Conversion Factor: On July 7, 2022, the Centers for Medicare & Medicaid Services (CMS) submitted for publication its proposed rule for the Medicare 2023 Physician Fee Schedule (PFS), which is scheduled to be published in the Federal Register on July 29, 2022. CMS is proposing a significant reduction in the conversion factor, which has prompted the American Medical Association (AMA) to release a statement noting in part, “It is immediately apparent that the rule not only fails to account for inflation in practice costs and COVID-related challenges to practice sustainability, but also includes a significant and damaging across-the-board reduction in payment rates.”

Specifically:

• The 2023 proposed conversion factor is $33.0775, which is a reduction of $1.5287 from the 2022 conversion factor of $34.6062. This is a reduction of about 4.4 percent.

• The Medicare statute states that the update to the conversion factor for 2022 and 2023 is 0.0 percent. For 2022, however, Congress took action to increase the final rule’s conversion factor by 3 percent. That increase will expire at the end of 2022, and CMS is required to calculate the 2023 conversion factor as if the 2022 increase had not been made.

• For each year, if changes in relative value units (RVUs) for the various type of providers would cause Medicare expenditures to increase by more than $20 million, CMS must make a “budget neutrality” reduction to the RVUs. Without such a reduction, the 2023 proposed conversion factor would have been 34.062. The proposed changes to RVUs, however, require a budget neutrality reduction of 1.55 percent, resulting in a 2023 proposed conversion factor of $33.0775. The proposed rule states, “The most widespread specialty impacts of the RVU changes are generally related to the changes to RVUs for specific services resulting from the misvalued code initiative, including RVUs for new and revised codes.”

For orthopaedic surgery, CMS estimates that the combined effect of all the RVU changes will be a 0.0 percent reduction. For physical and occupational therapy, the estimated reduction is 1 percent. CMS is also providing information on the facility/non-facility changes. For orthopaedic surgery, the facility reduction is 0.0 percent and the non-facility reduction is 1 percent.

Evaluation and Management (E/M) Visits: The proposed rule notes that CMS has been working with the AMA in recent years to update the codes so that they better reflect the current practice of medicine, are less administratively complex, and are paid more accurately. The office/outpatient (O/O) E/M visits were the first code “family” to be addressed, and increased reimbursements for many areas were implemented beginning in 2021. It appears that CMS is not proposing changes for O/O E/M visits for 2023, but rather is focusing on updating other E/M areas. (These include inpatient and observation visits, emergency department (ED) visits, nursing facility visits, domiciliary or rest home visits, home visits, and cognitive impairment assessment.)

Split/Shared E/M Services: With respect to the facility setting, CMS is delaying until 2024 the full implementation of changes to billing for split/shared E/M services. Those changes had been scheduled to be fully implemented as of January 1, 2023. Beginning with 2024, when both a physician and a non-physician practitioner (NPP) provide services to a patient for an E/M visit in the facility setting (not the office setting), the person who provides the “substantive portion” of the services will bill for the visit and reimbursement will be based on the rate applicable to that person (physician or NPP, as the case may be). The rule is that time, and not medical decision making (MDM), is the determinative factor; therefore, whoever provides more than 50 percent of the total time for the visit is providing the “substantive portion”. In contrast, for 2022—and now 2023, per the proposed rule—there is a special rule (except that it is not applicable to critical care visits). For those two years only, there are options—the substantive portion can be determined (1) by time (more than 50 percent), or (2) by performing the history, or (3) by performing the exam, or (4) by performing the MDM.]

Telehealth Flexibilities: The 2023 proposed rule includes telehealth provisions concerning physical therapists and occupational therapists, which are addressed in the therapy services section of the newsletter. Note also that the discussion below of the Covid public health emergency addresses the Medicare telehealth flexibilities allowed during the emergency period.

Other Matters: The version of the PFS proposed rule released on July 7 is over 2,000 pages. The Advocacy Committee gave priority to studying the provisions discussed above, but will continue to study the proposed rule and provide updates to OrthoForum members on any other matters of significant interest.

Duration of Public Health Emergency; Effects From Its End; Extension of Telehealth Flexibilities

Effective July 15, 2022, the Secretary of Health and Human Services, Xavier Becerra, extended the Covid-19 public health emergency (PHE) for an additional 90-day period, using authority under section 319 of the Public Health Service Act. That additional period will end on October 13. The Biden Administration has stated that it will provide a 60-day notice that the PHE will end. Therefore, if no such notice is provided by mid-August, the assumption will be that the PHE will be renewed on or before October 13. As noted in the previous newsletter, the end of the PHE will terminate the emergency flexibilities created by CMS regarding the Medicare, Medicaid, and CHIP programs, although a law enacted in March 2022 (Public Law 117-103) extends the Medicare telehealth flexibilities for 151 days beyond the end of the PHE. Millions of people may lose access to emergency health insurance coverage when the PHE ends. Note also that the authority for emergency use authorizations (EUAs) for drugs and devices issued by the Food and Drug Administration is not provided under section 319 of the Public Health Service Act, but rather under section 564 of the Federal Food, Drug, and Cosmetic Act. Separate action by Secretary Becerra under section 564 will be necessary to terminate EUAs. In December 2021, FDA released draft guidance on the process it will use to terminate EUAs.

