ADVI Instant: CMS Releases Physician Fee Schedule Proposed Rule for 2024

On July 13, 2023, the Centers for Medicare and Medicaid Services (CMS) issued the 2024 Medicare Physician Fee Schedule (PFS) proposed rule and other revisions to payment policies under Medicare Part B (link) with an accompanying fact sheet (link).

Notably, this year’s PFS Proposed Rule addresses proposals regarding refunds for discarded drug units, changes to telehealth service classifications, and expansion of additional payment for at-home administration for certain Part B preventable vaccine administration services. CMS also includes a request for information on self-administered drug coverage policies and complex non-chemotherapy administration services.

Comments are due on September 11, 2023.

Below, ADVI provides a high level overview of the proposed rule. Please contact your ADVI Account Manager for additional details.

Conversion Factor Update and Rate Setting Impact
The proposed conversion factor for CY 2024 is $32.75, a $1.14 decrease (or 3.34 percent decrease) from $33.89 in CY 2023.

Table 104 includes a breakdown by specialty of estimated payment changes based on the proposed rule. The following is a snapshot of specialties with the greatest increase and decrease in estimated payments.

Top Specialties with Increases in Estimated Allowed Charges for CY 2024Top Specialties with Decreases in Estimated Allowed Charges for CY 2024
SpecialtyTotal ImpactSpecialtyTotal Impact
Endocrinology+3%Interventional Radiology-4%
Family Practice+3%Nuclear Medicine-3%
Clinical Psychologist+2%Vascular Surgery-3%
(6 other Specialties)+2%Radiation Oncology & Radiation Therapy Centers-2%
13 other specialties-2%

The proposed conversion factor accounts for the expiration of a 2.5 percent increase provided by the Consolidated Appropriations Act (CAA) of 2023, the statutorily required update to the conversion factor of 0.00 percent, the –2.17 percent budget neutrality adjustment to account for changes in Relative Value Units, and the 1.25 percent payment increase as provided by the CAA, 2023.

Telehealth Services
In the CY 2021 PFS rule, CMS created a new category of telehealth services—Category 3—describing services that are added to the Medicare Telehealth Services List on a temporary basis following the end of the PHE through December 31, 2024.

For CY 2024, CMS received 31 requests to add services to the Medicare telehealth list on a permanent basis, but proposes to add or keep them on a Category 3 basis. CMS proposes to add GXXX5 Administration of a standardized, evidence-based Social Determinants of Health Risk Assessment tool, 5-15 minutes to the Medicare telehealth list on a permanent basis.

For CY2024, CMS proposes to revise their telehealth service designations to two categories instead of the current Categories 1 through 3. CMS proposes instead, creating new “permanent” and “provisional” categories of telehealth services. Current Category 1 and 2 telehealth services would be placed in the “permanent” category while temporary Category 2 or Category 3 telehealth services would be assigned as “provisional.”

CMS also proposes to implement several telehealth provisions of the Consolidated Appropriations Act, 2023 until December 31, 2024 including:

  • Extending the scope of telehealth originating sites to include the beneficiary’s home;
  • Including qualified occupational therapists, physical therapists, speech language pathologists and audiologists as telehealth practitioners;
  • Delaying the requirement for in-person visits for beneficiaries receiving mental health telehealth services
  • Permitting coverage and payment of audio-only telehealth services
  • Define “direct supervision” to allow the supervising practitioner to be available through real time audio and video interactive communication. CMS is requesting comments on whether this definition should be extended beyond December 31, 2024

Finally, CMS proposes, starting January 1, 2024, to pay for telehealth services furnished to beneficiaries in their home at the non-facility PFS rate.

Evaluation and Management (E/M) Services
In the CY 2021 PFS final rule CMS created an add-on code for complex E/M visits, G2211 to help account for additional resources required for primary care related to a patient’s single, serious or complex condition. Certain stakeholders were concerned about the budget neutrality adjustment required if G2211 were to be implemented and the potential redistributive impact on PFS payment broadly and in the Consolidated Appropriations Act of 2021, Congress prohibited CMS from paying services under G2211 before January 1, 2024.

With the moratorium on payment for G2211 set to expire on December 31, 2023, CMS proposes to begin payment for this code in CY 2024. However, CMS proposes that G2211 would not be payable when the E/M visit is reported with payment modifier -25, which denotes a separately billable E/M service by the same practitioner furnished on the same day as a procedure or other service. With this proposal, CMS estimates that G2211 will be billed with 54 percent of all outpatient and office E/M visits, less than their original estimate of 90 percent.

