Life Science Compliance Update

August 18, 2017

CMS Issues Proposed Rule on EHR Reporting Requirements

ROH Electronic Health Records Essay Photo

A recent Centers for Medicare & Medicaid Services (CMS) proposed rule would ease EHR reporting requirements over the next two years. The proposed regulation, which covers the 2018 Medicare payments for hospital inpatient services, relaxes data reporting requirements for Clinical Quality Measures (CQMs) that are part of the EHR Incentive program. In 2017, eligible hospitals demonstrating meaningful use for the first time would need to submit two self-selected quarters of CQM data and report at least six selected CQMs, down from eight. CMS offered similar flexibility when it released its Hospital Outpatient Prospective Payment System Rule in November 2016.

Meaningful Use

For the EHR Incentive Program, CMS has proposed that the reporting period in CY 2017 will be two self-selected quarters. For CY 2018 the reporting period will be the first three quarters of 2018. For both CYs 2017 and 2018, hospitals must report on at least six Clinical Quality Measures. In CY 2018, for those hospitals only participating in the Medicare EHR Incentive Program, electronic CQM submission will be available for the two months following the close of the year ending on February 28, 2019. For eligible professionals reporting electronically, CMS proposes to modify the EHR Incentive Program reporting period from a full year to a minimum of a continuous 90-day period during the year. The Proposed Rule also aligns CQMs with the measures available under the Merit-based Incentive Payment System.

Additionally, CMS proposes that no payment adjustment will be made for professionals who render “substantially all” of their services in an ambulatory surgical center (ASC). CMS seeks public comment on the following two alternative definitions to determine the final definition regarding ASC services:

  • An EP who furnishes 75 percent or more of his or her covered professional services in sites of service identified by the codes used in the HIPAA standard transaction as an ASC setting in the calendar year that is two years before the payment adjustment year; and
  • An EP who furnishes 90 percent or more of his or her covered professional services in sites of service identified by the codes used in the HIPAA standard transaction as an ASC setting in the calendar year that is two years before the payment adjustment year.

Other Areas of Proposed Rule

CMS proposes to use data from its National Health Expenditure Accounts instead of data from the Congressional Budget Office to estimate the percent change in the rate of uninsurance, which is used in calculating the total amount of uncompensated care payments available to Medicare disproportionate share hospitals. CMS said this proposed change would result in DSH payments increasing by $1 billion in fiscal year 2018.

Additionally, CMS proposes using worksheet S-10 data to determine uncompensated care payments and distribution beginning in FY 2018. The agency further proposes to implement the socioeconomic adjustment approach mandated by the 21st Century Cures Act for the FY 2019 Hospital Readmissions Reduction Program.  Finally, CMS proposes removing one measure in FY 2019 and adopting one new measure in FY 2022 and another in FY 2023.

August 16, 2017

CMS Issues Proposed Rule on Physician Fee Schedule


Last month, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that includes proposals to update payment policies, payment rates, and quality provisions for services furnished under the Medicare Physician Fee Schedule (PFS) on or after January 1, 2018. The calendar year (CY) 2018 PFS proposed rule is one of several proposed rules that reflect a broader Administration-wide strategy to create a healthcare system that results in better accessibility, quality, affordability, empowerment, and innovation.

The wide-ranging proposed rule addresses reimbursement to off-campus departments under section 603 of the Bipartisan Budget Act of 2015, telehealth, and a range of other issues. It seeks comments on biosimilar coding, E/M guidelines, emergency department visit valuations, PAMA lab rate implementation, and more.

The proposed rule notes that overall CY 2018 rates will be updated by +0.31 percent. This reflects the Medicare Access and CHIP Reauthorization Act’s specification of a 0.50 percent update, reduced by -0.19 percent stemming from the misvalued code target recapture amount in the Achieving a Better Life Experience (ABLE) Act of 2014.

