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November 29, 2022 - FDA, Healthcare, Digital Health, Regulatory, Pharma, United States

CMS Publishes Final 2023 Medicare Physician Fee Schedule—Key Takeaways for Telehealth Companies

Is 2021 the Value-Based and Shared Savings Revolution?

On November 1, 2022, the Centers for Medicare and Medicaid Services (CMS) published the final 2023 Medicare Physician Fee Schedule (“2023 Fee Schedule”). Although the 2023 Fee Schedule most notably sets the rates for Medicare services for the coming year, the rulemaking also traditionally includes a wide range of payment policies that can have significant and widespread effects on various aspects of the healthcare provider community. This article highlights how provisions in the 2023 Fee Schedule could affect telehealth companies in the upcoming year.

Medicare Telehealth Services Narrowed

Every year, CMS reviews requests by the public to add or delete certain services on the Medicare Telehealth Services List for reimbursement. Under the CMS process for review, the proposed services are assessed to determine whether they qualify under one of three categories of services: (a) Category 1 Services, which are permanently added to the Telehealth Services List because they are similar to professional consultations, office visits, and office psychiatry services that are currently on the Telehealth Services List; (b) Category 2 Services, which are permanently added to the Telehealth Services List because, although they are not similar to current telehealth services, use of telecommunications systems to furnish the services produces demonstrated clinical benefits to the patients; and (c) Category 3 Services, which are temporarily added to the Telehealth Services List because there are likely to be clinical benefits when the services are furnished via telehealth systems, but there is not yet sufficient evidence available to consider the services for permanent addition under the Category 1 or Category 2 criteria. During the pandemic’s Public Health Emergency (PHE), CMS added many services to the Telehealth Services List under Category 3. In this rulemaking, CMS reassessed the services that were made temporarily available via telehealth systems for the PHE.

In calendar year 2020, CMS added more than 135 new Medicare telehealth services to its Medicare Telehealth Services List. In contrast, under the 2023 Fee Schedule, CMS added very few new telehealth codes, while maintaining a group as Category 3 temporary codes, and will also be eliminating many telehealth services after the expiration of the PHE. 

  • Permanent New Telehealth Services Added. CMS permanently added five codes to its Category 1 Telehealth Services List –G0316, G0317, G0318, G30002, and G3003 ‒ which provide for reimbursement of prolonged services (e.g., nursing facilities) and chronic pain management. Generally, CMS determined that these services provided via telehealth consultations were similar to services already on the Telehealth Services List.
  • Temporary Telehealth Services. Another 15 services that were added because of the PHE are being moved to Category 3 codesThe codes will be included on the Telehealth Services List through 2023 to allow time to evaluate data that may support their permanent addition to the list on a Category 1 or Category 2 basis. The codes cover a wide array of services. See Table 12 at 87 Fed. Reg. 69458 (Nov. 18, 2022).

  • Telehealth Services Eliminated. Most notably, CMS announced that 54 of the 263 codes that had been temporarily available due to the PHE, will remain on the Telehealth Services List for the later of 151 days after the expiration of the PHE, or December 31, 2023. After such date, the announced services will not be included in the services payable by CMS. See 87 Fed. Reg. 70,186‒70,187In short, CMS determined that those services would not be furnished using the full scope of required service elements via two-way video communication, as though the services were provided in person. 

Telehealth Flexibilities for Originating Site, Types of Telehealth Practitioners, and Audio-Only Services

Major Temporary Flexibilities Will End

During the course of the PHE, CMS has exercised its authority granted under various legislation to waive or modify certain Medicare telehealth payment requirements. In this final rulemaking, CMS again restated that the following modifications would expire:

  • Removal of the geographic and site of service originating site restrictions;  
  • Removal of restrictions on types of practitioners who can provide telehealth services; and
  • Allowing certain services to be provided via audio-only methods.

As a result, on the date that is 151 days after the end of the PHE or December 31, 2023, whichever is applicable, the following restrictions will again apply to Medicare telehealth services (see generally 42 C.F.R. 410.78):

  • Medicare reimbursement will not be allowed for telehealth visits furnished to patients who are at home, except for certain services. Patients will again be required to be physically present in an office, clinic, or medical facility within a rural area, for most services.
  • Medicare reimbursement for telehealth visits furnished by physical therapists, occupational therapists, speech language pathologists, and audiologists will no longer be allowed.
  • Medicare will no longer cover audio-only visits for physical health encounters.

Permanent Changes for Substance Use Disorders and Mental Health Disorders

Certain changes for telehealth services related to substance abuse disorders and mental health disorders, however, were made permanent through statute:

  • For treatment of (a) a substance use disorder (SUD) or (b) a co-occurring mental health disorder, furnished on or after July 1, 2019, to an individual with an SUD diagnosis, there are no geographic restrictions and telehealth services may be provided to the patient at their home as a permissible originating site.
  • For diagnosis, evaluation, or treatment of a mental health disorder, effective for services furnished at or after the end of the PHE for COVID-19, there are no geographic restrictions and telehealth services may be provided to the patient at their home as a permissible originating site.

