They’re Here!

Introduction
The Fourth of July can be counted on for two things: fireworks, and Medicare payment rules, the defining documents that sort DC health policy folk into two camps. On one side, there are the Hill staffers and lobbyists who are trying to strategically plot a path through the appropriations quagmire to get to August recess. Then there are the regulatory staff whose year has just started.

And… since this is my soapbox, I’d like to take just one moment to speak to my friends the political fundraisers. Next month, before you hit send on that cheerful request for just one more check, you might want to re-think the “I hope you’re enjoying recess,” opener. Some of us are, in fact, up to our eyeballs in regs and have no idea what recess means other than traffic is better.

You might have had a chance to get a pleasant reply if there was something to look forward to in those pages, but if your target audience works for hospitals or providers, chances are they’re not finding a whole bunch to be happy about. In addition, this year’s hospital outpatient prospective payment system proposed rule comes in at a svelt 984 pages but the physician fee schedule is throwing haymakers and weighing in at 2248 pages.

There’s more to come from SHP on both rules, and surely more will be written by others in the coming days/weeks/months, but here are my top line take-aways a few days after the rules were released:

HOPPS

Hospitals are looking at a net 2.6% increase in outpatient payments in calendar year 2025 compared to 2024. This includes a proposed 3.0% market basket update, offset by a 0.4 percentage point cut for productivity. This modest update wasn’t going to make a lot of people happy but it will take a few weeks for us to truly understand the impact. The American Hospital Association responded quickly and predictably, saying,

CMS has yet again proposed an inadequate update to hospital payments. This proposed increase for outpatient hospital services of only 2.6% comes despite the fact that many hospitals across the country continue to operate on negative or very thin margins that make providing care and investing in their workforce very challenging. Hospitals’ and health systems’ ability to continue caring for patients and providing essential services for their communities may be in jeopardy, and we urge CMS to provide additional support in the final rule.

PFS

The physician fee schedule was destined to be a bit more exciting and it didn’t disappoint.

Telehealth: In what may be a good indication of the regulatory dynamic post-Chevron, CMS said it had to repeal a number of popular telehealth policies that were implemented on a temporary basis during the COVID public health emergency because Congress hadn’t created them. Unless Congress passes telehealth legislation, statutory telehealth restrictions on geography, site of service and practitioner type will go back into effect. These provisions are so popular that CMS may be willing to give Congress as much time as possible to act, but unless they pass legislation before January 1, 2025, post-COVID telehealth flexibility could be a thing of the past.

Doc Pay: If that wasn’t enough drama, it seems my West Side Story predictions may be coming to a head. CMS has identified a number of ways to boost primary care payment and help to drive Medicare beneficiaries in to payment models where primary care docs can coordinate patient care. In a public statement, the American Academy of Family Physicians said,

While we remain firm in our efforts to reform Medicare payment more broadly by addressing the unintended consequences of factors such as budget neutrality and the lack of site-neutral payments, the AAFP is encouraged that the Centers for Medicare and Medicaid Services (CMS) is working to appropriately recognize and value primary care within the limitations of the current Medicare physician fee schedule, including the continued implementation of codes, such as G2211, that more accurately reflect the resources needed for family physicians to serve as a comprehensive focal point of longitudinal care for patients. We’re grateful that CMS will allow payment for G2211 when billed alongside an evaluation and management (E/M) visit on the same day as an annual wellness visit, vaccine administration, or any Medicare part B preventive services.

At the same time, as SHP predicted, CMS finally resurfaced the long-dormant global surgical payment policy that has been pulling the strings behind fee schedule policy-making for more than a decade. In 2009, the Office of the Inspector General (OIG) for the Department of Health and Human Services (HHS) published a report claiming that Medicare paid $97.6 million for E&M services that were included in eye global surgery fees but not provided during the global surgery periods in calendar year 2005.[1] In 2012, it was orthopaedic surgeons’ turn. The OIG estimated that Medicare paid a net $49 million for E&M services that were included in musculoskeletal global surgery fees but not provided during the global surgery periods in 2007. MedPAC has expressed similar concerns over the rate of reimbursement for specialty care and about the validity of 10- and 90-day global surgery codes.

Since many policy experts also claim that primary care physicians are being underpaid, in the budget-neutral Medicare physician fee schedule, the solution would appear to write itself: revalue global surgical services in some way to lower payments to surgeons and use that money to better support primary care.

CMS tried to do just that in 2014 by first proposing to completely deconstruct global surgical payments, requiring surgeons to bill separately for each service provided. Ultimately, Congress blocked CMS from unbundling global payments until CMS could demonstrate that the post-op visits included in the bundles were not taking place. CMS tasked RAND with the data collection and analysis required.[2] However the RAND work was widely panned by the surgical community and CMS declined to take further action, except in 2021 when CMS refused to update the value of global surgical codes to reflect the changes to primary care evaluation and management codes. CMS justified this action, citing the MACRA provision that blocked them from making changes to global surgical reimbursement without evidence. Not to be painted into that corner again, this year the physician fee schedule proposed rule created a new billing code for surgeons to use for certain post-operative vists which will allow CMS to collect more data on the actual number of visits taking place.

It is notable that the OIG has recently announced a new review of post-operative services provided in the global surgery period[3] and CMS even published in a recent MLN connects newsletter, a reminder to surgeons of how they are supposed to bill under global surgical codes, linking to guidance last updated in December 2023.[4]

The AAFP statement was deliberate, calling out the challenges caused by the fee schedule’s budget neutral standard. Surgeons will surely echo that sentiment. But where will we go from there?


[1] https://oig.hhs.gov/reports-and-publications/all-reports-and-publications/nationwide-review-of-evaluation-and-management-services-included-in-eye-and-ocular-adnexa-global-surgery-fees-for-calendar-year-2005/

[2] RAND reports and data can be found here: https://www.cms.gov/medicare/payment/fee-schedules/physician/global-surgery-data-collection

[3] https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000309.asp

[4] https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/globallsurgery_icn907166.pdf

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