CMS E/M Proposal a Major Threat to Pathology, Laboratory Reimbursement for 2021

CMS Releases Physician Fee Schedule, Outpatient Proposed Rules  

As clinical laboratories across the nation struggle to meet patient demand for COVID-19 testing and other laboratory and pathology services, the Centers for Medicare & Medicaid Services (CMS) has released a Physician Fee Schedule (PFS) Proposed Rule that proposes significant cuts in payments for pathologists and clinical laboratories.  

On August 4, CMS released two major proposed rules concerning Medicare: The Physician Fee Schedule Proposed Rule, which outlines payment policy changes for pathologists and other physicians as well as for clinical laboratories that bill under the Clinical Laboratory Fee Schedule (CLFS), and the Outpatient Prospective Payment Services (OPPS) Proposed Rule, which outlines payment policies for services furnished in an outpatient setting.  

Overview of PFS Impact

In its PFS Proposed Rule, CMS is projecting a 9-percent overall cut in payments to pathologists, for a combined reduction in payments of $1.1 billion over 10 years, largely due to the Agency’s proposal to increase payment rates for evaluation and management (E/M) services. 

Because of budget neutrality requirements, increases in payment services requires offsetting cuts elsewhere. These offsetting cuts tends to fall hardest on those physicians who generally do not provide these services, like pathologists, cardiologists, and radiologists, and were triggered by an 11-percent reduction in the Medicare conversion factor (used to calculate annual updates to payment rates). 

For clinical laboratories, CMS projects that its proposed payment policies would reduce overall payments approximately 5 percent. The PFS E/M policy changes don’t have the same impact on clinical laboratories, which receive approximately 83 percent of their Medicare revenues from services paid under the CLFS. As part of its advocacy response, ASCP will be working to reduce the negative impact the E/M proposal will have on pathology and laboratory medicine.  

Pathology Services Payment Changes

Given the size of the cuts imposed by the E/M proposal, it is not surprising that the majority of pathology services are proposed for cuts of 9 percent or more, with cytopathology codes 88141, G0124, G0141, and P3001 slated for cuts of almost 22 percent. There are few bright spots to report. One, however, is the molecular pathology interpretation code, G0452, which had been identified as potentially misvalued. In the end, CMS increased payment for this code to $42.91, more than doubling the payment rate for the current year ($19.13). For more details on code specific impacts, see ASCP’s 2021 Impact Table.   

Clinical Laboratory Fee Schedule

One of the policy changes of interest to clinical laboratories pertains to the Protecting Access to Medicare Act, also known as PAMA, payment rate reporting requirements. The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, requires CMS to postpone PAMA’s payment cuts and reporting requirements for CLFS services. As a result, CMS is not proposing CLFS rate cuts for 2021 and plans to postpone the reporting window for private payer laboratory payment rates to January 1, 2022 to June 30, 2022.CMS is still planning on requiring laboratories to use payment data collected between January and June of 2019 as the basis for the reporting requirement. Similar changes are being proposed in the OPPS Proposed Rule.  

National Coverage Determinations

Another item the Agency floated is the sunsetting of several outdated national coverage determinations (NCDs), including one for histocompatability testing (NCD #190.1, (08/01/1978)) and another for cytogenetic studies (NCD #190.3 (7/16/1998)).  

Merit-based Incentive Payment System (MIPS) Value Pathways (MVPs)

For the 2020 performance period, because of the practice challenges associated with the COVID-19 pandemic, CMS will be providing hardship exemptions on a case-by-case basis. This may allow clinicians and groups an exemption from reporting on all four performance categories, i.e., Quality, Cost, Promoting Interoperability, and Improvement Activities, during 2020.

Maximum Payment Adjustments: By statute, the maximum allowable payment adjustment attributable to the 2021 year is -9/+9 percent. That said, a bonus can be obtained for exceptional performance.

Performance Category Weighting: CMS is considering changing the weighting of the Quality and Cost categories for 2020. Under their plan, Quality would be reduced from 45 percent to 40 percent, and Cost would increase from 15 to 20 percent. As a result, the proposed weightings would be as follows: Quality, 40 percent; Cost, 20 percent; Performance Improvement, 25 percent; and Improvement Activities, 15 percent. That said, because pathologists are exempt from the Cost and Practice Improvement categories, their weights are as follows: Quality, 85% and IA 15%.

