November 7, 2018

CMS Releases the 2019 MPFS and QPP Final Rules

Holland & Knight Alert
Miranda A. Franco


  • The Centers for Medicare & Medicaid Services (CMS) has published the Calendar Year (CY) 2019 Final Rule for the Medicare Physician Fee Schedule (PFS), which includes provisions related to Medicare physician payments as well as regulations for the Quality Payment Program (QPP).
  • Among notable changes, CMS finalized policies that would reduce provider reimbursement rates for new drugs under Medicare Part B, increase access to telehealth services, and revise a controversial evaluation and management proposal.

The Centers for Medicare & Medicaid Services (CMS) on Nov. 1, 2018, published the Calendar Year (CY) 2019 Final Rule for the Medicare Physician Fee Schedule (PFS). Although in previous years regulations for the Quality Payment Program (QPP) were released independently, the 2019 Medicare PFS Final Rule includes provisions related to Medicare physician payments as well as the QPP. The MPFS dictates Medicare rates and policies under Part B, while the QPP implements two key value-based payment programs: the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APMs).

Most of the provisions of the Final Rule take effect on Jan. 1, 2019; however, CMS pushed the start date until CY 2021 for certain burden reduction proposals in response to concerns from stakeholders.

CMS noted throughout the Final Rule that it wanted to continue to provide physicians and other healthcare practitioners relief from excessive regulation and to reduce compliance needs that interfered with patient care. However, with the QPP, International Pricing Index Model and other demonstrations, that remains to be seen.

Among notable changes, CMS finalized a policy that would reduce provider reimbursement rates for new drugs under Medicare Part B by 3 percent during the first quarter of sales when the average sales price (ASP) is unavailable. The Trump Administration first floated the change in its fiscal 2019 budget proposal released in February 2018, and the idea previously had been recommended by the Medicare Payment Advisory Committee (MedPAC)in its June 2017 Report to the Congress. CMS did not provide an estimate of how much the new policy would be expected to reduce Medicare expenditures.

The Final Rule also includes increased access to telehealth services. Specifically, CMS finalized distinguishing between Medicare telehealth services and "communication technology-based and remote evaluation services." This distinction would permit Medicare reimbursement for services that do not meet the statutory requirements for Medicare-reimbursable telehealth services. Ultimately, CMS finalized paying clinicians for virtual check-ins and for evaluations made from patient-submitted photos/images ("store and forward applications.") With CMS clearly warming to telehealth, Congress may not be too far behind.

Additionally, CMS scaled back and delayed for two years proposed changes to overhaul Medicare billing practices that have been in place for routine office visits since 1995.Instead of finalizing the blended rates for evaluation and management (E/M) codes for CY 2019 and 2020, CMS is implementing changes to the documentation policy but maintaining the current payment structure. However, starting in CY 2021 and beyond, CMS will change the payment structure by paying a single rate for E/M office visit Levels 2 through 4 for established and new patients, while maintaining the payment rate for E/M office visit Level 5.

Visit the CMS website for its MPFS Fact Sheet.

Final Rule Highlights

Medicare Physician Fee Schedule (PFS) Updates

General Payment and Relative Value Unit (RVU) Updates: The finalized 2019 MPFS conversion factor is $36.046, a slight increase above the 2018 MPFS conversion factor of $35.9996. CMS added practice experience (PE) utilization data for two new specialties: 1) Hospitalists and 2) Advanced Heart Failure and Transplant Cardiology.

Update to Wholesale Acquisition Cost (WAC)-Based Payment for Part B Drugs: While most Part B drugs are paid at Average Sales Price (ASP) plus 6 percent of ASP, certain drugs are currently paid at WAC plus 6 percent until more data is available (generally by the third quarter). CMS finalized a proposal to reduce these payments to WAC plus 3 percent and allow Medicare Administrative Contractors the authority to pay at WAC plus 3 percent as well. CMS notes that this policy is consistent with recent recommendations from MedPAC.

Evaluation and Management (E/M) Visits: Instead of finalizing the blended rates for E/M codes for CY 2019 and 2020, CMS is implementing changes to the documentation policy but maintaining the current payment structure,affording stakeholders additional time to engage with the agency. For CY 2019 and beyond, CMS finalized the below policies.

  • It eliminated the requirement to document the medical necessity of a home visit in lieu of an office visit.
  • For office/outpatient visits for established patients, when relevant information is already contained in the medical record, physicians can focus their documentation on what has changed since the last visit, or on pertinent items that have not changed.
  • For E/M office visits for new and established patients, physicians can indicate they reviewed and verified the information, so they do not need to re-enter in the medical record information on the patient's chief complaint and history that has already been entered by ancillary staff or the beneficiary.
  • CMS removed potentially duplicative requirements for notations in medical records that may have previously been included in the medical records by residents or other members of the medical team for E/M visits furnished by teaching physicians.

