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E2 – Avalere Insights on Recent CMS Proposed Payment Rules: MPFS

Summary

Tune in to hear the second episode in our 3-part series that focuses on CMS’s most recent proposed payment rules. In episode 2, we’ll be focusing on the Medicare Physician Fee Schedule proposed rule, or MPFS, with a focus on proposed changes to E/M and Opioid Use Disorder (OUD) treatment services.
“Medicare is implementing some of the changes from the SUPPORT Act to expand access for MAT therapy. We encourage stakeholders, manufacturers, and providers to explore bundled payments to appropriately capture the costs of therapy.” Danielle Showalter

Panelists

Moderator
Timothy Epple , Principal, Financial Services

Tim Epple provides due diligence and advisory services to private equity firms investing in the healthcare sector.

Speaker
Abby Moorman , Senior Consultant, Commercialization & Regulatory Strategy

Abby Moorman advises clients on reimbursement and product commercialization in many settings of care including physician office, outpatient department, ASC, and inpatient hospital.

Speaker
Danielle Showalter , Principal, Commercialization & Regulatory Strategy

Danielle Showalter advises clients on reimbursement, policy, and market access strategies for diagnostic, medical device, and pharmaceutical companies.

Listen to Other Podcasts in This Series

E1 – Avalere Insights on Recent CMS Proposed Payment Rules: OPPS

E3 – Avalere Insights on Recent CMS Proposed Payment Rules: ESRD PPS and Quality Incentive Program

Transcript

Tim: Hello, and welcome to Avalere’s second in a series of podcasts focused on proposed rules that have been released by CMS in 2019. My name is Tim Epple and I am a principle in Avalere’s Financial Services practices and today I am fortunate to be joined by Danielle Showalter and Abby Moorman who sit in Avalere’s Commercialization and Regulatory Strategy practice.  In today’s episode, we are doing a deep dive into the CY 2020 Medicare Physician Fee Schedule or MPFS Proposed Rule and really looking to focus on two topics:

  1. The proposed 2021 changes to physician evaluation and management codes, E/M Codes
  2. The development and implementation of payment for substance abuse and opioid treatment services.

Danielle I’d love to start with you and help orient us to MPFS and what it is used for. What do you think is the purpose of this rule?

Danielle : Sure, Tim. The purpose of the MPFS is for Medicare to set and establish payment rates for physicians and other healthcare providers. They can also use MPFS as a vehicle to establish new programs and services.

Tim: That’s great. Abby, thinking about more specific implementation of those services, codes and payment rates, can you give us more color on this?

Abby: When CMS is setting those payment rates, they can trickle in to the commercial payer contracts based on the relative value units that Medicare sets for individual codes. It can have a widespread impact on the system.

Tim: So basically, we shouldn’t think of the MPFS as only impacting providers from a Medicare standpoint but instead it is broader to providers across the healthcare ecosystem.

Abby: Correct.

Tim: That’s great. Well I’d really like to dig into the evaluation and management codes or E/M codes. Abby we can start with you on that.

Abby: E/M codes are used to describe your normal office visit, so each time you visit your doctor, with say a sore throat, they are coding an E/M visit. There are 5 levels of visits depending on the amount of time the physician spends with you or the amount of medical decision making.

Tim: Where would you put E/M codes in the context of other CPT or HCPCS codes in Medicare. Are they more often or less often billed codes? Where do they fit in the broader picture?

Abby: Since they are used for pretty much every office visit, they are the highest billed codes within the system.

Tim: So obviously very important from a Medicare perspective and sounds like it impacts a lot of different provider types?

Abby: Really, all payers paying for physician services.

Tim: Great. If I can remember from last year’s rule there was some previously proposed changes to E/M visits. Can you talk us through a little of the history with E/M codes?

Abby: In last year’s rule, CMS decided to create a single payment rate for levels 2 through 4, for E/M codes. CMS would give you the same payment rate whether you gave a level 2 visit versus a level 4 visit. That was going to be effective in 2021. They also proposed to simplify the documentation requirements, allowing providers to choose the level of E/M based on previously established E/M guidelines, medical decision making, or time.

Tim: So that sounds comprehensive but what is different from what is being proposed this year as compared to last year?

Abby: In this year’s rule, the AMA went back to the drawing board and revised the CPT codes from how they have been established over many, many years. They changed them to how providers pick the specific level of services based on medical decision-making or time. These new codes as a CPT change, will affect all payers and all providers. And the good side of this is that CMS is proposing to accept the evaluation for these codes, meaning that each level will still be at a resource based nature, which means that there won’t be a single payment rate for levels 2 through 4 and that they will actually reflect the complexity of visit based on the level the provider chooses.

Tim: Can you add a little more flavor – like how big of a deal is this? Is this provider specific, does this impact backend staff? Again, how big of a deal will this be?

Abby: As I said before, E/M codes are used by all payers as well as all provider specialties. So it’s going to affect everyone that is coding E/M visits. Additionally, its going to have even more widespread effect, with needing to update EMRs or chart masters on how to pick the appropriate level of a visit.  And because it is such a widespread sweeping change, there is also going to need to be significant education for providers as well as coders to, again, learn how to choose the appropriate level of a visit.

Tim: So it’s not really a reimbursement or coding change, its really a change in how practices are run, how things are billed, and how back end staff might be allocated. It is a far-reaching change.

Abby: Definitely.