Reporting Threshold: The threshold to avoid a penalty in 2021 is being reduced from 60 to 50 points. However, the additional performance threshold would be set at 85 points for 2021.

MIPS Value Pathways (MVP):  Though CMS had previously finalized participation through the MVP for 2021, CMS is proposing to delay its implementation due to stakeholder concerns about timeline and COVID-19. Instead, CMS is proposing additions to the framework’s guiding principles and development criteria to support stakeholder engagement in co-developing MVPs and establishing a clear path for MVP candidates to be recommended through future rulemaking. Moreover, CMS is proposing to allow qualified clinical data registries (QCDRs) to support MVPs starting in 2022. ASCP is currently examining how the ASCP National Pathology Quality Registry can help pathologists participate in an MVP.

Alternative Payment Models (APMs): CMS is proposing a new MIPS pathway to recognize participation in APMs called the APM Performance Pathway.

Other MIPS proposals: CMS is proposing to use performance period benchmarks, rather than historical ones, to score quality measures for 2021 due to concerns that 2020 data may not be sufficiently accurate or reliable. CMS is also planning on making numerous changes to the 112 existing MIPS quality measures, including removing some of these measures and adding more than 200 new quality measure for the 2021 performance year. CMS plans to revise the scoring policy for topped-out measures and will also be making minor changes to the Improvement Activities category. For more information on CMS’s changes to the quality payment program, a detailed fact sheet is available here. 

Notable OPPS Provisions

Payment rates fare better under the OPPS Proposed Rule, which lifts payment rate about 3 percent overall. One notable proposal for the laboratory community concerns CMS’s clinical diagnostic laboratory test packaging (bundling) policy and laboratory date of service (DOS) policy for cancer-related protein-based multianalyte assays with algorithmic analyses (MAAA). Under the Agency’s suggestion, the CY 2021 OPPS/ASC proposed rule would exclude cancer-related protein-based MAAAs, which are not generally performed in the hospital outpatient department setting, from the OPPS packaging policy, and revise the laboratory DOS policy to add these tests to the laboratory DOS provisions. These proposals, if adopted, would require laboratories performing cancer‑related protein‑based MAAAs that meet the DOS requirements to bill Medicare directly for these tests rather than seeking payment directly from the hospital.

As previously noted, CMS is proposing to postpone the reporting of private payer laboratory payment rates, per PAMA, to January 1, 2022 to June 30, 2022, though it will maintain its requirement that laboratories report payment data collected between January and June of 2019. Like the PFS Proposed Rule, the OPPS Proposed Rule would also adopt a 0% payment reduction for 2021 and would postpone the 15 percent payment reduction limits to the years 2022-2024.  

ASCP Advocacy Next Steps:  ASCP is very disappointed with the PFS proposed rule and believes that the proposed E/M policies could seriously undermine the ability of pathologists and clinical laboratories to meet patient testing needs for COVID-19 and other diseases/conditions. Over the next few months ASCP will be working to fix proposed payment policies that negatively impact pathology and laboratory medicine. ASCP will be continuing our efforts to urge HHS and Congress to waive the budget neutrality requirements pertaining to the E/M proposal in an effort to override much of the PFS’s proposed impact on pathology and clinical laboratories.

As part of these efforts, ASCP will be working with the American Medical Association and other professional societies representing the pathology and laboratory community. As part of these initiatives, ASCP will be utilizing a series of grassroots advocacy campaigns. When these deploy, ASCP will be urging its entire members to contact their elected representatives in Washington to urge HHS officials to change these flawed policies. ASCP looks forward to working with its members and the broader laboratory community in pursuit of these changes.  

ASCP is still in the process of analyzing the PFS and OPPS proposed rules (all 2,100+ pages!) and will provide additional updates on their provisions as needed.

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For more information regarding ASCP's advocacy initiatives and policy positions, please contact ASCP's Center for Public Policy at (202) 408-1110.  

 

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