-LA) and Maggie Hassan (D-NH) released a framework titled “Lowering Health Costs for Seniors Framework” (the Framework). The Framework proposes site-neutral payment for services in off-campus hospital outpatient departments.

The Framework establishes two site-neutral reform options. The first reform option involves eliminating the grandfathering provision of the Bipartisan Budget Act of 2015 and expanding the policy to all hospital-owned sites. The second reform option calls for reimbursing services commonly provided outside of a hospital setting at one rate under Medicare. In the second option, the Secretary of HHS would identify procedures that are performed in a hospital setting, ambulatory surgical center, and physician setting and set the Medicare reimbursement rate based on where the procedure was most commonly and safely performed and apply that single rate to the service regardless of where it was performed.

The second reform option would also involve reinvestment in rural hospitals and high-needs hospitals. Rural hospitals would include Sole Community Hospitals, Low-Volume Hospitals, and Medicare-Dependent Hospitals. High-needs hospitals criteria would potentially include metrics such as the percentage of total payor mix from public payers, charity care, and bad debt; the percentage of dual eligible inpatient days as a percentage of total inpatient days; total uncompensated care per bed above a certain amount; or proximity to a high number of major disaster declarations. The reinvestment mechanism would provide additional Medicare reimbursement bonuses for rural hospitals or high-needs hospital for the following essential services that are often critical but not profitable for rural or high-needs hospitals: Level I or Level II Trauma Center, Obstetrics Department, Burn Unit, Neonatal Intensive Care Unit, and Emergency Psychiatric Services.

The reinvestment mechanism would utilize Medicare alternative payment models as a transitional benefit to hospitals during the implementation of site-neutral payments, including one-sided risk contracts with the Medicare program or two-sided risk contracts with the Medicare program. A one-sided risk contract requires providers to meet quality and spending benchmarks to receive payment bonuses at the end of the year. Two-sided risk contracts require providers to share in the savings they create for the Medicare program or assume financial responsibility for any extra costs to Medicare. The Framework also includes two alternative payment models to encourage hospitals to move toward the two-sided risk contract, as two-sided risk contracts increase provider accountability.

The proposal was released as a policy paper, so many steps remain before the Framework would become law, but site-neutral policies could be used as “pay-fors” in future budget cycles.

The full Framework is available here.

Reporter, Priya Sinha, Atlanta, +1 404 572 3548, psinha@kslaw.com.

Also in the news

CMS Releases Home Health Prospective Payment System Final Rule

On November 1, 2024, CMS released the final rule for the Home Health Prospective Payment System (HH PPS) for calendar year (CY) 2025 (the Final Rule). CMS estimates that the Final Rule will increase home health payments by $85 million, an increase of 0.5% over CY 2024. This reflects an estimated 1.8%, or $305 million, decrease associated with the behavioral assumption adjustment (also known as the permanent adjustment), an estimated 0.4%, or $79 million, decrease associated with a proposed fixed-dollar loss ratio (FDL), and a 2.7%, or $460 million, HH PPS annual payment update increase. The Final Rule implements a number of other payment-related changes, such as updates to wage index values using core-based statistical areas, a recalibration of case-mix weight and Low Utilization Payment Adjustment (LUPA) thresholds based on CY 2023 claims data, and a 2.7% increase to payments for home intravenous immune globulin (IVIG) and services. In addition, the Final Rule finalizes changes for home health conditions of participation, including requiring home health agencies to develop and maintain an “acceptance to service” policy for prospective patients, as well as changes to the requirements applicable to provider and suppliers that reactivate their Medicare billing privileges to provide for a period of enhanced oversight. The Final Rule is available here, and the CMS fact sheet is available here.

CMS Finalizes CY 2025 End-Stage Renal Disease Prospective Payment System Final Rule

On November 1, 2024, CMS finalized the 2025 payment rates under the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for renal dialysis services (the Final Rule), as well as renal dialysis services provided by an ESRD facility to beneficiaries with acute kidney injury (AKI). These payment updates include a bundled-per-treatment payment to ESRD facilities, which includes all renal dialysis services, and an increase of the ESRD PPS base rate, which CMS projects will increase payments to ESRD facilities by 2.7% compared to 2024. CMS also finalizes an ESRD PPS-specific wage index to adjust payments based on geographic differences, expanded the list of ESRD outlier services, proposes a change to the Low-Volume Payment Adjustment (LVPA) to increase payments to the lowest volume facilities, including oral-only drugs in the ERSD PPS bundled payment, potentially increasing the payment for phosphate binders, and proposes the payment for AKI renal dialysis services provided to beneficiaries in their homes. The Final Rule also updates several requirements, including for the ESRD Quality Incentive Program, ESRD Facility Conditions for Coverage, and ESRD Treatment Choices Model.  CMS’s Fact Sheet is available here. The Final Rule is available here.