This newsletter outlines key federal regulatory developments and highlights PAI’s advocacy on matters that impact physicians and patients, including:

1. PAI Launching a Value-Based Arrangements Resource Site for Physicians and Practices;
2. Texas Medical Association Suing the Biden Administration Over the Surprise Billing Rule;
3. House Members Sending a Letter to Secretaries of Health and Human Resources (HHS), Treasury, and Labor Departments urging the Interim Final Rule (IFR) on Surprise Billing Reflect the No Surprise Act as Written;
4. Release of the Centers for Medicare and Medicaid Services’ (CMS) calendar year (CY) 2022 Medicare Physician Fee Schedule and Quality Payment Program Final Rule;
5. The Occupational Safety and Health Administration (OSHA) and CMS Release Vaccine Mandates for Healthcare Staff and Employers with Greater than 100 Employees;
6. The Medicare Payment Advisory Commission (MedPAC) Dives Back into Exploration of Outpatient Site-Neutral Payments;
7. CMS Announcing a Revised Application of the Merit-Based Incentive Payment System (MIPS) Automatic Extreme and Uncontrollable Circumstances Policy; and

Release of CMS’s CY 2022 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Final Rule.

For up-to-date information on COVID-19, please visit PAI’s Resources page and Healthsperien’s Resource Updates page. For additional information on key issues in the health policy landscape and identifying potential reforms under the Biden Administration, the 117th Congress, and in the states, please visit Healthsperien’s Resource page here.

PAI Launches Value-Based Arrangements Resource Site for Physicians and Practices

On September 13, PAI, in partnership with Healthsperien, launched the Value Based Arrangements resource site to help physicians better understand and assess the pathways available to their practices. The resources available offer approachable and in-depth overviews of the key components of participating in value-based arrangements, what physicians should understand ahead of entering a contract, and how physicians can set their practices up for success in these arrangements. The following resources are available for physician members and their practices:

• Building Blocks for Success - Introduction
• Building Blocks for Success - Practice Assessment
• Reference Guide
• Evaluating Patient Risk and Physician Performance in Alternative Payment Models (APMs)
• Practice Structuring for APM Participation
• Crosswalk - Medicare APMs to Commercial Value-Based Arrangements
• Types of Value-Based Revenue Models
• Guide to Value-Based Contracting

PAI understands the complexity of value-based arrangements and the importance of making the best decision for your practice when selecting to engage in a value-based arrangement. We believe these resources will serve to enhance the decision-making process for you and your practice.

Texas Medical Association Sues Biden Administration Over Surprise Billing Rule 

On October 28, the Texas Medical Association (TMA) sued HHS and other federal agencies, challenging certain regulatory provisions of the Surprise Billing Part II IFR, which implements the federal law enacted earlier this year to address surprise medical billing. The No Surprises Act established new limitations to patient cost-sharing for out-of-network care and banned balance billing for certain medical services, including emergency services. TMA’s lawsuit would not impact the January implementation of the patient protections provisions in the IFR. The lawsuit challenges only certain provisions in the IFR that establish the rules governing the independent dispute resolution process established in the law as a binding mechanism for resolving disputes between payers and physicians or hospitals. 

TMA’s lawsuit challenges the dispute resolution provisions in the regulation, which fail to reflect the clear, unambiguous provisions of the law and would give health plans unhindered ability to unilaterally set payment rates for in-network and out-of-network services. The No Surprises Act establishes a process whereby physicians and other healthcare providers negotiate with payers to determine reimbursement for out-of-network services covered by the law. In situations where the parties cannot come to an agreement, they can seek a binding determination from a third-party independent dispute resolution (IDR) entity that ultimately chooses one side’s offer over the other as an appropriate payment amount. 

