From Surgical Codes to Telemedicine: Highlights of the 21st Century Cures Act

Gregory R. Zinser

Vice President, Anesthesia Business Consultants, LLC

The 21st Century Cures Act (Cures Act), signed into law on December 13, 2016, contains $6.3 billion in provisions that will fund federal agencies as they work to speed the arrival of diagnostic tools and disease therapies and improve mental health treatment. Some policymakers have proclaimed it the most important legislation passed in 2016.

According to former Vice President Joe Biden, "The 21st Century Cures Act is going to harness the best minds, science and technology to tackle some of the biggest healthcare challenges today. It gives millions of Americans hope.”

Overall, the Cures Act represents an effort to achieve Medicare and Medicaid program savings while improving access to new technologies and healthcare services for program beneficiaries. The Cures Act includes important provisions relating to electronic health records (EHRs), medical research, mental health reform and telemedicine, in addition to several potentially high-impact Medicare reimbursement policy changes.

The Medicare reimbursement changes are set to take effect starting this year and into 2019, and include site-neutral payment exceptions, adjustments to the penalty calculation formula under the Hospital Readmissions Reduction Program, new codes to bridge outpatient and inpatient surgical procedures, and suspension of the 25 Percent Rulefor long-term care hospitals (LTCHs).

Site-Neutral Payments

Prior to the Cures Act, the site-neutral Medicare reimbursement policy required the Centers for Medicare and Medicaid Services (CMS) to pay off-campus provider-based outpatient departments under the Medicare Physician Fee Schedule rather than the outpatient payment system.

The new site-neutral payment rules that became effective on January 1, 2017 under the Cures Act will reduce off-campus provider-based department claims reimbursement rates by about 50 percent, with three notable exceptions:

1. Off-campus provider-based departments that had already billed for covered services under the Medicare outpatient payment system before November 2, 2015 can still receive outpatient rates.
2. Hospitals with a “binding written agreement with an outside unrelated party for the actual construction of such department” dated before November 2, 2015 will be exempt.
3. Outpatient departments at cancer hospitals are exempt from site-neutral payment reductions.

Hospital Readmissions Reduction Program

Through the Medicare value-based reimbursement program, hospitals face up to a three percent payment cut if they have excessive readmissions (compared to a national mean readmissions rate) within 30 days of discharge for certain conditions.

Citing a December 2016 report from the Health and Human Services (HHS) Office of the Assistant Secretary for Planning and Evaluation (ASPE), critics of the program have argued that hospitals treating large proportions of dual-eligible beneficiaries, such as safety-net hospitals, are disproportionately penalized, since the patient population has higher readmission rates. That report stated that dual-eligible beneficiaries had 24 to 67 percent higher odds of a hospital readmission across conditions in the Hospital Readmissions Reduction Program.

In support of that position, the Medicare Payment Advisory Committee (MedPAC) has also recommended comparing hospitals with similar patient populations to each other, rather than a national mean readmission rate, to level the playing field.

In response to these recommendations, starting in 2019, the Cures Act requires HHS to divide hospitals into groups based on similar dual-eligible beneficiary populations and apply “a methodology in a manner that allows for separate comparison of hospitals within each such group, as determined by the Secretary.”

Surgical Procedure Codes

With the intention of building a crosswalk between Medicare inpatient and outpatient surgical codes, the Cures Act requires HHS to develop Healthcare Common Procedure Coding System (HCPCS) versions for no fewer than 10 surgical Medicare Severity-Diagnosis Related Groups (MS-DRGs) by January 1, 2018. More specifically, the Cures Act states that: “Not later than January 1, 2018, the Secretary shall develop HCPCS versions for MS–DRGs that are similar to the ICD–10–PCS for such MS–DRGs such that, to the extent possible, the MS–DRG assignment shall be similar for a claim coded with the HCPCS version as an identical claim coded with an ICD–10–PCS code.”

While additional HCPCS codes do not explicitly change Medicare reimbursement policies, the new codes could impact the rates hospitals receive for common surgical procedures, considering that Medicare reimbursement for a short inpatient hospital stay is usually higher than similar outpatient stays. The creation of the additional crosswalk codes is consistent with steps CMS has already taken to prevent facilities from improperly billing for more lucrative short inpatient stays, most notably the Two Midnight Rule established in 2014 to curb hospitals from using short inpatient stays when the service should have been billed as outpatient.

Long-Term Care Hospitals and 25 Percent Rule Relief

The 25 Percent Rule designed by CMS in 2005 establishes a 25 percent limit on the proportion of patients an LTCH can admit from one hospital during the LTCHs cost reporting period. Under the rule, any LTCH that exceeded the 25 percent threshold would face Medicare reimbursement cuts. The rule would have reduced Medicare spending by $90 million, but some healthcare stakeholders, including the American Hospital Association (AHA), opposed the payment cuts. The AHA argued in October 2016 that the regulation “arbitrarily penalizes LTCH admissions based on the origin of an LTCH referral, with complete disregard for the patient’s medical necessity for LTCH services.”

