Medicare Compliance & Reimbursement

Add-on code, regulatory requirements factor into final decrease.

Despite rising costs, industry outcry, and a general malaise surrounding another proposal to decrease the conversion factor (CF) for 2024, Medicare went ahead and cut it anyway — and for more than originally promised.

Context: On Nov. 16, the Centers for Medicare & Medicaid Services (CMS) published the calendar year (CY) 2024 Medicare Physician Fee Schedule (MPFS) final rule in the Federal Register, which is unsurprisingly mammoth in size and scope. There are many positives among the policies — particularly in the areas of primary care, telehealth, and behavioral healthcare — and CMS continues to rectify systemic issues uncovered during the pandemic, including post-COVID PHE regulatory reforms (see story, p. 3).

However the final rule isn’t all roses — and many clinicians will find less money in their wallets due to regulatory requirements and 2024 rate-setting.

Last July, CMS proposed a 3.34-percent cut to the CF. But in the final rule, the agency opted to reduce the CF further by 3.37 percent, which equates to $32.7442 or $1.15 less than the 2023 CF of $33.89. On top of that, CMS anticipates overall payment rates under the CY 2024 MPFS will fall by 1.25 percent, according to the final rule.

“CMS is taking important steps toward those goals in this rule by improving payment for primary care and access to mental health care, paying for new navigation services to help people with cancer and other serious illnesses navigate their treatment, supporting family caregivers, paying for services involving community health workers to address health-related social needs that impact care, and enhancing access to dental care for people with certain cancers,” says CMS Administrator Chiquita Brooks-LaSure in a release on the rule.

Here’s What Impacted CMS’ 2024 Rate-Setting and CF Changes

A combination of federal laws, budgetary constraints, and expiring legislation all factored into the CF decrease for CY 2024.

First: CMS must update the CF under MACRA by 0.00 percent. MACRA replaced the Sustainable Growth Rate (SGR) in 2015, and the law requires a 0.00-percent update to the CF for 2020 through 2025. “Section 101 repeals the Medicare SGR methodology for updates to the physician fee schedule (PFS) and implements scheduled PFS updates, including a higher update rate for ‘qualifying APM participants’ beginning in 2026,” CMS notes in a FAQ on physician payment reform.

Looking ahead, Quality Payment Program (QPP) guidance suggests that qualifying APM participants will receive a 0.75-percent boost in 2026 while non-qualifying participants will receive a 0.25-percent increase to the CF.

Next: In the Consolidated Appropriations Act, 2023 (CAA, 2023), Congress offered a solution to the massive CY 2023 pay cut with a two-pronged approach: a 2.5-percent statutory payment increase for CY 2023 and a 1.25-percent payment adjustment for CY 2024. CMS addresses both the expiration of the statutory payment and the payment adjustment in the CF decrease and payment rate changes.

Last: But the necessary decreases to rectify the CAA, 2023 changes aren’t “the only cut[s] CMS made to the CY 2024 CF,” clarifies healthcare executive Jeffery Davis with McDermott +Consulting, an affiliate of law firm McDermott Will & Emery, in the firm’s Regs and Eggs blog. “CMS also made a 2.1-percent cut to preserve budget neutrality — and the majority of that cut was due to CMS’ decision to implement the same add-on code for complexity that CMS had initially implemented for CY 2021 and Congress delayed until CY 2024.”

Remember, Section 1115 of the Social Security Act requires CMS to make budget-neutrality adjustments to physician payment rates. In a nutshell, Medicare spending cannot exceed Medicare costs. “Increases in payment for physician services in a given year will require across-the-board decreases in payment for all physicians,” explains the American College of Surgeons in online guidance. “This does not take into consideration the varying costs associated with performing these services.”

Add-on code: Comments for and against the long-awaited implementation and utilization of HCPCS code G2211 (Visit complexity inherent to evaluation and management associated with medical care services that serve as the continuing focal point for all needed health care services and/or with medical care services that are part of ongoing care related to a patient’s single, serious condition or a complex condition. (add-on code, list separately in addition to office/outpatient evaluation and management visit, new or established)) abound in the final rule.

Some commenters argued there’s “a lack of clarity surrounding the appropriate circumstances for reporting the inherent complexity add-on code and that combined with potential implications for patient cost-sharing, health care practitioners

would experience ambiguity toward billing the code, which could result in our having overestimated utilization,” the final rule says. Others urged CMS to “align utilization estimates with the actual first year utilization of care management codes for transitional care management (TCM) and chronic care management (CCM)” while some entreated the agency to apply mid-year adjustments to the CF if the agency found it “overestimated utilization of the code,” the final rule highlights.

CMS did take these concerns into account and refined the CY 2021 policy to better accommodate stakeholders and “reduce the estimated redistributive impacts of this policy,” the agency says in a fact sheet on the rule. The result includes the following updates for the implementation of HCPCS G2211, starting Jan. 1, 2024:

• “The add-on code cannot be billed with an office or outpatient evaluation and management visit that is itself focused on a procedure or other service instead of being focused on longitudinal care for all needed healthcare services, or a single, serious or complex condition,” CMS says.
• CMS will monitor how the code is being utilized and make refinements if necessary.
• Due to public input, CMS revised utilization estimates and “these modifications reduce the redistributive impact to the CY 2024 conversion factor by nearly one third from the estimated impact described in the CY 2021 Medicare Physician Fee Schedule final rule,” the fact sheet notes.

CMS emphasizes repeatedly in the CY 2024 MPFS final rule that primary care is a focal point of recent policymaking, and the implementation of add-on code G2211 “will better recognize the resource costs associated with evaluation and management visits for primary care and longitudinal care.”

Industry Org Weighs In

When the CY 2024 MPFS proposed rule came out in July, the American Medical Association (AMA) urged the feds to take inflation, costs, and COVID fallout into consideration. That didn’t happen, and the trade group implies patients will suffer.

“This is a recipe for financial instability. Patients and physicians will wonder why such thin gruel is being served,” exhorts AMA President Jesse M. Ehrenfeld, MD, MPH, in a release on the final rule. “When adjusted for inflation, Medicare physician payment already has effectively declined 26 percent from 2001 to 2023 before additional inflation and these cuts are factored in,” he warns.

What’s next? Last March, the Medicare Payment Advisory Commission (MedPAC) urged Congress to tie physician payment rates to the Medicare Economic Index (MEI) (see Medicare Compliance & Reimbursement, Vol. 49, No. 7). Then “in April, a bipartisan group of House members introduced a bill that would provide annual inflation updates to the Medicare payment schedule based on the MEI,” Ehrenfeld says. And on Oct. 18, the House GOP Doctors Caucus drafted legislation to update the budget-neutrality methodologies and adjacent policies (see Medicare Compliance & Reimbursement, Vol. 49, No. 21).

Stay tuned: Medicare Compliance & Reimbursement will continue to monitor and report on the physician payment dialogue, including possible legislative and budgetary updates.

Resource: You can view the CY 2024 MPFS final rule, which is effective Jan. 1, 2024, at www.federalregister.gov/documents/2023/11/16/2023-24184/medicare-and-medicaid-programs-cy-2024-payment-policies-under-the-physician-fee-schedule-and-other.