Trump Administration Plans Overhaul of Medicare Payment Schedule

The Trump administration has proposed policy changes that would remove the tiered system of complexity that currently governs Medicare reimbursement. While the Centers for Medicare and Medicaid Services (CMS) hopes that the new regulations will reduce clinicians’ and administrators’ paperwork burden and free up providers to spend more time working with patients, critics say that the plan favors certain specialties over others and disincentivizes doctors from caring for patients with the greatest medical need.

Under the current physician payment system, each visit to a health-care provider is graded on its complexity and assigned an evaluation and management (E/M) code from 1 to 5. A Level 1 visit might not involve a consult with a doctor at all, while a Level 5 visit could include complicated tests and extensive analysis by a physician. Providers must record the E/M code of the visit for reimbursement purposes, as a higher-level visit will result in a larger Medicare reimbursement. For example, Medicare payment for new patients range from $76 for a Level 2 office visit to $211 for a Level 5 visit.

The proposed changes reflect the belief that these distinctions force physicians to waste time completing paperwork. “The differences between Levels 2 to 5 are often really difficult to discern and time-consuming to document,” said CMS Chief Medical Officer Kate Goodrich, MD. The new proposed plan would establish a flat rate of $135 for all visits, regardless of complexity.

Because the plan establishes a flat rate for office visits, it may disparately affect primary-care providers and specialists. For example, according to a table published by the HHS, the agency estimated that obstetricians and gynecologists benefit most from the proposal, while dermatologists, rheumatologists and podiatrists would be negatively affected. “It creates winners and losers among specialties,” said Medical Group Management Association (MGMA) Senior Vice President Anders Gilberg. “That’s where potential battle lines will be drawn.”

CMS Administrator Seema Verma, MPH, defended the proposal, arguing that the reduction in paperwork far outweighed the negative adjustments in payment for some specialties. “Time spent on paperwork is time away from patients,” she said, estimating that doctors would save an average of 51 hours of clinic time each year.

Along with the controversial changes to office-visit reimbursement, CMS also introduced a plan to cut reimbursement for newly introduced drugs, from a 6-percent premium to the wholesale acquisition cost to 3 percent. The proposal could indirectly reduce reimbursements for hematologists and oncologists, who often use newly introduced drugs to care for patients with malignancies.

Sources: Medscape, July 18, 2018; Medscape, July 19, 2018; The New York Times, July 22, 2018.