Congress has delayed the 25 Percent Rule’s implementation since the patient threshold was first finalized, and under the Cures Act, Congress extended the CMS enforcement prohibition of the 25 Percent Rule on LTCH's for another year.

Other notable provisions of the Cures Act include:

Electronic Health Records

"The development of new drugs and devices is meaningless unless they are delivered to the right patients at the right time," according to a House statement. "Cures will help improve delivery by ensuring electronic health record systems are interoperable for seamless patient care and help fully realize the benefits of a learning health care system.”

The reporting provisions of the Cures Act require that EHRs include criteria on product security, user-centered design and interoperability, and certification that the EHR conforms to testing.

The Cures Act also calls for a national Application Programming Interface (API) standard to cover authentication, security, auditability and deeper data interoperability, to be completed by stakeholders and published within one year.

In terms of enforcement, the law includes significant penalties for vendors who participate in information blocking—“that which interferes with, prevents or materially discourages access, exchange or use of electronic health information.” Vendors can be fined up to $1 million per violation and would potentially lose their EHR certification if their EHR is not deemed interoperable.

Medical Research Initiatives

The Cures Act undoes two obstructive policies relating to medical research—one dealing with paperwork and the other with scientific meetings.

It eliminates the Paperwork Reduction Act requirements for National Institutes of Health (NIH) research—a step that will help speed research initiation and knowledge generation. The Paperwork Reduction Act of 1995 required multiple levels of government review and public comment on any set of questions that NIH researchers proposed to ask of 10 or more persons in a scientific study supported by contracts, the Intramural Research Program and many cooperative agreements.

This process rarely resulted in substantive changes, but could have delayed the start of research for up to nine months, dissuading investigators, especially trainees, from undertaking important studies. Cures Act provisions also support early-stage researchers. Today, the average age of a researcher receiving their first independent research grant from the NIH is 42. NIH has been working hard to create additional opportunities for younger researchers, including dedicated awards for new and early-stage investigators.

Though such efforts have proven valuable for encouraging individual researchers, they have not resulted in a lowering of the average age of independent investigators within the full NIH research portfolio. The Cures Act will establish an office at the NIH to promote policies aimed at improving coordination and analysis of opportunities for new and early-stage investigators, as well as to attract, retain and develop emerging scientists in priority research areas.

Such efforts will include strategies for developing early-stage researchers who are women or members of other groups that are traditionally underrepresented in biomedical research careers. To provide further support to early-stage researchers, the Cures Act authorizes the establishment of additional programs to assist in the repayment of student loans and raises the cap on the repayment assistance available to researchers.

The Cures Act provides multiyear funding for three innovative scientific initiatives launched by the Obama administration: the Brain Research through Advancing Innovative Neurotechnologies (BRAIN) Initiative, the Precision Medicine Initiative (PMI) and the Beau Biden Cancer Moonshot, which also includes a promising new research initiative focused on regenerative medicine.

Each of these initiatives has its own set of ambitious goals, but their basic aims are as follows:

• BRAIN is a sweeping effort to build technology and knowledge across an array of disciplines to elucidate how circuits in the brain function in real time and what goes wrong in disease.
• PMI is a transformative research infrastructure that will enable and simplify research across all diseases. Its centerpiece, dubbed All of Us, is a longitudinal cohort study involving one million or more Americans.
• The Beau Biden Cancer Moonshot is a plan to double the rate of progress in the fight against cancer, making more therapies available to more patients, while also improving cancer detection and prevention. The regenerative medicine component focuses on clinical research using adult stem cells, including autologous stem cells, and features an innovative funding mechanism that requires a match from the grant or contract awardee.

Mental Health

Text of the full Cures Act is more than 300 pages, with more than 100 pages dedicated to mental health reform, including the following directives aimed at improving mental health coverage and services:

• Creates a new presidentially-appointed and Senate-confirmed Assistant Secretary for Mental Health and Substance Use Disorders to oversee the Substance Abuse and Mental Health Services Administration (SAMHSA) and coordinate related programs and research across the federal government, with emphasis on science and evidence-based programs, and with the aid of a newly established Chief Medical Officer.
• Requires states to expend not less than 10 percent of their community mental health services block grant funding each fiscal year to support evidence-based programs that address the needs of individuals with early serious mental illness, including psychotic disorders, regardless of the individual’s age at onset.
• Strengthens community response systems with a grant program to create databases on psychiatric beds, crisis stabilization units and residential treatment facilities.
• Directs CMS to outline for states innovative opportunities to use Medicaid 1115 waivers to provide care for adults with serious mental illness.
• Requires the Secretary of Health and Human Services to issue guidance clarifying the circumstances under which healthcare providers and families can share and provide protected information about a loved one with Social Media Information (SMI).
• Requires the Secretary to develop model programs and trainings for healthcare providers to clarify when information can be shared, and trainings for patients and their families to help them understand their rights to protect and obtain treatment information.
• Requires the Government Accountability Office (GAO) to conduct a study on parity enforcement and provide recommendation for increasing enforcement results.
• Provides for further guidance and compliance efforts in mental health parity to ensure insurance providers meet the spirit of the law.
• Requires the assistant secretary to award grants to implement suicide prevention and intervention programs for individuals who are 25 years of age or older, to include screening for suicide risk, suicide intervention services and treatment referrals.

