Medicare Payment and Reimbursement

Hospitals Express Opposition to E/M Code Changes

September 13, 2018 3:12 pm

Another physician payment concern for FY19 is that as few as 15 percent of eligible clinicians likely would qualify for the advanced APM track of MACRA, according to CMS figures.

Sept. 12—A Medicare proposal to simplify evaluation and management (E/M) codes could hit hospitals’ bottom lines, hospital advocates recently warned the Trump administration.

As part of the proposed CY19 rule on Medicare physician pay rates, the Centers for Medicare & Medicaid Services (CMS) would collapse the payment rates for levels 2 through 5 E/M visits and require only the documentation necessary for a level 2 visit.

But hospitals are worried their physicians could take a financial hit.

“The agency has provided very little policy justification for, or analysis of, its proposals,” the American Hospital Association (AHA) wrote CMS on Sept. 7. “As such, we urge CMS to not finalize these proposals at this time as they could have negative effects on patient care as well as unintended consequences.”

AHA and other hospital advocates warned that the proposal would produce a significant disconnect between resource use and intensity of physician services and physician compensation. Neither CMS’s proposed add-on codes, nor its proposal to allow providers to default to level 2 E/M visit documentation requirements, would offset the proposed payment decrease, they wrote.

The change would affect $23.3 billion in annual Medicare payments and would cut Medicare payments for some specialists by between 13 percent and 20 percent depending on the specialty, according to American Medical Association projections.

“HFMA has concerns regarding the impact of these changes for practitioners that frequently treat Medicare’s most medically complex patients,” Joseph J. Fifer, president and CEO of HFMA, wrote in a comment letter. “This will penalize those physicians who care for these patients and may result in unintended consequences of limiting some practices’ ability to treat these patients.”

A Moody’s analysis noted the change would increase payments for less complex patients and reduce them for more complex cases, effectively increasing payments to primary care physicians and lowering payments to specialists.

The rating agency concluded that the proposed changes were a credit negative for academic medical centers, which tend to employ more specialists, and for rural hospitals, which often employ physicians in hard-to-recruit specialties.

In contrast, reducing the number of E/M codes was seen by Moody’s as a credit positive for community hospitals that employ large numbers of physicians because those organizations tend to have more primary care physicians.

The only national hospital group that voiced support for the E/M code reductions was the National Rural Health Association (NRHA), which projected that the changes would reduce administrative burdens and unnecessary paperwork.

“Rural physicians provide a broader range of primary care services that would often be referred to specialists in urban areas,” Alan Morgan, CEO of NRHA, wrote in contrast the Moody’s assessment. “These primary care providers save Medicare money, while providing excellent care to beneficiaries without the need for burdensome travel.”

But even among the hospital advocates that opposed shrinking the number of E/M codes, many supported other proposals for physician payment changes. For instance, the Catholic Health Association supported proposals such as:

  • Removing the documentation requirement for justifying a home visit over a facility visit
  • Eliminating the prohibition on billing same-day visits by practitioners of the same group and specialty
  • Allowing elements of patient history to be recorded by staff or patients in the medical record and not have to be repeated by the physician
  • Allowing physicians, residents, or nurses to document the presence of a teaching physician and the physician’s participation in the review and direction of services

MACRA Change

Much of the reaction to physician payment changes in the proposed rule related to the ongoing implementation of the Medicare Access and CHIP Reauthorization Act (MACRA).

For instance the Federation of American Hospitals (FAH) backed the continued gradual implementation of the new physician payment system under MACRA, through accommodations such as the CMS proposal to permit facility-based reporting for hospital-based clinicians and groups.

However, FAH—like some other hospital advocates—said CMS needs to reduce the number of physicians it excludes from the Merit-based Incentive Payment System (MIPS), a change that would expose more physicians to quality-reporting requirements and potential payment cuts. The hospital advocates noted that since MIPS is revenue-neutral, reducing the number of participating physicians also reduces the potential bonuses that high-performing physicians can receive.

For the third performance year, CMS proposed a low-volume threshold that would exclude more clinicians—estimated by CMS at more than 872,000—from MIPS participation than in the first two years of the program.

Chip Kahn, president and CEO of FAH, said in comments that “the positive payment adjustments for those clinicians and groups who successfully participate in MIPS have been extremely low—far below the costs associated with participating in the program.”

Other MACRA-related changes sought by hospital advocates included a request by America’s Essential Hospitals (AEH) that CMS incorporate a risk adjustment for social risk factors, including socioeconomic status, in the quality measures chosen for MIPS.

“For example, patients who do not have a reliable support structure at discharge are more likely to be readmitted to a hospital or other institutional setting,” wrote Bruce Siegel, MD, president and CEO of AEH. “By ignoring these factors, CMS will skew quality scores against hospitals and clinicians that provide care to the most complex patients, including those with sociodemographic challenges and the uninsured.”

APM Issues

Among changes related to advanced alternative payment models (APMs), HFMA and other hospital advocates urged extending the 5 percent annual APM bonus to physicians in the upcoming Medicare Advantage Qualifying Payment Arrangement Incentive (MAQI) demonstration. CMS already proposed exempting such physicians from MIPS reporting and penalties if they successfully participate in Medicare Advantage programs that are considered similar to APMs.

Other hospital advocates noted CMS’s projection that as few as 15 percent of eligible clinicians would qualify for the advanced APM track of MACRA in 2019. AHA blamed the anticipated low participation—three years into the five-year APM bonus period—on CMS’s standards for downside financial risk criteria, which exclude most existing APMs.

AHA “remains concerned that this approach fails to recognize the significant resources providers invest in the development of APMs. We continue to urge CMS to expand its definition of financial risk to include the investment risk borne by providers who participate in APMs and to develop a method to capture and quantify such risk.”

However, comments by Trump administration officials in recent weeks only have underscored their commitment to increasing the level of financial risk that providers will face under federal healthcare programs, a move they describe as key to driving delivery reforms.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare 


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