Importantly, in late July, the House leadership suddenly decided to schedule a floor vote on passing a bipartisan telehealth bill, H.R. 4040, which was introduced in June 2021 by Representatives Liz Cheney (R-WY) and Debbie Dingell (D-MI). In preparing for this vote, the House leadership is modifying the bill so that it will extend the PHE telehealth flexibilities until the end of 2024. On July 27, 2022, the House passed the bill by a vote of 416-12.

No Surprises Act

Revised Final Rule Expected on Arbitration Process: A revised final rule concerning the arbitration process is expected to be released soon, which will address the portions of the interim final rule from October 2021 that were vacated by a federal trial court in Texas in February 2022. In a court filing in a separate case concerning the No Surprises Act (in a case filed in the District of Columbia), the Biden Administration on April 4 requested that particular court to defer taking any action because the Administration intends to issue a revised arbitration final rule in early summer 2022.

Background: The second interim final rule to implement the No Surprises Act, which was issued on October 7, 2021, gave priority to the “qualifying payment amount” (QPA) in the independent dispute resolution (IDR) process under the Act to resolve payment disputes between physicians and health plans (i.e., the arbitration process). The QPA is the median in-network contracted rate in the geographic area involved for the applicable insurance market (large group market, small group market, or individual market) as adjusted for inflation occurring after January 31, 2019. On February 23, 2022, a federal district court in Texas issued a ruling on this arbitration issue. The court agreed that the QPA should not be given more weight than the other factors specified in the No Surprises Act, finding that the interim final rule conflicts with the text of the Act and that the Administration violated the Administrative Procedure Act by issuing the final rule without first having issued a proposed rule with a comment period. Accordingly, the Biden Administration has withdrawn guidance documents that are based on, or that refer to, giving priority to the QPA in the IDR process.

Medicare Advantage Prior Authorization Requirements

House Prior Authorization Bill Likely to Receive Vote on House Floor: The Advocacy Committee supports a bipartisan bill that was introduced in the House of Representatives on May 13, 2021, to require Medicare Advantage (MA) plans to electronically issue real-time prior-authorization decisions. This requirement would take effect with the second plan year beginning after the bill’s enactment. The bill is H.R. 3173, the Improving Seniors’ Timely Access to Care Act of 2021, which was introduced by Representatives Suzan DelBene (D-WA) and Mike Kelly (R-PA). In mid-May, the number of cosponsors reached 290, which triggered a provision in the House rules manual that has the effect of authorizing Representative DelBene to make a motion that would eventually bring the bill to the House floor for a vote. It appears that Representative DelBene has not yet made this motion. Presumably, she is having discussions with the committees of jurisdiction (Ways & Means and Energy & Commerce) about whether, in lieu of her making a motion under that House Rule, the committees are willing to consider the bill and report it to the full House. As of mid-July, the bill had 306 cosponsors, of which 177 were Democrats and 129 were Republicans.

Update Regarding Ways & Means Committee: It became clear on July 26, 2022, that Representative DelBene was in fact negotiating with the W&M Chair, Representative Richard Neal (D-MA), and that they had reached an agreement. That day DelBene and Kelley introduced a new version of their bill (H.R. 8487) after Neal had announced the previous day that the Committee would consider their new bill on July 27. The W&M committee approved the bill on July 27 by a voice vote. The next step for the bill likely will be consideration by the House Energy & Commerce Committee. The new version of the bill would require MA plans to use an electronic prior-authorization process by the third plan year after the bill’s enactment.

Energy & Commerce Hearing: The House Energy & Commerce Committee (E&C) held an oversight hearing on June 28, 2022, to investigate issues concerning the Medicare Advantage program. A memorandum prepared by E&C Chairman Frank Pallone (D-NJ) in relation to the hearing noted that the HSS Office of Inspector General (OIG) reported in April 2022 that MA plans sometimes delayed or denied beneficiaries’ access to medically necessary services such as advanced imaging services, radiation therapy, and stays in post-acute facilities, despite those requests meeting Medicare coverage rules. The memorandum also noted that CMS audits have also highlighted widespread and persistent MA organization performance problems related to denials of care and payment.