The -0.19 percent recapture across all services is necessary because CMS proposes -0.31 percent of misvalued code reductions, short of the 0.50 percent ABLE Act target. These adjustments are coupled with a statutory budget neutrality adjustment to yield a proposed 2018 PFS conversion factor of $35.99, up from $35.89 in CY 2017.

Highlights of the Rule

Off-Campus Departments 

CMS proposes to reduce current fee schedule payment rates for non-excepted items and services furnished by off-campus hospital outpatient provider-based departments by 50 percent. Specifically, the percent-of-OPPS rate currently paid under the current fee schedule for these services would decline from 50 percent to 25 percent, CMS explains, to “encourage fairer competition between hospitals and physician practices by promoting greater payment alignment.”

CMS says that “for CY 2019 and for future years, we intend to examine the claims data in order to determine not only the appropriate PFS Relativity Adjuster(s), but also to determine whether additional adjustments to the methodology are appropriate – especially with the goal of attaining site neutral payments to promote a level playing field under Medicare between physician office settings and non-excepted off-campus PBD settings, without regard to the kinds of services furnished by particular off-campus PBDs.” It seeks comment on methodology changes that would account for “specialty-specific patterns.”

E/M Guidelines

CMS notes “we continue to agree with stakeholders that the E/M documentation guidelines should be substantially revised” and adds that “a comprehensive reform of E/M documentation guidelines would require a multi-year, collaborative effort among stakeholders.” The agency says it is “especially seeking comment on how we might focus on initial changes to the guidelines for history and exam, because we believe documentation for these elements may be more significantly outdated.”

Emergency Department Visits 

Through a comment solicitation, CMS requests input on “whether emergency department visits are undervalued due to increasing heterogeneity of the settings under which emergency department visits are furnished and changes to the patient population.”

Office-based Behavioral Services

CMS proposes increasing payment for office-based behavioral health services, saying its proposal will “better recognize overhead expenses for office-based face-to-face services with a patient.”

Biosimilar Coding Request for Comments

CMS solicits public comments on its current policy of grouping all biosimilars under a single HCPCS code if they have the same reference product (and thus basing ASP on all biosimilars in that code). It says it seeks “comments on the effects of its payment policy based on experience with the United States’ biosimilar product marketplace since the regulations went into effect on January 1, 2016” and is “particularly interested in new or updated material, such as market analyses or research articles that provide evidence which supports positions expressed in comments.” It also asks about “data to demonstrate how individual HCPCS codes could impact the biosimilar market, including innovation, the number of biosimilar products introduced to the market, patient access, and drug spending” and asks about “other novel policies” that increase competition and reduce costs, such as “legislation, demonstrations, and administrative options.” No such policies are actually proposed in the rule.

In providing context for the comment solicitation, CMS says it anticipates growth in biosimilar approvals and use. It adds that it “seeks to promote innovation, to provide more options to patients and physicians, and competition to drive prices down, recognizing that even though these two goals may be difficult to achieve concurrently, to delink them would be counterproductive.”

The agency also says “CMS’s goal [is] to further investigate a solution that allows market forces to provide a robust and comprehensive selection of choices for patients at a fair price” and “we are interested in better understanding if and how the innate differences in biological products and their current regulatory environment should be reflected in Medicare payment policy for biosimilars, particularly as it relates to biosimilars that are licensed for fewer than all indications for which the reference product is licensed or situations where different biosimilars may be licensed for different subsets of indications for which the reference product is licensed.”

Request for Information

In addition to the payment and policy proposals, CMS is releasing a Request for Information (RFI) to welcome feedback on positive solutions to better achieve transparency, flexibility, program simplification, and innovation. This will inform the discussion on future regulatory action related to the PFS.

CMS is soliciting ideas for regulatory, sub-regulatory, policy, practice, and procedural changes to better accomplish these goals. Ideas could include recommendations regarding payment system re-design; elimination or streamlining of reporting; monitoring and documentation requirements; operational flexibility; and feedback mechanisms and data sharing that would enhance patient care, support the doctor-patient relationship in care delivery, and facilitate patient-centered care. Ideas could also include recommendations regarding when and how CMS issues regulations and policies and how CMS can simplify rules and policies for beneficiaries, clinicians, providers, and suppliers.

