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CMS Proposals: Say Bye to Direct Supervision, Hello to Separate E/M Payments, Prior Auth

By Nina Youngstrom

In a stunning reversal, CMS plans to drop the direct physician supervision requirement for outpatient therapeutic services performed at hospitals and critical access hospitals and instead require general supervision — and do the same for some other services, including remote patient monitoring, according to the proposed 2020 Outpatient Prospective Payment System (OPPS) and Medicare Physician Fee Schedule (MPFS) regulations announced July 29. That’s not the only turnabout in the regulations: CMS said it won’t move forward with plans to pay one rate for three levels of evaluation and management (E/M) services, while keeping a promise to relax documentation requirements. The regulations also would bring prior authorization to a handful of procedures and more site neutrality, as CMS approves total knee replacement in ambulatory surgery centers. And hospitals are faced with an expansion of price transparency requirements that attorneys are dubious about (see story, below).

The relaxation of physician supervision requirements, which appears in different forms in both regulations, came out of left field. “What I thought was really unexpected and a good thing that CMS did is the change to supervision of hospital outpatient and critical access hospital services,” says Valerie Rinkle, president of Valorize Consulting. “It’s a little bit of back to the future with a cherry on top.” Before 2010, CMS assumed that as long as physicians were around the hospitals, they provided for the safety of patients. But partly fueled by concerns about lack of oversight in off-campus provider-based departments, CMS created a stricter standard with direct supervision, she says, although critical access hospitals (CAHs) were repeatedly given a pass. Now it proposes to drop direct supervision, and apply general supervision to all outpatient therapeutic hospital services, whether provided at CAHs or on or off campus.

The relaxation of supervision requirements should put an end to overpayment refunds and False Claims Act cases based on the failure of physicians to directly supervise. But Rinkle worries about a possible ulterior motive. Will CMS use the relaxed physician supervision level to “continue the march toward site neutrality for certain services?” Her reasoning: Hospitals have pointed to direct supervision as a driver of higher costs in outpatient departments compared to freestanding clinics.

There was also good news for providers on E/M services and documentation. CMS proposed to drop its plan to pay physicians the same amount for CPT code levels two, three and four for office/outpatient visits, which was announced in the 2019 MPFS, although delayed until 2021 (“CMS Finalizes M.D. Payment Changes, With Delay And Level Five; Documentation Is Eased,” RMC 27, no. 39). CMS would continue to pay separately for all E/M levels of service, which also would have different values to better capture their work relative value units (RVUs). CMS is proposing to adopt work RVUs for office/outpatient E/M codes and the new prolonged services add-on code recommended by the RVS Update Committee of the American Medical Association (see box). CMS also plans to ditch the lowest level CPT code, 99201, for new patients.

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