Starting in CY 2021 and beyond, CMS will make the following changes to the payment structure.

  • CMS will collapse code Levels 2 through 4 into one level and will pay providers a single rate (one each for established and new patients), but it will maintain the Level 5 code, which accounts for care provided to the most complex patients. CMS had originally proposed folding the Level 5 code into the single rate.
  • CMS estimates that, once the new payment policies are implemented in 2021, it will disproportionally benefit specialties that report lower-level visits, such as podiatry (+10 percent), as well as specialties that report E/M visits in conjunction with minor procedures, such as dermatology (+4 percent).
  • The change in the proposal to maintain a Level 5 visit for highly complex patients mitigates the estimated impacts on specialties that report many highly complex visits, such as allergy/immunology (was -5 percent, now 0 percent), hematology/oncology (was -4 percent, now 0 percent) and rheumatology (was -4 percent, now -1 percent).
  • Physicians will also have the option to receive higher rates with the creation of a new "extended visit" code to account for additional time spent with patients whose visits are coded at Levels 2 through 4.
  • The agency also said, beginning CY 2021, it will allow clinicians to rely more on their own medical decision-making or the time spent with a patient to determine the level of a patient's care needs.

Further, in response to comments from external stakeholders, CMS will not finalize the following proposals:

  • reduced payment for E/M services that are furnished on the same day as procedures
  • separate coding and payment for podiatric E/M visits
  • standardized allocation of practice expense relative value units (RVUs) for the codes that describe these services

Telehealth Updates: CMS finalized a policy to add separate Medicare reimbursement for two types of services:

  1. Brief Communication Technology-Based Service (HCPCS Code: G2012), e.g., Virtual Check-In. Virtual check-ins are "brief check-in services furnished using communication technology that is used to evaluate whether or not an office visit or other service is warranted." Under CMS' regulation, virtual check-ins would be eligible for separate payment, but these services would not be billable if they originated from or led to another, related E/M service by the same physician or qualified health care professional within the previous seven days, or led to an E/M service or procedure within the next 24 hours or soonest available appointment.
  2. Remote Evaluation of Recorded Video and/or Images Submitted by the Patient (HCPCS Code: G2010). Like virtual check-ins, these "store and forward" services would not be billable if they originated from or led to another, related E/M service by the physician or qualified health care professional within the previous seven days, or led to an E/M service or procedure within the next 24 hours or soonest available appointment. G2010 may be billed only for established patients. CMS finalized that the follow-up with the patient could take place via phone call, audio/video communication, secure text messaging, email or patient portal communication. CMS also finalized that beneficiary consent may be verbal or written, including electronic confirmation that is noted in the medical record for each billed service for HCPCS code G2010.

The communication technology-based and remote evaluation services do not satisfy the requirements for Medicare telehealth services as set forth in Section 1834(m) of the Social Security Act, 42 U.S.C. §1395m(m), but in the Final Rule, CMS takes the view that the Medicare telehealth standards do not apply to services that "inherently involve the use of communication technology."

CMS also finalized adding prolonged preventive services (HCPCS Codes G0513 and G0514) to the list of Medicare telehealth services that can be reimbursed when provided via telehealth and in compliance with CMS' reimbursement requirements for telehealth services, including originating site restrictions and geographic requirements.

CMS also finalized policies to pay separately for new codes describing chronic care remote physiologic monitoring (CPT codes 99453, 99454 and 99457) and interprofessional internet consultation (CPT codes 99451, 99452, 99446, 99447, 99448 and 99449).

In addition, beginning July 1, 2019, CMS will increase access to telehealth services for opioid use disorder treatment by removing the originating site geographic requirements and allowing providers to be reimbursed for telehealth services originating in an individual's home for the treatment of a substance use disorder or a co-occurring mental health disorder.

Off-Campus Provider-Based Hospital Department Payments (Section 603): For non-excepted departments paid under the MPFS, CMS maintained its CY 2018 payment Relativity Adjuster of 40 percent of the amount that would have been paid under the Hospital Outpatient Prospective Payment System. This is a decrease from the 50 percent rate in CY 2017.CMS states that this methodology will continue to be standard practice until an alternative payment method is proposed and finalized through rulemaking.

Imaging Appropriate Use Criteria (AUC) Program: Implementation of AUC is set to begin in 2020, with reimbursement penalties for imaging starting in 2021.

CMS finalized its proposed revision to the significant hardship criteria to include criteria related to internet access, vendor issues, and extreme or uncontrollable circumstances. In addition, CMS added independent diagnostic testing facilities (IDTFs) to the definition of applicable settings, allowing the AUC program to be more consistently applied to outpatient settings. CMS also finalized that only auxiliary staff "working under the direction of the ordering professional" can consult CDS.

