Navigating the CMS CY 2024 proposed rule: part 1

Introduction

On July 13, 2023, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule related to policy changes for Medicare payments under the Physician Fee Schedule (PFS), and other Medicare Part B issues, effective on or after January 1, 2024 (1).

The proposal, titled "Medicare and Medicaid Programs; CY 2024 Payment Policies Under the Physician Fee Schedule (PFS) and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; Medicare Advantage; Medicare and Medicaid Provider and Supplier Enrollment Policies and Basic Health Program,” (2) was open for public comments through September 11, 2023.

Deconstructing CMS-1784-P (2): a closer look at the proposed rule

Conversion factor (3)

LH: Let's discuss the physician fee schedule (PFS) conversion factor. The proposed rule suggests a decrease in the conversion factor from $33.89 to $32.75, a 3.34 percent reduction over the prior year. This is due to prior congressional relief expiring, in addition to budget neutrality adjustment. (1; 2) What's your take on this, Beth?

BM: The proposed decrease in the conversion factor is a concern. Especially when we consider ongoing financial pressures such as inflation, pandemic recovery, and market fluctuations, it's challenging for specialty practices. Notably, 90 percent of this reduction is due to the addition of the new complex care code. (2) I believe we should caution against adding this code until Congress determines the best way to add services for complex case management without cutting reimbursement to doctors who may be managing such cases.

The reality is that all providers, not just those managing complex care needs, continue to contend with the effects of several years of high inflation that has had a significant impact on the cost of all the kinds of supplies needed to meet the needs of patients. It is not only the costs that have changed, but the uncertainty of the past several years has thrown off analytics practices can rely on to inform budgets and plan appropriate stocking of supplies. The result is practices trying to guess the best time and the proper amount of such inputs based on imperfect data that doesn’t reflect true market conditions. (1) (4)

The passage of the Inflation Reduction Act (IRA) (5) further compounds the uncertainty in this environment, as it will likely have a substantial effect on practices’ margins. The impact will be especially pronounced in the specialty space, where next-generation drugs make up a large portion of input costs. (6) Coupling a decrease in the conversion factor with these other stressors will result in smaller, physician-owned practices being forced to close their doors or resign themselves to acquisition by large health systems. (6) Neither outcome results in positive effects for patients.

Physicians in these practices are the only group within Medicare that do not receive a yearly payment increase. Last month, CMS finalized the yearly rule providing a net payment increase of 4 percent to Skilled Nursing Facilities. (7) Likewise, the Hospital Outpatient Department and Ambulatory Surgical Center payment systems proposed a rule that increases payments to each by 2.8 percent for 2024. (8) These increases are the result of increases in the hospital market basket, measuring the cost of providing care in those settings. It is wholly appropriate to update payment to account for increases in the cost of providing care services to beneficiaries, and we believe the same should be done for practitioners through the Physician Fee Schedule.

Impact to specialty practices

LH: Inflation and economic uncertainties along with pandemic recovery have certainly added complexity to financial planning, especially in areas where bounce back takes longer, such as rural communities. What about the impact on other specialty services?

BM: That's a crucial point, Lisa. Specialty practices are essential in addressing the rise of chronic diseases accelerated by the pandemic. When there are increased rates of more complex conditions that are caught later in their progression, the skills of a specialist – and often many – are required. 

However, some of the proposed policies, such as reductions in total allowed charges for various specialties, could have a negative impact. For instance, ophthalmology practices might see an approximately 17 percent cut in reimbursement, which can be especially challenging considering their patient demographic, mostly 65 years or older. (9) While this is just one example, it is representative of many of these specialties that will see significant reductions because of these proposals.

LH: Legislators should explore alternative options that do not disproportionately affect specialists who are in high demand to meet historic levels of patient need. Maintaining payment stability year-over-year to account for changes in the cost of providing care is essential.

Services addressing health-related social needs (10)

LH: Shifting gears, let's discuss the proposed services addressing health-related social needs. What exactly are these services, and why are they important for specialty practices?

