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Issue 22, Fall/Winter 2023

Stay up-to-date on the latest regulatory proposals, congressional activity, and political developments relevant to orthopedic care with this month’s OrthoForum Advocacy Newsletter. Included in this edition: Final rules from the Centers for Medicare and Medicaid Services (CMS) impacting orthopedic payments and coverage, a Biden Administration Executive Order (EO) on Artificial Intelligence (AI), the most recent Medicare Payment Advisory Commission (MedPAC) public meetings, updates on notable hearings and health-related legislation in Congress, and a look at the current state-of-play for the 2024 presidential race.

ANNOUNCEMENTS

Please join us in celebrating Dr. Richard Bruch’s long history of independent MSK practice advocacy.

Dr, Bruch will be retiring from his role as OrthoForum Advocacy Committee Chair at the end of the year. His commitment to advancing the independent practice of orthopaedics and advocating for the priorities of OrthoForum and OrthoConnect members has been truly excellent. From his days as a physician and leader at EmergeOrtho to supporting our interests in DC, Dr. Bruch has been a steadfast champion for private practice. We extend our heartfelt gratitude to Dr. Bruch for his years of leadership and tireless efforts in furthering the goals of our organization.

Welcome Dr. Jefferey Racca of New Mexico Orthopaedic Associates.

We are pleased to announce that Dr. Jefferey Racca of New Mexico Orthopaedic Associates will be stepping into the role of OrthoForum Advocacy Committee Chair in 2024. Dr. Racca brings a wealth of experience and a commitment to continue the essential work of supporting private practice and addressing the needs of our members. We look forward to the continued success and growth of the OrthoForum and OrthoConnect with Dr. Racca as Chair.

BIDEN ADMINISTRATION UPDATE

CMS finalized several policies impacting orthopedic surgeons via the 2024 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Physician Fee Schedule (PFS) final rules. The finalized changes include but are not limited to addressing payment rates, telehealth flexibilities, and coverage of intensive outpatient programs that will significantly affect orthopedic surgical practices. CMS also released a Final Rule on Nursing Home Ownership and Private Equity to “shine a light” on the current state-of-play for private equity (PE) ownership. Lastly, this section summarizes the Executive Order (EO) on Artificial Intelligence (AI), released by the White House, which includes notable health-policy related provisions.

Physician Fee Schedule

On November 2, 2023, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2024 Physician Fee Schedule Final Rule. This final rule contains updates to payment policies, payment rates, and other provisions for services furnished under the Medicare Physician Fee Schedule (PFS) effective January 1, 2024. CMS finalized a CY 2024 PFS conversion factor of $32.74, a decrease of $1.15 (3.4%) from the CY 2023 conversion factor of $33.89, which will result in estimated payment cuts of 2-3% for many surgical specialties, including orthopedics.

On telehealth services, CMS did not permanently add any new services to the Medicare Telehealth Services List for CY2024 after finding that none of the requests met the criteria. However, CMS finalized the proposal to extend the definition of “direct supervision” to allow virtual presence through 2024. Of note for Emergency Services, implementation of the definition of “substantive portion” for split/shared evaluation and management services will be delayed through at least December 31, 2024.

Overall, CMS continues with only a select number pandemic-era telehealth flexibilities while it gathers additional information and assesses changes in practice patterns before adopting permanent expansions. Payment cuts remain an issue for physicians, especially surgical specialties facing an estimated 2-3% reduction in the conversion factor.

See below for a chart featuring a specialty-specific breakdown from CMS in the PFS 2024 Final Rule (Table 118), including “orthopedic surgery”:

Outpatient Provider Payment Services

The Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2024 Hospital Outpatient Prospective Payment System (OPPS) Final Rule on November 2, 2023. In the rule, CMS finalized a payment rate update of 3.1% for hospitals and Ambulatory Surgical Centers (ASCs) meeting applicable quality reporting requirements under the OPPS. With this update, total payments to providers in 2024 is an estimated at $96 billion, up from $89.9 billion in 2023.

Considering the ongoing impact of the COVID-19 public health emergency on healthcare utilization, CMS finalized extending the 2019 OPPS/ASC final rule policy to update the ASC payment system rates using the productivity-adjusted hospital market basket update for an additional two years.