CMS also clarified that exceptions granted for an individual with an emergency medical condition includes instances where an emergency medical condition is suspected but not yet confirmed. CMS noted this might include, for example, instances of severe pain or severe allergic reactions. In these instances, the exception is applicable even if it is determined later that the patient did not, in fact, have an emergency medical condition.

Clinical Laboratory Fee Schedule (CLFS): CMS finalized its proposal to change the definition of "applicable laboratories" that must report data for the purposes of weighted median payment calculations as implemented following the Protecting Access to Medicare Act (PAMA). The change would modify the definition of an applicable laboratory to exclude Medicare Advantage (MA) plan payments from total Medicare revenues, the denominator of the majority of Medicare revenues threshold.

Changes to Medicare Shared Savings Program (MSSP) Accountable Care Organization (ACO) Quality Measure Set: The Final Rule included several changes to the MSSP program beyond those included in a separate rule proposed in August. To reduce reporting burden and align MSSP with the Merit-Based Incentive Payments System (MIPS), CMS finalized removal of 10 quality measures and added two quality measures for the payment year (PY) 2019 MSSP quality measure set. The rule also allows beneficiaries who voluntarily align with a nurse practitioner, physician assistant, certified nurse specialist or a physician with a specialty not used in assignment to be prospectively assigned to an ACO if the clinician they align with is participating in an ACO. The Final Rule also revises the definition of primary care services used in the beneficiary assignment.

Six-Month Extension to Subset of MSSP ACOs: To address time-sensitive proposals to the MSSP timeline as described in the MSSP ACO Pathway to Success proposed rule, CMS finalized its proposal to grant ACOs whose participation ends Dec. 31, 2018, a six-month voluntary extension from Jan 1, 2019, to June 30, 2019.

Request for Information on Price Transparency: In the Proposed Rule,CMS requested information on price transparency. Although the Proposed Rule did not set forth any specific proposals, CMS stated that it was considering potential actions to promote provider-side efforts "to engage in consumer-friendly communication of their charges" so that patients understand their potential financial liability for services and can compare charges between providers. The agency sought information regarding barriers preventing providers and suppliers from informing patients of their out-of-pocket costs; what changes are needed to support greater transparency around patient obligations for their out-of-pocket costs; what can be done to better inform patients of these obligations; and what role providers of healthcare services and suppliers should play in this initiative. This request for information was also included in the FY 2019 Inpatient Prospective Payment System (IPPS) Proposed Rule.

In the Final Rule, CMS noted that it received 94 responses and will continue to consider the issue. CMS has separately proposed price transparency requirements for direct-to-consumer advertising.

Signature Requirements in Certain Compensation Arrangement Exceptions to the Physician Self-Referral Law: CMS finalized refining the self-referral (Stark) regulations to tighten and clarify the existing law with respect to what qualifies as a written agreement and when a signature must be secured. Specifically, it added regulatory provisions specifying that 1) the writing requirement contained in various compensation arrangement exceptions can be satisfied by "a collection of documents, including contemporaneous documents evidencing the course of conduct between the parties" and 2) the signature requirement can be satisfied if the compensation arrangement meets all of the other requirements of the exception and if the required signatures are obtained within "90 consecutive calendar days immediately following the date" a signature was required but not yet secured. Lastly, CMS includes the final annual update of the list of Current Procedural Terminology (CPT)/Healthcare Common Procedure Coding System (HCPCS) codes that are included in the scope of designated health services to which the Physician Self-Referral Law applies.

Quality Payment Program (QPP) Updates

This year's QPP Final Rule continues to slightly ramp up the Merit-Based Incentive Payment System (MIPS) for eligible clinicians, with CMS increasing the number of clinicians included in MIPS, increasing the threshold score for avoiding a MIPS penalty and increasing the weight of the MIPS cost component.

Advanced Alternative Payment Models (APMs) track policies remained fairly status quo, with some slight policy changes intended to streamline the program and reduce burden for participants.

MIPS Flexibility and Changes: CMS advances minimal changes to the existing MIPS program, affecting the cost, quality and interoperability components.

CMS finalized reweighting the MIPS categories to 45 percent Quality, 25 percent Promoting Interoperability, 15 percent Cost, and 15 percent Improvement Activities.