BM: These services encompass separate coding and payment for Community Health Integration, Principal Illness Navigation, and Social Determinants of Health (SDOH) Risk Assessments. (1; 4) They are critical because they empower practices to address the broader social determinants of health that can significantly impact a patient's well-being. Many practices have already taken steps to assess and meet these needs by hiring additional staff, integrating SDOH assessments, and connecting patients with community resources.

LH: How does the proposed rule align with the efforts of these practices and do any challenges remain?

BM: The proposed rule aligns well with the goals of these practices by introducing payment for Principal Illness Navigation Services. (4) This is a significant step forward as it recognizes the value of these services in improving patient outcomes. It validates the efforts that many practices have already undertaken.

Challenges do remain, especially for smaller practices that may not have the financial resources to invest in staff or allocate staff time to address social determinants of health. Many practices are limited by the lack of reimbursement for these services, which can lead to financial losses. Commercial payers and selected state Medicaid programs reimburse HCPCS G9920 and G9919 codes for patient screening and documentation of results at a rate of approximately $33.89 compared to HCPCS code 96169 or 96161 reimbursed at $2.71 each. (11) This is a difference of a magnitude of 10 – such a disparity is shocking and shows that the Medicare program does not recognize the resources required to provide these services. 

LH: Reimbursement should match the value of these services and support practices in addressing broader patient needs. This will help them continue to provide holistic care to patients by addressing social determinants of health effectively.

Drugs Not Usually Self-Administered by Patients (12)

LH: Now, let's delve into the "Drugs Not Usually Self-Administered by Patient" and "Single Dose Containers & Single-use Packaged Drugs" sections. Can you provide an overview of these areas?

BM: Let's start with "Drugs Not Usually Self-Administered by Patient." This section sought comments on whether guidance surrounding self-administered drug (SAD) lists should be revised to provide greater clarity for Medicare Administrative Contractors (MACs). (13)  We would agree that coding and payment for complex drugs should be examined to make the determination of each MAC as streamlined as possible. Doing so would help ensure minimal differences in each SAD list that is used by each regional MAC, thereby minimizing the coding burden and confusion for practices that may operate in more than one region.

LH: Simplifying coding processes sounds promising. How might these changes benefit our specialty practices and their patients and are there any challenges with the existing legislation?

BM: The goal here is to enhance patient access to necessary drugs while reimbursing practices for the care they provide without undue administrative burden. As highlighted in the past, we have concerns about added complexity and reporting burden on providers in certain circumstances, impacting practice budgets and patient costs. Some existing definitions are deemed overly restrictive and don't adequately reimburse for services provided. For example, certain drugs are administered at clinics due to timing constraints, a practice that should be accounted for in the guidelines.

Single Dose Containers & Single-use Packaged Drugs  (14)

LH: CMS proposed revisions to several policies concerning Single Dose Containers & Single-use Packaged Drugs. It appears that these changes could pose operational challenges for practices. 

BM: That’s right, Lisa. Although CMS is taking steps to provide additional clarification for the requirements made of manufacturers and attempting to coordinate reporting with other requirements under the Inflation Reduction Act (IRA) Part B inflation rebate reporting, operationalizing all the portions of these requirements at the practice level will continue to be difficult. (1; 13) 

Much of the coding and EHR recording for these types of drugs is done in an automated, workflow-integrated manner, not only for the administering practitioner but also in the IV prep area. The new proposal from CMS to allow manufacturers to apply for a modified threshold for wastage of a particular drug further complicates the process for our practices. While such a process is wholly reasonable for manufacturers, it means that practices and in many cases their software providers will have another changing requirement to stay in compliance with for many different drugs. In addition, there are real reimbursement consequences for practices when these rebates change. Such modifications can also impact patient out-of-pocket costs.

LH: We recognize that this reporting is required by statute, but CMS should implement the requirements in such a way that minimizes reporting and administrative burden for practices. Practices are already crushed under the weight of all kinds of reporting, and do not need anything added on top of that.