Contrary to the clear provisions set forth in the law, the regulation directs the IDR entity to select the offer closest to the payer-determined median in-network rate or “qualified payment amount” (QPA), unless the physician establishes credible information about additional circumstances that clearly demonstrate that the median in-network rate is materially different from the appropriate out-of-network rate.  In sharp contrast, the No Surprises Act outlines a variety of  factors that IDR entities must consider, weighing each of the factors relevant to the individual circumstances. These factors include relevant information such as the level of training and experience of the physician, market share of the physician in the geographic region where the service is provided, acuity of the patient, teaching status of the facility, and demonstrations of good faith efforts made by the physician to enter into network agreements. 

TMA’s lawsuit seeks injunctive relief, urging the District Court to sever the provisions related to the preference toward QPA during the arbitration “as having been unlawfully issued without notice and comment” and require HHS to provide notice and comment prior to finalizing a replacement rule.
  
PAI stands in strong support of TMA’s lawsuit and will urge HHS to revise the provisions of the IFR. Throughout the legislative process, PAI emphasized concerns about any dispute resolution process that utilizes in-network benchmarks as the primary factor. Such an approach will create a serious imbalance in network contracting processes that will leave physicians with little or no negotiating ability. This will allow payers to unilaterally determine rates below the costs of delivering care, and therefore, eventually impact access for patients in need, particularly in emergency settings.

House Members Send Letter to Secretaries of Health and Human Services, Treasury, and Labor Departments Urging the Surprise Billing Part II IFR Reflect No Surprises Act as Written

On November 5, Congressmen Brad Wenstrup (R-OH) and Tom Suozzi (D-NY) led 150 Members of Congress in sending a letter to the Secretaries of the HHS, Treasury, and Labor Departments urging that the IFR for Surprise Billing reflect the No Surprises Act as written. Specifically, the letter urges the Secretaries to revise the IFR to align with the law as written by specifying that the certified IDR entity should not default to the median in-network rate, or QPA, and should instead consider all the factors outlined in the statute without disproportionately weighting one factor: 

• Median in-network rates
• Physician training and quality of outcomes
• Market share of parties
• Patient acuity or complexity of services
• In the case that a physician is a facility: teaching status, case mix, and scope of services
• Demonstrations of previous good faith efforts to negotiate in-network rates
• Prior contract history between the two parties over the previous four years

PAI greatly supports the letter sent by congressional members and strongly concurs that current language in the IFR could incentivize insurance companies to set artificially low payment rates, which would narrow physician networks and jeopardize patient access to care. PAI is especially concerned that the IFR could have a broad impact on reimbursement for in-network services, which could exacerbate existing health disparities and patient access issues in rural and urban underserved communities.

CMS Releases CY 2022 Medicare Physician Fee Schedule Final Rule

On November 2, CMS released the 2022 Medicare Physician Fee Schedule and Quality Payment Program Final Rule (fact sheet, full rule) which includes updates on policy changes for Medicare payments under the Fee Schedule, and other Medicare Part B issues, on or after January 1, 2022. PAI voiced strong objections to the reduced conversion factor for CY 2022 in our comment letter to CMS. Physician costs continue to increase at a quick rate, which has only been furthered by the public health emergency (PHE), and many physicians and practices are still recovering financially. This reduction could impact small physician practices and lead to further consolidation in the years ahead. To read PAI’s full letter to CMS, please click here. PAI plans to continue its advocacy on the Hill and to administrators and will keep members up to date on upcoming regulations. 

Below are key highlights from the Final Rule:

OSHA and CMS Release Vaccine Mandates for Healthcare Staff and Employers with Greater than 100 Employees

CMS released their regulations governing healthcare staff vaccination requirements on November 4. The CMS IFR does not require daily or weekly testing of unvaccinated individuals because healthcare worker vaccinations are required by January 4, 2022, instead. CMS stated that they "have reviewed scientific evidence on testing and found that vaccination is a more effective infection control measure.” However, facilities covered by the IFR may exercise testing precautions voluntarily in addition to vaccination. CMS notes that nothing in this rule removes the obligation on providers and suppliers to meet existing requirements to prevent the spread of infection, which in practice means that these entities may also conduct regular testing alongside such actions as source control and physical distancing. 