In responding to the RFI, provide clear and concise proposals – including data and specific examples. If the proposals involve novel legal questions, analysis regarding CMS’ authority is welcome. CMS will not respond to RFI comment submissions in the final rule, but rather will actively consider all input in developing future regulatory proposals or future sub-regulatory guidance. 

Comments on the proposed rule and RFI are due by September 11, 2017.

August 11, 2017

MACRA Categories and Codes in CMS Proposed Fee Schedule


In the 2018 proposed Medicare Fee Schedule rule, CMS reviews MACRA patient relationship categories and codes, their development and timelines, and provides details for the initial claims-based reporting of the relationship categories and codes to CMS.


Section 101(f) of MACRA added a new subsection (r) to section 1848 of the Act entitled Collaborating with the Physician, Practitioner, and Other Stakeholder Communities to Improve Resource Use Measurement. Section 1848(r)(2) requires the development of care episode and patient condition groups plus group classification codes. To satisfy the purpose of patient and/or episode attribution to one or more clinicians, it further requires:

  • The categories and codes must define and distinguish an applicable practitioner’s relationship to and responsibility for each patient when an item or service is furnished to the patient by that practitioner.
  • The categories shall include different potential practitioner-patient relationship types.
  • The categories shall reflect various potential responsibility types.
  • The categories shall capture the frequency with which the practitioner delivers care to the

Patient Relationship Categories

CMS posted and solicited public comment upon a draft relationship categories list and the list’s foundational principles in April 2016. Potential category modifications were developed based upon comments received. In December 2016, CMS sought comments about such modifications and about operational approaches for reporting the categories on Medicare claims. After comment review, CMS posted the first operational list of patient relationship categories on May 17, 2017:

  • Continuous/Broad Services,
  • Continuous/Focused Services,
  • Episodic/Broad Services,
  • Episodic/Focused Services, and
  • Only as Ordered by Another Clinician.

Patient Relationship Reporting Using Modifiers

Section 1848(r)(4) of the Act specifies that claims for services furnished beginning January 1, 2018, shall include, as determined appropriate by the Secretary, the following:

  • Any applicable codes for care episode groups,
  • Any applicable codes for patient condition groups,
  • Any applicable codes for patient relationship categories, and
  • The NPI of the ordering physician or applicable practitioner.

CMS describes having planned to use procedure code modifiers for patient relationship code reporting via claims. In December 2016, commenters indicated a preference for CPT modifier codes rather than HCPCS Level II modifiers. CMS submitted a CPT code application that was rejected in June 2017, as the CPT Editorial Panel preferred to wait until the proposed modifiers were finalized before issuing Category I CPT codes. CMS is therefore proposing HCPCS modifiers as shown in Table 26 reproduced from the proposed rule:

Proposed Patient Relations HCPCS Modifiers and Categories


Proposed HCPCS Modifier

Patient Relationship Categories



Continuous/Broad Services



Continuous/Focused Services



Episodic/Broad Services



Episodic/Focused Services



Only as Ordered by Another Clinician

CMS proposes that claims for services furnished beginning January 1, 2018, shall include the appropriate modifier selected from Table 26 and the NPI of the ordering practitioner. CMS proposes that modifier reporting will be voluntary. Modifier use would not be a condition of payment, affect payment, change the meaning of a reported procedure code(s), or be tied to any reported E/M service(s) intensity. The duration of the voluntary HCPCS modifier reporting period is not specified by CMS. Finally, CMS notes that the relationship codes may be incorporated into future QPP measures. CMS seeks comment on the proposed modifier list, the plan to resubmit the modifiers for CPT code assignments, and the initial voluntary reporting of the proposed modifiers.


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