Part B Drug related proposals
Requiring Manufacturers of Certain Single-Dose Container or Single-Use Package Drugs to Provide Refunds With Respect to Discarded Amounts (“wastage”)
CMS will issue an initial refund report to manufacturers by December 31, 2024, which will include all quarters of calendar year 2023. An initial refund report will be issued by December 31, 2023 and will include information based claims data from 2023 Q1 and Q2. In the future, CMS intends to issue refund reports around the same time as Part B and Part D inflation rebate reports. Starting in 2025, CMS will issue refund reports for the previous calendar year by the end of September. Refund reports will include data for 8 quarters, 4 quarters from the previous year and 4 quarters from 2 calendar years prior. Starting in September 2025, reports will include the total number of units of billing and the payment code of the drug as well as discarded units during the previous calendar year.

The proposed payment deadline for manufacturers is 2 calendar months after the report is issued, allowing time for review and dispute. When there is a dispute, the manufacturer would have 30 days to pay the refund after the dispute is resolved.

CMS proposes that the refund amount owed by a manufacturer is the amount equal to the estimated amount by which:

  • The product of:
    • The total number of units of the billing and payment code for the discarded drug during the quarter
    • The amount of payment determined for a drug/biological under section 1847A(b)(1)(B) or (C) of the Act as applicable for a quarter
  • Exceeds the difference of:
    • An amount equal to the applicable percentage of the estimated total allowed charges for such a drug (less the amount paid for packaged drugs) during the quarter, and
    • The refund amount previously paid for the refundable drug for the given quarter

If the refund calculation from the above formula is a negative number, CMS proposes that the amount will be netted out of any refund owed for other updated quarters or new quarters.

If a drug or biological has multiple manufacturers, the financial responsibility for the refund is proposed to be split by dividing the sum of the individual manufacturer’s billing units sold during the refund quarter for all the manufacturer’s NDCs assigned to the billing and payment code by the sum of all manufacturers’ billing units sold during the refund quarter for all NDCs of the refundable drug assigned to the billing and payment code – all referenced in ASP data submissions.

Multiple Manufacturers Example (Table 18 in proposed rule):

NDCManufacturerRefund Quarter Sales
(billing units)
Proportion of Sales
12345-6789-01Manufacturer 15,00023.81%
23456-7890-01Manufacturer 26,00028.57%
34567-8901-01Manufacturer 310,00047.62%

Proposed Changes for Low Dose Drugs:

  • CMS proposes to increase the applicable percentages for low volume dose drugs (drugs with a volume less than 0.4mL). Refundable drugs with labeled doses that are contained within 0.1mL would have an increased applicable percentage of 90 percent, and refundable drugs with labeled doses that are contained with 0.11 – 0.4mL would have an increased applicable percentage of 45 percent.
  • Orphan drugs that are administered to fewer than 100 unique Medicare fee-for-service beneficiaries during a calendar year would have an increased applicable percentage of 26 percent.
  • If a manufacturer believes that a particular drug should be re-evaluated for an adjusted applicable percentage for unique circumstances, CMS proposes a process by which the Agency would review the written request with supporting documentation. 

Provisions from the Inflation Reduction Act Relating to Drugs and Biologicals Payable Under Medicare Part B (§§ 410.152, 414.902, 414.904, 489.30)
CMS proposes to limit payment for single source drugs or biologicals to WAC +3 percent during an initial period when ASP data is not available. Similarly, CMS also proposes that for new biosimilars furnished on after July 1, 2024 during the initial period when ASP data is available, payment will be limited to the lesser of:

  • An amount not exceed 103 percent of the WAC of the biosimilar or the Medicare Part B drug payment methodology in effect on November 1, 2003, or
  • 106 percent of the lesser of the WAC or ASP of the reference biological, or during the price applicability period, 106 percent of the maximum fair price of the reference biological

Limitations on Monthly Coinsurance and Adjustments to Supplier Payment Under Medicare Part B for Insulin Furnished Through Durable Medical Equipment
CMS proposes to codify new statutory monthly coinsurance limits of $35 for a 1-month supply and $105 for a 3-month supply for insulin given through covered DME.

Request for Information (RFI): Drugs and Biologicals which are Not Usually Self-Administered by the Patient, and Complex Drug Administration Coding
CMS has received concerns from stakeholders that the self-administered drug list guidance needs to be updated to reflect new circumstances that are currently reflected in the list’s development. Other stakeholders have asked CMS to look at non-chemotherapeutic complex drug administration payment inadequacy. CMS is soliciting comments on both Part B drug payment topics, seeking relevant information that would support revisions that could improve how infusion services should be billed.