Of note for OrthoForum, the rule finalized updates to the Hospital Outpatient Quality Reporting (OQR), ASC Quality Reporting (ASCQR), and new Rural Emergency Hospital Quality Reporting (REHQR) programs. Specifically, CMS finalized the adoption and codification of several standard quality program reporting policies, as well as the adoption of four initial measures for the REHQR Program. CMS did not finalize its proposal to re-adopt the Hospital Outpatient/ASC Facility Volume Data on Selected Outpatient Surgical Procedures measure after consideration of commenter feedback. Additionally, CMs added 26 dental codes to the ASC covered procedures list for CY 2024, along with 11 additional procedures identified by commenters, including total ankle and total shoulder replacement surgery. CMS finalized proposals to add nine services to, and remove none from, the inpatient only list.

Final Rule on Nursing Home Ownership and Private Equity

On November 17, 2023, CMS released a final rule on “Disclosures of Ownership and Additional Disclosable Parties Information for Skilled Nursing Facilities and Nursing Facilities; Medicare Providers’ and Suppliers’ Disclosure of Private Equity Companies and Real Estate Investment Trusts”. The final rule mandates that SNFs participating in Medicare and Medicaid are required to disclose specific data related to ownership, management and financial control. Also of note, the rule establishes definitions for private equity firms and real estate investment trusts (REITs), which as of 2022 accounted for a combined 14 percent of SNF ownership.

Following the release of the final rule, the Department for Health and Human Services (HHS) released a White House statement reiterating the Administration’s goals to “shine a light on private equity ownership”, as it has become “increasingly important to scrutinize ownership arrangements.” The statement goes on to note that recent research published by HHS Office of the Assistant Secretary for Planning and Evaluation shows that “private equity ownership is associated with poorer staffing conditions and resulting decreases in quality of care.”

As issues surrounding private equity in the healthcare space come to light, OrthoForum will continue to advocate for the health, safety, and sustainability of both providers and their patients.

White House Executive Order on Cybersecurity and AI

On October 30, 2023, the White House issued an executive order (EO) on artificial intelligence (AI) entitled “Safe, Secure, and Trustworthy Development and use of Artificial Intelligence”. The EO includes several health-policy related provisions such as reducing risks with Chemical, Biological, Radiological, and Nuclear (CBRN) Threats, ensuring responsible AI innovation in healthcare, and establishing a U.S. Health and Human Services (HHS) AI Task Force.

Specifically, the EO calls for a National Academies study on biosecurity risks from AI and biological data, which aims to identify risks from USG datasets used to train AI and opportunities for AI to counter biothreats. The EO permits HHS grantmaking and partnerships to advance responsible health AI such as immune-response profiling, data quality, health equity, and community readiness. Additionally, the EO establishes an AI safety program while seeking to develop recommendations and best practices to avoid AI-related patient harm. Notably, the EO states that within 90 days the HHS Secretary alongside the Secretary of Defense and Secretary of Veterans Affairs must create an AI Task Force which, within 365 days of its creation, develop a strategic plan that encompasses policies and frameworks that may include regulatory action on the deployment and use of AI and AI-enabled technologies (including research and discovery, drug and device safety, healthcare delivery, and public health), and identify guidance and resources for such a deployment.

Of note for OrthoForum, AI is steadily increasing as a topic of interest across the country from the federal government and in the medical field throughout various practices. The evolution of AI is permitting physicians to personalize patient treatment by automatically annotating features in an X-ray, assisting in risk prediction, and augmenting information. AI capabilities will continue to gain attraction in tandem with appropriate studies and oversight.

Federal Advisory Update

The Medicare Payment Advisory Commission (MedPAC) held its September, October and November Public Meetings on September 7-8, October 5, and November 6-7, respectively. Notably for OrthoForum Members, the September Public Meeting featured a session on Ambulatory Surgical Centers (ASCs), where Commissioners reviewed MedPAC’s newest chapter on ASCs and discussed hospital consolidation and the decrease in privately practicing physicians. Also of note for the OrthoForum, there was heavy focus on physician payments during sessions in the October Public Meeting, in addition to discussion on site-neutrality, APM bonuses, and overall spending. In MedPAC’s November Public Meeting, the Commission’s sessions were centered around Medicare Advantage (MA) plans and hospice care, though topics including telehealth and emerging technologies were also discussed.