On November 4, OSHA published their Emergency Temporary Standard (ETS) and preamble on COVID-19 vaccination. This ETS establishes binding requirements on large employers (i.e., those with 100 or more employees) to help protect employees from contracting COVID-19 in the workplace. Covered employees must have received their final dose of a vaccine series by January 4, 2022 or be subject to weekly COVID-19 testing. This milestone ETS is expected to cover 84 million employees.

The report states that Medicare’s short-term finances were significantly affected by the pandemic but that such impacts are not expected to have a large effect on the trust funds beyond 2024. That said, the report cautions that the pandemic has created an unusual amount of uncertainty regarding the Trustees’ long-term financial projections. The report’s release comes amid congressional consideration of various policies to expand Medicare benefits by adding dental, vision, and hearing benefits to fee-for-service Medicare. It remains to be seen whether this updated data will impact the Biden Administration’s push for the inclusion of these benefits in the forthcoming reconciliation package currently being constructed.

PAI is concerned with the results of this annual report. Physician payment update amounts are specified for all years in the future and these amounts are not expected to keep pace with the average rate of physician cost increases. These rate updates could be an issue in years when levels of inflation are high and would be problematic when the gap between the price updates and physician costs becomes large. PAI is closely monitoring this issue for its members. 

MedPAC Dives Back into Exploration of Outpatient Site-Neutral Payments

On November 9, MedPAC announced they will continue exploring aligned payment for care provision in outpatient settings (i.e., ambulatory surgical centers, physician offices, and hospital outpatient departments). The differences in fee-for-service reimbursement for each category of outpatient setting can lead to industry consolidation, as physicians in higher-cost settings have incentives to acquire physicians in lower-cost settings and bill at higher payment rates. To address these issues, MedPAC is investigating which site of service should be used to set payment rates going forward. 

PAI’s research illustrates the disparity between providing services in a hospital outpatient setting instead of in a physician office and supports continued investigation by MedPAC of the cost discrepancies of delivering care in different settings.

CMS Announces Revised Application of MIPS Automatic Extreme and Uncontrollable Circumstances Policy

On November 10, CMS announced they are applying the MIPS automatic extreme and uncontrollable circumstances (EUC) policy to all individually eligible MIPS eligible physicians for the 2021 performance year. The automatic EUC policy only applies to MIPS eligible physicians who are eligible to participate in MIPS as individuals. The automatic EUC policy does not apply to groups, virtual groups, or APM Entities. MIPS eligible physicians who are eligible to participate in MIPS as individuals do not need to take any action to have the automatic EUC policy applied. Individuals will be automatically identified and will have all four MIPS performance categories reweighted to 0% and receive a neutral payment adjustment for the 2023 MIPS payment year unless they 1) submit data in two or more performance categories, or 2) have a higher final score from group or APM Entity participation. 

PAI applauds CMS for their revised application of the MIPS EUC policy. PAI has long advocated for the automatic application of the EUC policy for the 2020 and 2021 performance year. In the midst of trying to manage and survive COVID-19, physicians require regulatory relief and reduced administrative burden.

CMS Releases CY 2022 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Final Rule 

On November 2, CMS released the 2022 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Final Rule (fact sheet, full rule) which includes updates on policy changes for Medicare payments under the prospective payment system and ambulatory surgical center payment system on or after January 1, 2022.



PAI supports the use of CY 2019 data to approximate expected costs for CY 2022 OPPS rate-setting purposes, so long as an appropriate inflator is applied to adjust for inflation and quickly rising costs. However, PAI is concerned with the civil monetary penalties included in the Price Transparency Rules. These monetary penalties will unfairly target the least financially stable institutions and could lead to further consolidation in the future.