Quality Payment Program (QPP)
CMS proposes several changes starting January 1, 2024, related to the QPP. Specifically, CMS proposes:

  • Five new Merit-based Incentive Programs (MIPS) Value Pathways (MVPs) around the topics of Women’s Health, Prevention and Treatment of Infectious Disease, Mental Health and Substance Use Disorder Care, Quality Care for Ear, Nose, and Throat Disorders, and Rehabilitative Support for Musculoskeletal Care,
  • Maintenance updates to the MVP are aligned with development criteria and in consideration of the feedback from interested parties CMS has received through the maintenance process,
  • Updates to previously finalized subgroup policies to help guide clinicians and groups to meaningfully participate in MVPs through subgroup reporting,
  • Updates to performance category measures and activities, including the quality performance category, cost performance category, improvement activities performance category, and promoting interoperability performance category,
  • Updates to the MIPS final scoring methodology, including performance category scores, cost improvement scoring, MIPS payment adjustments, MIPS targeted review, third party intermediaries, and public reporting on compare tools,
  • To establish the Medicare Clinical Quality Measures (CQMs) for Accountable Care Organizations Participating in the Medicare Shared Savings Program (Medicare CQMs) as a new collection type for Shared Saving Program ACOs under the Alternative Payment Model (APM) Performance Pathway (APP)

Clinical Laboratory Fee Schedule (CLFS)
Updates to Protecting Access to Medicare Act (PAMA) Reporting
In accordance with section 4114 of the Consolidated Appropriations Act (CAA) of 2023, CMS proposes to modify the next PAMA data collection period to run from January 1, 2024, through March 31, 2024, with the next private payor rate-based CLFS update for these tests set to go into effect on January 1, 2025, instead of January 1, 2024.

Additionally, CMS proposes to change requirements for the phase-in of payment reductions to reflect the amendments in the CAA of 2023, specifically § 414.507(d) to indicate that for CY 2023, payment may not be reduced by more than 0 percent as compared to the amount established for CY 2022, and for CY 2024 through CY 2026, payment may not be reduced by more than 15 percent, as compared to the amount established in the prior year.

Further, CMS proposes to assess the impact of delayed reporting and subsequent implementation of updated CLFS rates by calculating weighted medians of private payor rates based on new data and comparing the revised rates to the current rates. With respect to data reported in the 2017 data collection period, CMS estimates that 119 tests may be subject to the full 15% phase-in reduction in CY 2024.

Medicare Coverage for Opioid Use Disorder (OUD) Services Furnished by Opioid Treatment Programs (OTPs)
CMS proposes to extend existing flexibilities through the end of 2024 for periodic assessments that are carried out via audio-only telecommunications. Under this proposal, CMS would allow OTPs to bill Medicare under the Part B OTP benefit for furnishing periodic assessments via audio-only telecommunications when video is not available to the beneficiary. Telephone-based (or audio-only) therapy and recovery support services provided by SUD programs have been found to be one of the most common modes of telehealth for treatment of opioid use disorder.

Impact on Health Equity and Patient Access
CMS proposes to provide separate payment for three new services: Community Health Integration services, Principal Illness Navigation services, and the Social Determinants of Health (SDOH) Risk Assessment. Community Health Integration services (proposed new codes GXXX1 and GXXX2) are to address health-related social needs that impact a patient’s medical problems. Principal Illness Navigation services (proposed new codes GXXX3 and GXXX4) are to connect Medicare beneficiaries with high-risk diagnoses (such as cancer) to appropriate clinical and social support resources.

The SDOH Risk Assessment service (proposed new code GXXX5) provides payment for the administration of a SDOH risk assessment tool and the documentation of ICD-10-CM codes Z55-Z65 in a patient’s medical record. CMS proposes to add the SDOH Risk Assessment as an optional element to Annual Wellness Visits (AWVs) with an additional payment, and to provide payment for SDOH Risk Assessments performed on the same day as an E/M visit.

Medicare Part B Payment for Preventative Vaccine Administration Services
Starting in June 2021, CMS provided additional payments for in-home COVID-19 vaccine administration for patients who have difficulty leaving their home to receive the vaccine or are difficult to reach due to disability or socioeconomic and geographic barriers. Starting January 1, 2024, CMS proposes to maintain this additional payment and expand this payment policy to at-home administration of the pneumococcal, influenza, and hepatitis B vaccines (all included in the Part B preventative vaccine benefit). The proposed additional payment rate for in home vaccine administration services is the payment rate established on January 1, 2022 ($35.50) adjusted annually by the Medicare Economic Index.

ADVI will continue monitoring developments and next steps. This is a delayed release. ADVI Instant content is distributed in real time for retainer clients. Get in touch to learn more about how we can support your commercialization, market access, and policy needs.

Interested in getting in touch with Lindsay?

Lindsay Bealor Greenleaf, JD, MBA

Solution Leader, Federal and State Policy