MedPAC expressed that the Commission will continue efforts to refine physician reimbursement adequacy through the fee schedule while appropriately managing overall spending growth. The OrthoForum will keep you updated on any MedPAC recommendations to Congress stemming from their work on these important physician payment issues. The Commission’s next public meeting before the new year will be on December 7-8.

September MedPAC Public Meeting

MedPAC reviewed the Commission’s findings on ASCs, HOPDs, surgical procedure coverage, hospital consolidation, and the current private practice environment. Of note, the Commission examined the highest-revenue procedures carried out in ASC systems which included cataract removal, GI procedures, neurostimulator insertion, pain management, and joint replacement. Further, the Commission found that revenue from knee and hip replacement has risen rapidly. Mr. Zabinski also highlighted consolidation in the field, citing that the share of physicians working in private physician-owned practices decreased from 60% to 47%. During the session, Commissioners focused comments and questions on hospital consolidation, the reduction of physician-owned private practices, and differences between ASCs and HOPDs regarding differences in both payments and patient experiences.

October MedPAC Public Meeting

In the physician payment rates session of the October Public Meeting, MedPAC commissioners examined data on fee schedule adequacy indicators showing that physician compensation growth is surpassing inflation levels. Based on these positive indicators, Commissioners voiced support for taking a “watchful waiting approach” regarding future fee schedule payment updates rather than recommending significant changes. Commissioners spoke to promoting site-neutral payments between hospital outpatient departments and physician offices for similar services to improve payment parity. Additionally, Commissioners expressed support for addressing inflationary effects and differential impacts of primary care providers compared to specialists. There were mixed opinions from Commissioners regarding alternative payment method (APM) bonus incentives, with some Commissioners claiming that the bonuses are ineffective at incentivizing participation, whereas other Commissioners advocated for the overall benefit of the program’s messaging. Several Commissioners raised the issue of overvalued codes and practice-specific costs in Medicare spending.

Also of note in the session on inpatient rehabilitation facilities, MedPAC Commissioners looked at alternative payment approaches for non-qualifying conditions and compared the intensity of rehabilitation treatment between inpatient rehabilitation facilities (IRFs) and skilled nursing facilities (SNFs) for similar conditions. Commissioners’ questions during the session centered around whether clinical evidence suggests added benefits from IRF-level treatment for Medicare beneficiaries.

November MedPAC Public Meeting

MedPAC’s November Public Meeting saw significant progress on informing MedPAC’s recommendations on Medicare Advantage payment policy, analysis of hospice utilization and outcomes, and coverage and payment issues for digital therapeutics and other software. In the session on Medicare coverage and payment for “Software as a Medical Service” (SaaS) and prescription digital therapeutics (PDTs), Commissioners reviewed definitions, characteristics, and Medicare coverage of SaaS and PDTs under OPPS, Medicare PFS, IPPS, and DME fee schedules, as well as principles for Medicare fee-for-service (FFS) payments. The Commission also discussed how Medicare should ensure covered services with results in improved health outcomes, how Medicare should generally pay for the coverage of SaaS that is separate from the device, and how Medicare should set the payment rate for items and services paid for under fee schedules. Commissioners indicated interest in payment bundles and cost reduction but noted that more analysis is needed before recommendations can be made. The Commission reiterated that MedPAC will continue efforts to evaluate digital medicine, telehealth, and other emerging technologies.

Congressional Update

Following an eventful past few months in session for Congress with Speakership challenges, busy hearing and markup schedules, and appropriations deadlines, many are wondering how issues such as physician payments will be addressed before the new year. With the absence of final passage for any of the twelve annual appropriations bills, Speaker Johnson (R-LA) introduced a short-term continuing resolution (CR), H.R. 6363 to extend funding for four appropriations bills through January 19, 2024, and the remaining eight appropriations bills through February 2, 2024. The President signed the CR on November 16, 2023.

The CR also includes extensions of expiring health programs through January 19th, including funding for community health centers (CHCs), the National Health Service Corps, the Special Diabetes Programs, and preventing cuts to the Medicaid DSH program. However, the CR does not address Medicare physician payment cuts, extensions of funding for children’s hospitals that provide physician training, or continuation of the Medicare alternative payment model (APM) bonus. With these updates, it is likely that Congress will not be addressing Medicare physician cuts this year due to a lack of an end of year vehicle and the impact of other key priorities.