Other General Policy Issues

• With respect to Medicare sequester cuts, a 2 percent cut took effect on July 1, 2022, under the Budget Control Act of 2011 (BCA). Due to a law enacted in December 2021, no Medicare sequester cut under the BCA was in effect for the first quarter of 2022, and a 1 percent cut was in effect for the second quarter. In addition, that same law entirely eliminated the 4 percent Medicare sequester cut that would have applied this year under the Statutory Pay-As-You Go Act of 2010.

• With respect to appropriate use criteria (AUC) for determining when the use of advanced diagnostic imaging is appropriate, it appears that those criteria will take effect on January 1, 2023, unless the public health emergency is extended into 2023 (in which case the criteria will likely take effect on January 1, 2024).

Additional Information
For more information on any of the topics discussed in this section, please contact the chair of the OrthoForum Advocacy Committee, Dr. Richard Bruch, at rich.bruch@gmail.com.

Extension of PHE; Post-PHE Period: The Covid-19 public health emergency (PHE) has been extended through mid-October per action taken by HHS on July 15, 2022. As noted in the prior newsletter, the Consolidated Appropriations Act, 2022 (enacted on March 15, 2022), includes provisions to extend the Medicare telehealth flexibilities for 151 days beyond the end of the PHE. That Act amended the Medicare statute to expressly provide that, through the end of this 151-day period, physical therapists (PTs) and occupational therapists (OTs) are considered telehealth providers.

PFS Proposed Rule:
Conversion Factor: On July 7, 2022, the Centers for Medicare & Medicaid Services (CMS) submitted for publication the proposed rule for the 2023 Physician Fee Schedule (PFS). As noted elsewhere in this newsletter, the 2023 proposed conversion factor is $33.0775, which is a reduction of $1.5287 from the 2022 conversion factor of $34.6062. This is a reduction of about 4.4 percent. CMS was required to make a “budget neutrality” reduction due to changes in the relative value units (RVUs), which is estimated by the agency to result in a 1 percent reduction for PTs and OTs.

Extension of Therapy Codes: As with the 2022 PFS final rule, the 2023 proposed rule continues through the end of 2023 many of the Medicare telehealth flexibilities allowed during the PHE even if the PHE ends well before then, including CPT codes 97161-97164 for PTs, codes 97165-97168 for OTs, and therapy codes 97110, 97112, and 97116. The 2022 final rule only extended therapy codes 97150, 97530, and 97542 through the end of the PHE; however, the 2023 proposed rule extends those three codes through the end of 2023.

• Importantly, the extension of CPT codes to the end of 2023 does not necessarily mean that PTs and OTs will be authorized to provide those services through the end of 2023. Once the 151-day period following the end of the PHE expires, the normal Medicare provisions governing which health professionals are authorized telehealth providers will once again apply. Those provisions do not authorize PTs and OTs to be telehealth providers.

Democratic Lawmakers Re-Introduce Proposal to Advance Equity in the Work of CMMI

A bill introduced in both the Senate and the House—the John Lewis Equality in Medicare and Medicaid Treatment Act of 2022—seeks to advance the role of health equity in the development of value-based models by requiring the Center for Medicare & Medicaid Innovation (CMMI) to consult with experts on disparities in health, including the CMS Office of Minority Health, the Federal Office of Rural Health Policy, and the Office on Women’s Health, on any payment models under development. The Senate bill (S. 4067) was introduced on April 7, 2022, by Senator Cory Booker (D-NJ) with two Democrat cosponsors. The House bill (H.R. 7755) was introduced on May 12, 2022, by Representative Terri Sewell (D-AL) with six Democrat cosponsors.

Former Representative John Lewis (D-GA) first introduced the bill in the House in the 115th Congress as the Equality in Medicare and Medicaid Treatment Act of 2018 and later also introduced it in the 116th Congress. Senator Booker first introduced the bill in the Senate in the 116th Congress. Following the death of Representative Lewis in July 2020, Senator Booker is continuing to take the lead in the Senate on the bill and Representative Sewell is taking the lead in the House.

The current bill mirrors other recent changes that CMMI has implemented to better incorporate health equity in the development of payment models, in alignment with Director Liz Fowler’s policies.

Under current law, CMMI is not required to consider social determinants of health, such as a patient’s environment, education, and economic status, when implementing and testing new payment models. Lawmakers and other supporters of the John Lewis Equality in Medicare and Medicaid Treatment Act argue the current framework incentivizes providers to select patients who will produce favorable clinical outcomes, effectively sidelining minorities and rural communities in the development of payment models.

