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On July 13, the Centers for Medicare & Medicaid Services (CMS) released its annual rule proposing updates to its payment system for physicians in Medicare. For weeks, industry stakeholders had been awaiting the release of this regulation, which is 1,747 pages in length and would update payment policies and programs regarding Medicare payments to physicians and other providers under the Physician Fee Schedule (PFS) on or after January 1, 2022.

One of the reasons this rule was so heavily anticipated is because it is one of the first major rules issued by the Biden Administration at a time when many industry stakeholders have spent the past few months wondering whether the change in Presidential Administrations would cause a major shift in CMS’s payment policies. Another reason is because it included critically important policy updates concerning such issues as Medicare payment rates, telehealth services, accountable care organizations (ACOs), and the Merit Based Incentive Payment System (MIPS).

Key Proposals

In terms of specific policies, the rule proposes to:

  • Reduce FFS payment rates across the board by 3.75 percent in 2022. The rule proposes a 2022 PFS conversion factor of $33.58, a decrease of $1.31 (3.75 percent) from the 2021 PFS conversion factor of $34.89. This decrease reflects the expiration of the 3.75 percent payment increase for 2021 that was included in the December 2020 year-end legislation to override the impact of the Evaluation and Management (E/M) relative value unit changes that were included in the 2021 E/M documentation and payment system overhaul. Medicare payment rates for 2022 will also be adjusted according to 2020 performance in MIPS.
  • Continue coverage for certain telehealth services through 2023. Last year, CMS expanded its list of covered telehealth services for the COVID-19 public health emergency. This rule would continue coverage of many of those services through the end of 2023, so that they would last beyond the end of the emergency period and provide CMS adequate time to evaluate whether the services should be permanently added to its telehealth list. While not insignificant, these changes would not remove the patient geographic and location restrictions that outside of the emergency period limit Medicare’s telehealth services program to patients in rural areas who are physically present at healthcare facilities.
  • Establish policies to expand telehealth services in behavioral health. In this regulation, CMS implemented a key provision of the December 2020 year-end COVID-19 relief/government funding legislation that expands telehealth services in behavioral health. As required by that law, CMS would remove the geographic restrictions and add the home of the patient as a permissible site for behavioral health telehealth services if an in-person service is also provided by the physician or practitioner furnishing the telehealth services within six months prior to the initial service, and at least once every six months thereafter. For behavioral health telehealth services, CMS also proposed to allow the limited use of an audio-only interactive telecommunications system. For practitioners who have the capability to furnish two-way, audio/video communications, but where the beneficiary is not capable of using, or does not consent to, the use of two-way, audio/video technology, CMS proposed to allow an audio-only behavioral health telehealth visit.
  • Increase the MIPS scoring threshold from 60 to 75 points and adjust the MIPS quality and cost category scoring weights. The performance threshold is the total Merit Based Incentive Payment System (MIPS) score at which neutral MIPS payment adjustments apply; scores above or below the threshold result in positive or negative adjustments respectively. For 2022, CMS proposed to increase the threshold from 60 to 75 points, which reflects the mean performance score of all clinicians in 2019. As prescribed by law, in 2022, the performance category weights are: 30% for quality; 30% for cost; 15% for improvement activities; and 25% for the Promoting Interoperability. Under MIPS, eligible clinicians will receive positive or negative payment adjustments of up to 9% in 2024 based on 2022 performance.
  • Revise some of the performance measures in each of the four MIPS performance categories. While CMS did not propose major revisions to any of the four categories, it did propose impactful revisions for each.  For quality, CMS proposed to update the scoring system by removing end-to-end electronic reporting, high-priority measure bonus points, and the 3-point floor for scoring measures (with some exceptions for small practices). For cost, CMS proposed to add new episode-based measures. For improvement activities, CMS would revise the list of eligible activities. For Promoting Interoperability, CMS proposed to make changes to the category’s objectives and measures that align with changes recently proposed for the hospital Promoting Interoperability Program. These include revising requirements for the Public Health and Clinical Data Exchange objective and modifying the Prevention of Information Blocking attestation statements. 
  • Delay initial implementation of MIPS Value Pathways from 2022 to 2023. In response to industry concerns regarding the previously announced plans to transition MIPS to the MIPS Value Pathways participation framework, CMS delayed the first phase of the shift from 2022 to 2023. As noted by CMS, “our intent with this delayed timeframe is to provide practices the time they need to review requirements, update workflows, and prepare their systems as needed to report MVPs.” CMS also proposed to complete the full transition from traditional MIPS to MIPS Value Pathways following the 2027 performance period, establishing a lengthy five-year transition period. For the physician community, this delay is welcomed, but the overall future of the program remains very confusing given the lack of concrete details surrounding MVPs and continued delays in implementation.
  • Delay ACO quality measure set changes from 2022 to 2024. Last year, CMS finalized a policy to reduce the Medicare Shared Savings ACO Program quality measure set to the same six measures used in the MIPS APM Performance Pathway (APP) starting with the 2022 performance year. In this rule, CMS proposed to delay the change until 2024. In effect, for 2021, 2022, and 2023, this would allow ACOs to report the current measure set via the web interface, or the MIPS APP measure set that will be required in 2024. This change came in direct response to lobbying from ACO and physician organizations, which applauded the proposal.

Analysis & Key Takeaways

Following the rule’s release, physician trade and lobbying associations immediately began lobbying to reverse the proposed reduction in the conversion factor. Other policies, including the delayed change in ACO quality measures and delayed implementation of MIPS Value Pathways, are strongly supported by most physician groups. Despite CMS’s positive messaging regarding a permanent expansion of telehealth services, aside from for behavioral health services, this rule does not permanently eliminate the patient geographic and physical site location rules beyond the end of the COVID-19 public health emergency because it would require an act of Congress.

Perhaps most importantly, the policies in this rule signal a continuation by the Biden Administration of many of the bipartisan value-based reimbursement policies and programs launched and implemented by the two prior Presidential Administrations. Indeed, reduced FFS payment rates, continued MIPS and ACO reforms (and delays of those reforms), and an incremental expansion of telehealth should reinforce that the healthcare industry remains on the path towards value over volume.

What’s Next?

The proposed rule is now open for public comment for 60 days, until September 13. Following the close of the public comment period, CMS will then issue a final rule in October or November ahead of a January 1, 2022 implementation date for the rule’s policies.  

Those interested in more details, can access the rule here and CMS’s press release here. NextGen Healthcare clients interested in learning more about this topic can register for our August Health Reform Simplified webinar. Contact your NextGen Healthcare representative for more information.

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Chris Emper
Government Affairs Advisor, NextGen Healthcare
Chris Emper, JD, MBA, is government affairs advisor at NextGen Healthcare and president of Emper Healthcare Advisors—a health IT industry advisory and consulting services firm in Washington, D.C. that specializes in helping healthcare providers and technology companies successfully navigate and comply with complex regulations and value-based reimbursement models. Prior to forming Emper Healthcare...