See below for a committee breakdown of health-related legislation, recent markups, and legislative hearings.

Element 1: Enhance Specialty Care Performance Data Transparency.
CMMI found that the need for enhanced data and profiling tools to provide data on specialist performance emerged as a key theme in the development of the strategy. In the short term, CMS will refine and enhance specialist performance data and dashboards to support greater coordination and integration across primary and specialty care. In the long-term, CMS plans to develop and distribute industry standard definitions of condition-based episodes for ACOs to improve management of specialty care and to support subcontracting efforts with specialists.

House Ways & Means – On September 19th, the House Ways and Means Committee held a hearing entitled “Hearing on Reduced Care for Patients: Fallout From Flawed Implementation of Surprise Medical Billing Protections” where members discussed the independent dispute resolution (IDR) process, administration fees, private equity, accessibility issues in rural areas, workforce shortages, administrative fees, and an increased backlog of payment disputes.
House Energy and Commerce – On October 19th, the House Energy and Commerce Committee held a “Health Legislative Hearing” where members considered twenty-three health-related legislative proposals and discussed the impact of Medicare payment cuts on providers and patients, health care access and barriers to care, and consolidation. Following the full committee hearing, the House Energy and Commerce Health Subcommittee held a markup on November 15th to vote on of twenty-one of the previously discussed healthcare-related bills. All 21 of the bills were favorably reported out to the full committee as amended. Of note for OrthoForum, two key pieces of legislation were discussed, voted on, and passed out of the subcommittee:
- R.6371, the Provider Reimbursement Stability Act of 2023 (Sponsors: Reps. Murphy, Burgess, Kelly, Wenstrup, Buschon, Van Drew, Miller-Meeks, Harris, Babin, Joyce, Jackson, McCormick, Ferguson, Dunn, and Carter). This legislation would increase the PFS budget neutrality threshold and provide for a lookback period to reconcile overestimates and underestimates of pricing adjustments for individual services
- R. 6366 “To amend title XVIII of the Social Security Act with respect to the work geographic index for physician payments under the Medicare program, and to revise the phase-in of clinical laboratory test payment changes under such program” (Sponsor: Rep. Hudson). This legislation aims to extend for one year a policy to increase the work geographic index to 1.00 for any locality where the index would be less than 1.00, which is otherwise set to expire January 1, 2024. The legislation also delays cuts and reporting under the clinical lab fee schedule
Senate Finance Committee – On November 14^th, the Senate Finance Committee held a hearing entitled “Ensuring Medicare Beneficiary Access: A Path to Telehealth Permanency” featuring a witness panel of four healthcare professionals. Senators on both sides of the aisle voiced support for the continuation of Medicare telehealth flexibilities that began during the COVID-19 public health emergency and advocated for legislation such as 2016, the CONNECT for Health Act. The bill, which currently has 59 bipartisan cosponsors in the Senate, is a comprehensive piece of legislation which aims to expand telehealth flexibilities. Of note, most of the current Medicare telehealth flexibilities are set to expire on December 31, 2024, without action from Congress

Political Update

Less than a year away, the 2024 campaign season is gearing into place as former President Donald Trump continues to lead the GOP field according to the latest polling averages (See Polling Below). Incumbent Joe Biden faces no credible Primary threat, but recent dips in approval ratings and 1-on-1 matchups with GOP opponents has Democrats concerned as we enter 2024. The next catalysts in the race will be the voting results of early primary states in Q1 2024 (See “Upcoming Catalysts”).

GOP Field Consolidating

Since our last update, several notable candidates, including but not limited to former Vice President Mike Pence and Sen. Tim Scott (R-SC) suspended their respective presidential campaigns. Former President Trump continues to hold commanding leads in the primary and is followed by former U.N. Ambassador Nikki Haley, Florida Governor Ron DeSantis, and entrepreneur Vivek Ramaswamy. The former President has not participated in any GOP presidential debates. The non-Trump candidates, especially Ms. Haley and Gov. DeSantis, are hoping that results in Iowa, New Hampshire and South Carolina in the early new year will undercut Mr. Trump’s inevitability argument.