    Significantly, the statute prohibits payment for telehealth services furnished in patients’ homes under this provision, unless the physician or practitioner furnishes an item or service in person, without the use of telehealth communication, within six months prior to the first time the physician or practitioner furnishes a telehealth service to the patient, and thereafter, once every 12 months.  CMS clarified in its comments, however, that if a beneficiary began receiving mental health telehealth services during the PHE, or during the 151-day period after the end of the PHE, then they would not be required to have an in-person visit within six months; rather, they will be considered established and will instead be required to have at least one in-person visit every 12 months (so long as any such subsequent telehealth services are furnished by the same individual physician or practitioner (or a practitioner of the same sub-specialty in the same practice) to the same beneficiary). This means that these services would be subject to the requirement that an in-person visit is furnished within 12 months of each mental health telehealth service for those services that are subject to in-person visit requirements (unless an exception is documented by the treating practitioner).

Direct Supervision of Clinical Staff

During the course of the PHE, CMS has changed the definition of “direct supervision” as it pertains to supervision of diagnostic tests, physicians’ services, and some hospital outpatient services, to allow the supervising professional to be immediately available through virtual presence using real-time audio/video technology, instead of requiring their physical presence. In the final rulemaking, CMS determined that this flexibility for virtual supervision, would no longer apply.

After the end of the calendar year in which the PHE ends, then, Medicare telehealth services may no longer be performed by clinical staff incident to the professional services of the billing physician or practitioner who only provides virtual supervision. The rules will revert back to the original requirements where “direct supervision” will again require the immediate, in-person, physical availability of the supervising physician or other practitioner, although the professional need not be present in the same room during the service.

Remote Therapeutic Monitoring

Remote Therapeutic Monitoring (RTM) is the use of medical devices to monitor a patient’s health or response to treatment using non-physiological data.  RTM is used to actively monitor a patient’s musculoskeletal activity and respiratory activity, as well as medication response and adherence, and response to therapy. 

Generally, CMS emphasized its continuing goals of enhancing access to RTM and allowing the codes to reflect a broad range of clinical activities and use of various levels and involvement of auxiliary staff. CMS also took into consideration whether some of the complexities of coding for RTM could be eliminated. In the end, however, CMS made few changes to its payment policies for RTM. CMS declined to establish a generic RTM device code that is agnostic to the specific body system involved (e.g., musculoskeletal or respiratory) or therapy type (e.g., medication therapy response) that the device monitors, but promised to consider this in a future rulemaking. Additionally, CMS declined to adopt any new G-codes that would have reflected more flexibilities around provision of services by auxiliary clinical staff and supervision thereof. Instead, CMS chose to maintain its current policies for the existing RTM treatment management CPT codes, with two notable clarifications. First, CMS is allowing “general” supervision (as opposed to the more cumbersome “direct” supervision) for all RTM services. “General” supervision means the procedure is furnished under the billing provider’s overall direction and control, but the billing provider’s presence is not required during the procedure. This modification provides additional flexibility for the provision of services by certain clinical auxiliary personnel (e.g., lower-level licensed or unlicensed personnel). Second, CMS did adopt a new CPT code for cognitive behavioral therapy monitoring devices, indicating its continued support of RTM services.

Since 2019, when CMS first adopted payment policies for remote physiological monitoring (RPM), the offerings for remote monitoring services have exploded. Just as CMS quickly but methodically developed policies for RPM, the final rulemaking indicates that steps towards a fully developed regulatory framework in this area will be incremental. Digital health companies interested in expanding into varied remote monitoring services should closely watch developments under the federally funded programs. Not only do these programs cover a large portion of patients of healthcare services in the United States, but the policies and regulations adopted by CMS strongly influence how commercial payors structure their own offerings and reimbursement strategies. Developments in this area over the next year will be key in shaping pricing models, as well as care delivery models for remote monitoring companies.

Key Takeaways

Telehealth companies providing services to Medicare patients will be significantly impacted by the modifications to telehealth services that are reimbursable in 2023, as well as the major shift in the manner in which reimbursable telehealth services will be provided at the end of the PHE. Even those telehealth companies serving non-Medicare populations should consider the impact of these changes on their businesses. Many commercial and Medicare Advantage health plans use the CMS Physician Fee Schedule and associated policies for other lines of business, often in a blanket manner. Many of the shifts that will be occurring in 2023 and beyond will affect the operational, as well as financial, aspects of any business that works with health plans that adopt the Medicare payment policies.

Kai Mindick, a Law Clerk in our Austin office, contributed to the writing of this post.