Conclusion

Thank you, Lisa and Beth, for these valuable insights. We look forward to part 2 of the series, where we will continue our exploration of the CY 2024 proposed rule, covering topics such as Clinical Diagnostic Laboratory Tests (CDLTs), MIPS Value Pathways (MVPs), telehealth, dental coverage, Inflation Reduction Act (IRA) Codification & Conforming Changes, Appropriate Use Criteria (AUC) for Advanced Diagnostic Criteria Program, MDPP flexibilities and the proposed increase in the performance threshold. We aim to provide comprehensive insights into how these proposed changes may impact specialty practices and patient care.

References

1. Centers for Medicare & Medicaid Services (CMS). Calendar Year (CY) 2024 Medicare Physician Fee Schedule Proposed Rule. cms.gov. [Online] 07 13, 2023. [Cited: 09 25, 2023.] https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2024-medicare-physician-fee-schedule-proposed-rule.
2. —. PFS Federal Regulation Notices. CMS.gov. [Online] 08 07, 2023. https://www.cms.gov/medicare/medicare-fee-service-payment/physicianfeesched/pfs-federal-regulation-notices/cms-1784-p.
3. Office of the Law Revision Counsel of the United States House of Representatives. 42 USC 1395w-4: Payment for physicians' services. Title 42-THE PUBLIC HEALTH AND WELFARE. [Online] [Cited: 09 25, 2023.] https://uscode.house.gov/view.xhtml?req=granuleid:USC-1994-title42-section1395w-4&num=0&edition=1994#sourcecredit.
4. Centers for Medicare & Medicaid Services (CMS). CMS Physician Payment Rule Advances Health Equity. cms.gov. [Online] 07 13, 2023. [Cited: 09 25, 2023.] https://www.cms.gov/newsroom/press-releases/cms-physician-payment-rule-advances-health-equity.
5. Centers for Medicare & Medicaid Services. Inflation Reduction Act and Medicare. cms.gov. [Online] 09 12, 2023. [Cited: 09 25, 2023.] https://www.cms.gov/inflation-reduction-act-and-medicare.
6. Juliette Cubanski, Tricia Neuman, Meredith Freed, and Anthony Damico. How Will the Prescription Drug Provisions in the Inflation Reduction Act Affect Medicare Beneficiaries? kfff.org. [Online] 01 24, 2023. [Cited: 09 25, 2023.] https://www.kff.org/medicare/issue-brief/how-will-the-prescription-drug-provisions-in-the-inflation-reduction-act-affect-medicare-beneficiaries/.
7. Federal Register. Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities; Updates to the Quality Reporting Program and Value-Based Purchasing Program for Federal Fiscal Year 2024. federalregister.gov. [Online] 08 7, 2023. [Cited: 09 25, 2023.] https://www.federalregister.gov/documents/2023/08/07/2023-16249/medicare-program-prospective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities.
8. —. Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems; Quality Reporting Programs; Payment for Intensive Outpatient Services in Rural Health Clinics, Federally Qualified Health Centers, and Opioid Treatme. federalregister.gov. [Online] 07 31, 2023. [Cited: 09 25, 2023.] https://www.federalregister.gov/documents/2023/07/31/2023-14768/medicare-program-hospital-outpatient-prospective-payment-and-ambulatory-surgical-center-payment.
9. IntrinsiQ Specialty Solutions. InfoDive. August 2023.
10. Federal Register. 88 Fed. Reg. 52326. 
11. Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, Medicare Parts A, B, C, and D Overpayment Provisions of the Affordable Care Act an. Federal Register. [Online] 12 27, 2022. [Cited: 09 25, 2023.] https://www.federalregister.gov/documents/2022/12/27/2022-26956/medicare-program-contract-year-2024-policy-and-technical-changes-to-the-medicare-advantage-program.
12. Federal Register. 88 Fed. Reg. 52387. 
13. —. Medicare and Medicaid Programs; CY 2024 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; Medicare Advantage; Medicare and Medicaid Provider and Suppl. federalregister.gov. [Online] 08 07, 2023. [Cited: 09 25, 2023.] https://www.federalregister.gov/documents/2023/08/07/2023-14624/medicare-and-medicaid-programs-cy-2024-payment-policies-under-the-physician-fee-schedule-and-other.
14. —. 88 Fed. Reg. 52391.