Tim: And my last question for you, is on the budget neutrality of the MPFS. I’ve spent a lot of time thinking about this. How do you think about the potential or proposed increase in in overall E/M payment rates in the context of overall payments to other specialties? Should we think of this as E/M rates going up and other rates going down. Can you clarify this?

Abby: So, it is still unclear how the new reimbursement rates that are going into effect in 2021 are going to affect budget neutrality. CMS isn’t quite sure if this will significantly impact budget neutrality, and they have not estimated the specific impact across the code set but they will do so in next year’s rule. There are some specialties that CMS estimates will have a positive impact from the E/M change. Those are people that receive a large part of the revenue from E/M such as rheumatology, hematology, oncology and family medicine. Whereas for other providers, CMS is expecting a negative impact including ophthalmology and nurse anastasis. It is still unclear whether or not in 2021 we will have a negative budget neutrality adjustment.

Tim: Thank you, we will keep an eye on that. Switching to another topic, that is getting a lot of attention on the hill, now in CMS, and across the industry, which is substance abuse treatment, specially Substance Use Disorder and Opioid Use Disorder.

Danielle I’d love to pick you brain on this. What lead CMS to increase their focus on the substance abuse space and what is their basis for some of the proposed changes in this year’s rule?

Danielle: Sure, Opioid Use Disorder (OUD) has gotten a lot of media exposure over the past few years. In fact, it has been recognized as a public health disorder as well as public health emergency by the Administration. Medication Assisted Treatment (MAT) is one of the most effective treatment for OUD with 1 of the 3 approved FDA approved treatments being methadone. However, due to various regulations and policies, methadone for MAT can only be dispensed and administered by an opioid treatment program (OTP). Because of this, there has historically been a gap in coverage for Medicare patients for methadone for MAT.

Tim: That’s very interesting and clearly this has been a very high priority and a visible issue. What specifically has been done to push CMS to take action?

Danielle: In 2018, Congress enacted the SUPPORT ACT, Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act. The SUPPORT Act established a new Medicare Part B benefit category for OUD treatment services, furnished by an OTP beginning on or after January 1, 2020. This is part of the implementation that CMS needs to complete to comply with the SUPPORT ACT.   CMS last year put out a request for information, RFI, from stakeholders and now based on that feedback is proposing new definitions for opioid treatment services enrollment policies as well payment rates.

Tim: It sounds like CMS is putting in place payment rates structures for the SUPPORT Act?

Danielle: Yes

Tim: Great and more specifically what are the new payments being proposed under the MPFS and how do they vary by providers?

Danielle: Broadly, CMS proposed serval initiative to bundle payment for either opioid specific or broader substance abuse treatment services, however this is going to vary by provider type as well as by OTP designation.

For OUD treatments, which are specific to OTP providers, CMS is proposing to bundle the drug and non-drug component of treatment into one payment. They are going to make this a one-week duration for those codes.  They are also proposing to initially break apart the drug and non-drug components in order to value them and then piece them back together. The drug payment piece will be based on 100% of Average Sales Price (ASP) of the drug. The non-drug component which includes the dispensing, administration of some of the medications, where applicable, substance abuse counseling, individual and group therapy and toxicology testing, will be based on TRICARE’s payment rates that they have been using for their beneficiaries since 2016. CMS is basing some of that payment on TRICARE’s in their proposal.

For SUD treatments, which are not specific to OTP providers, and to be used by physicians and other health professionals, CMS is proposing to bundle monthly services rather than weekly for the management, care coordination, therapy, and counseling activities. However, for the SUD treatments the bundle will not include the drug; providers will be paid separately for the drug as they currently are.

Tim: So, it sounds like CMS is really making sure to provide payments for not only for MAT and providers that can administer them, but also including the SUD bundle, to make sure to capture any non-medication focused treatment, which is obviously, more focused on the counseling, management, and care coordination piece.

Danielle: Yes

Tim: We know that the patient population is at-risk, so how do you think about the cost exposure for patients and what that means for beneficiaries?

Danielle: Interestingly, since the drug cost varies so much, the bundle payment varies a lot. Considering that it includes the drug and non-drug component, the tables CMS released vary greatly from about the $100 mark, give or take, to $5,000, for a one-week duration of therapy. What’s important to note is that at this time, CMS is proposing – however this can be revised in the future – a $0-dollar copay for beneficiaries to help minimize any access barriers that they may experience.

Tim: That’s interesting and prioritizes access. One last question, what else is CMS doing to for access for OUD treatment via changes to the tele-health list?

Danielle: CMS is proposing adding individual group therapy and counseling services for part of the bundle to be furnished under the telehealth services. This is a major development to increase access, since in certain geographies providers as well as patients may have more limited access due to distance.

Tim: That’s very interesting and obviously CMS is taking a holistic approach to treatment. My last question is looking across all the changes in substance abuse and opioid use disorder treatment, how do you think about this for providers and manufacturers? What are your summary thoughts on what is changing?

Danielle: What Medicare is doing is implementing some of the changes from the SUPPORT Act in order to expand access for MAT therapy for Medicare patients. We would encourage stakeholders, manufacturers and providers, to take a look at the bundle payments and make sure they are appropriately capturing the costs of therapy that are occurring.

Tim: Great, I appreciate the thoughts from both of you and look forward to catching up when the final rule comes out in November. Thank you.

Danielle and Abby: Thank you

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