  • For Quality, CMS finalized the removal of 26 measures (of 34 proposed) from the MIPS program in alignment with the "Meaningful Measures" initiative by removing process-based quality measures that are low-value or low-priority.
  • For Cost, CMS finalized eight episode-based treatment groups into the calculation of the cost category addressing acute and procedural episodes. Currently, the cost category is based on two measures: Total Per Capita Cost and Medicare Spending Per Beneficiary. The eight recently developed, episode-based cost measures include: Elective Outpatient Percutaneous Coronary Intervention (PCI), Knee Arthroplasty, Revascularization for Lower Extremity Chronic Critical Limb Ischemia, Routine Cataract Removal with Intraocular Lens (IOL) Implantation, Screening/Surveillance Colonoscopy, Intracranial Hemorrhage or Cerebral Infarction, Simple Pneumonia with Hospitalization, and ST-Elevation Myocardial Infarction (STEMI) with Percutaneous Coronary Intervention (PCI). Eligible clinicians may have concerns about an increase in the weight of the cost category to 15 percent in the same year that new episode-based measures may be in effect.
  • For Improvement Activities, CMS removed one previously existing improvement activity, added six new improvement activities (addressing eye exams, navigation, care management, communication, education and patient safety), and modified five improvement activities.
  • For Promoting Interoperability (formerly Advancing Care Information), CMS eliminated the base, performance and bonus scores, and finalized a new scoring methodology,but maintains the "all-or-nothing" scoring. CMS will use performance-based scoring at the individual measure level. Each measure would be scored based on the performance on the measure on the submission of a numerator and a denominator, or yes or no. The scores for each individual measure would be added together to calculate the score of up to 100 possible points.

CMS is creating four overall objectives: e-Prescribing, Health Information Exchange, Provider to Patient Exchange, and Public Health and Clinical Data Exchange. It is also adding two new measures to the e-Prescribing objective: Query of Prescription Drug Monitoring Program (PDMP) and Verify Opioid Treatment Agreement.

CMS also finalized requiring MIPS-eligible clinicians to use 2015 Edition-certified Electronic Health Records (EHRs). Currently, clinicians can use 2014-certified systems to be eligible for the program.

Performance Period: The performance period for the Quality and Cost categories remains at the full performance year. It remains at 90 days for the Promoting Interoperability and Improvement Activities categories.

Low-Volume Threshold: To be excluded from MIPS, clinicians or groups would need to meet one of the following three criteria: have $90,000 or less in Part B allowed charges for covered professional services, provide care to 200 or fewer beneficiaries, or provide 200 or fewer covered professional services under the PFS (added criterion).

MIPS Payment Adjustment/Performance Threshold: The "performance threshold" represents the score that is necessary to receive a neutral to the positive payment adjustment for the year. A score below the performance threshold will result in a negative payment adjustment, while a score above the payment threshold will result in a positive payment adjustment. A score at the payment threshold will result in a neutral payment adjustment. CMS increased the performance threshold from 15 points to 30 points (out of 100). The exceptional performance threshold is set at 75 points, rather than the proposed 80 points, up from 70 points in 2018.

Expanding QPP Eligibility/Opt-In: CMS finalized an additional exclusion eligibility threshold for providers who do not submit at least 200 claims for the covered professional services under the PFS. CMS also said it would permit clinicians or groups who meet some but not all of these eligibility thresholds to opt-in to MIPS.

The agency also proposes expanding the types of clinicians eligible to participate in MIPS. Currently, five types of clinicians are eligible to participate: certified registered nurse anesthetists, clinical nurse specialists, nurse practitioners, physicians and physician assistants. Those clinicians could also qualify as part of a group. For 2019, CMS is expanding the eligibility pool to include physical therapists, occupational therapists, clinical psychologists, and registered dietitians or nutrition professionals.

Facility-Based Measurement: CMS finalized the implementation of a facility-based MIPS scoring that would allow "facility-based clinicians" to use the Hospital Value-Based Purchasing Program performance for the MIPS Quality and Cost categories. Clinicians who provide 75 percent or more of their services in an inpatient hospital, outpatient hospital or ED setting are eligible for facility-based measurement under MIPS.

New Medicare Advantage Qualifying Payment Arrangement Incentive (MAQI) Demonstration: CMS finalized a five-year demonstration to test whether exempting clinicians who participate in certain Medicare Advantage payment arrangements would increase participation in Advanced APMs (AAPM). Participants who meet the requirements of this demonstration would automatically be exempt from MIPS, but would not receive the AAPM's 5 percent bonus.

Changes to Other Payer AAPM Criteria: CMS modified the Certified Electronic Health Record Technology (CEHRT) criteria for Other Payer AAPMs so that, beginning in 2020, 75 percent (instead of 50 percent) of eligible clinicians in other payer arrangements must use CEHRT. In addition, CMS finalized that in 2020 at least one of the quality measures used in other payer arrangements must be finalized on the MIPS final list of measures, endorsed by a consensus-based entity, or determined by CMS to be evidence-based, reliable and valid.  


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

Related Insights