Specifically, the bill directs CMMI to consider a model’s impact on access to care for people of color, women, and people in rural areas, in addition to cost and quality; include experts in health disparities and social determinants of health during the evaluation and review process for new payment models; and create a Social Determinants of Health Model, focusing on health conditions of those dually eligible for Medicaid and Medicare, behavioral health, and maternal mortality.

The bill has been endorsed by a variety of organizations—a full list of supporters can be found here.

CMMI Publishes Implicit Bias Assessment

On July 5, 2022, CMMI published findings from an assessment of potential implicit bias within three demonstration models. The internal analysis seeks to identify whether implicit bias may be present in the existing models’ designs, and if so, whether that has resulted in the unintentional exclusion of certain beneficiary groups. CMS will use the analysis results to inform broader efforts to address bias across CMMI models.

The analysis focused on three established service and delivery models: the Kidney Care Choices Model, the Comprehensive Care for Joint Replacement (CJR) Model, and the Million Hearts Cardiovascular Risk Reduction Model. CMMI first gathered data on health disparities related to each model’s target beneficiary population, then assessed each algorithm used for the models to determine its intended purpose and whether it effectively achieves that goal for all populations.

For the CJR Model, the evaluation found that beneficiaries receiving joint replacements at participating hospitals while the model was in effect were less medically complex than those receiving joint replacements at those same hospitals before model implementation began. They were also less likely to be dual eligible for Medicare and Medicaid which is an indication of lower socioeconomic status. The report notes a single year’s findings showing that beneficiaries were also less likely to be Black, but this trend was not consistent across model years as the other findings. For the three-year extension that began January 2022, CMS revised the risk-adjustment formula used to for the CJR target price to include dual-eligibility status. CMS is collecting data.

CMMI Subcommittee
For more information on CMMI issues, or to join the CMMI Subcommittee of the OrthoForum Advocacy Committee, please contact Dr. Wilford Gibson at gibsonw@atlanticortho.com.

The halfway point of this midterm election year is a good place to take stock. Most states have held their primaries, which means that most general election matchups have been settled, and the major fundraising committees have submitted their quarterly reports of receipts, expenditures, and cash on hand. Where do we stand? Let’s take a look.

President Biden’s low approval rating, combined with the rate of inflation, would seem to depress the chances of Democratic candidates across the board. Forecasters are virtually unanimous in predicting that Republicans will win control of the House.

That prediction is supported by generic ballot polling information. When voters are asked which party they would support in the next election, 44.1% say Republicans and 43.2% say Democrats. The Republican lead has decreased since the US Supreme Court overturned Roe v. Wade, but the 0.9% margin is more formidable than it looks. Because of the way congressional district lines are drawn, and because of the way the population is distributed through the US (widely spread Republicans and tightly clustered Democrats), Democrats would have to win the national House vote by approximately 5% to retain control of the House.

The Senate is a different story. Remember, in 2018 Democrats benefited from a “wave” that resulted in a 40-seat pickup in the House of Representatives…but Republicans earned a net gain of two Senate seats. Voters are more likely to know their senators than their representatives, making it more likely that they will split their vote. The quality of candidates (and the campaigns they run) matters a great deal. And the composition of the class is critical.

In 2022, Republicans have 21 seats at stake and Democrats have 14. Generally, the party defending fewer states has an advantage, though that edge may not be decisive. Republicans will be defending two seats in states that Joe Biden won in the 2020 presidential contest, while Democrats are defending zero states that Trump won. Five Republicans are retiring rather than run for re-election, creating open seat races in swing states like Pennsylvania, North Carolina and Ohio, while just one Democrat is retiring, creating an open seat in Vermont, a solidly blue state.

The quality of candidates mentioned above has become the X factor in Senate races. The results of the 2010 Senate elections demonstrate the importance of selecting viable candidates. In the first Obama midterm, Republicans saw a net gain of six Senate seats, reducing the Democratic margin to 53-47. Republicans were expected to win two more seats, in Delaware and Nevada, but their candidates faltered. The Republican challenger to Harry Reid of Nevada led in the last nine polls before Election Day, only to lose the race by almost six points. During the summer, Reid’s challenger had gone from an eleven point lead to a seven point deficit, the largest one-month polling shift in Senate history.

The Delaware story is more typical of how a winnable seat, for either party, can slip away. Delaware Republicans were expected to nominate Rep. Mike Castle to run for the open seat. Before occupying the state’s only House seat, Castle had been governor, winning large margins in statewide elections. Polling right before the Delaware primaries showed Castle beating the likely (and eventual) Democratic nominee, Chris Coons, by a solid ten points. To make a long story short, Castle was upset in the Republican primary by an inexperienced candidate (Christine O’Donnell) who foundered in the general – “foundered” in the general meaning that she had to spend precious general election campaign funds on a TV ad in which she declared that she was not a witch. You can look it up.