The new law also establishes a coordinating committee of 23 individuals in order to provide “a summary of advances in serious mental illness and serious emotional disturbance research related to the prevention of, diagnosis of, intervention in, and treatment and recovery of serious mental illnesses, serious emotional disturbances, and advances in access to services and support for adults with a serious mental illness or children with a serious emotional disturbance.”

It will also seek to determine what impact federal programs have on “rates of suicide, suicide attempts, incidence and prevalence of serious mental illnesses, serious emotional disturbances, and substance use disorders, overdose, overdose deaths, emergency hospitalizations, emergency room boarding, preventable emergency room visits, interaction with the criminal justice system, homelessness and unemployment.”

John M. Grohol, PsyD, founder of Psych Central, a mental health and psychology network, stated in a recent article that “While this bill goes a long way to addressing some of the problems with the mental healthcare system in the United States, it does little to fix the underlying issues. It does not significantly increase the actual funding to states that provide public mental health care to the indigent and poor. And it doesn’t really do much to help bridge the divide between physical healthcare (delivered through primary care physicians) and mental health, although the new bill does carry a number of provisions to start addressing this issue.”

However, the White House lauded the bill for taking steps to "improve mental health, including provisions that build on the work of the President's Mental Health and Substance Use Disorder Parity Task Force. Like all comprehensive legislation, the bill is not perfect. But the legislation offers advances in health that far outweigh these concerns."

Telemedicine

Medicare coverage of telehealth is currently limited to patients seen at certain clinical facilities, so-called "originating sites" located in health professional shortage areas (HPSAs) or outside of Metropolitan Statistical Areas (MSAs).

Originating sites do not include the patient's home, and telehealth services are primarily limited to professional consultations, psychiatry services and certain end-stage renal disease (ESRD) services. Medicare coverage does not include remote patient monitoring either in the home or other care settings.

Although the statute allows the HHS Secretary to expand coverage to other services, CMS has been very cautious in adopting new telehealth codes. In January, the American Telemedicine Association stated that Medicare does not provide enough billing codes for telehealth services and lobbied for 35 new codes to be added to the Physician Fee Schedule.

To further clarify its intent, the Cures Act also includes the following "Sense of Congress" language.

It is the sense of Congress that:

1. Eligible originating sites should be expanded beyond those originating sites described in 42 U.S.C. 1395m(m); and
2. Any expansion of telehealth services under the Medicare program should:Recognize that telemedicine is the delivery of safe, effective, quality health care services, by a health care provider, using technology as the mode of care delivery;
3. Meet or exceed the conditions of coverage and payment with respect to the Medicare program if the service was furnished in person, including standards of care.

Section 4012 of the Cures Act makes no change to current Medicare coverage of telehealth, but it does require the Medicare Payment Advisory Commission (MedPAC) and CMS to study the issue and submit information to the congressional committees of jurisdiction. By no later than March 15, 2018, CMS must identify and report on those populations of Medicare beneficiaries whose care may be most improved through telehealth expansion, including dual eligibles and those with chronic conditions, and make recommendations regarding how those telehealth services covered by private payers could be included in the Medicare fee-for-service program. It must also report on telehealth activities taking place in the Center for Medicare and Medicaid Innovation (CMMI) and those funded through Section 1115A of the Social Security Act.

It is estimated that 90 percent of large companies already have integrated telemedicine solutions and that by 2020, telemedicine will be a $34 billion industry. Additionally, a recent study by the Federation of State Medical Boards found that telemedicine is currently the most important medical regulatory topic to be addressed. The studies called for in the new legislative directives, along with the Federal Communications Commission’s efforts to fund the buildout of telemedicine networks and explore additional broadband-enabled healthcare solutions, are likely to further encourage telemedicine’s adoption and reimbursement.

Summary

The Cures Act addresses a very broad spectrum of healthcare issues, attempting to strike the proper balance between controlling healthcare costs and ensuring patient access to new technologies and quality healthcare. As Congress and CMS continue their efforts toward that goal with this bill and others sure to follow, it is important for stakeholders to remain fully informed and prepared for changes that could impact both revenues and investments and to engage in the legislative process as opportunities arise.

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