Telemedicine gets another boost in proposed 2021 physician fee schedule

Ingrid Stiver Senior Manager, Health Research Institute, PwC US August 27, 2020

This month, CMS issued a proposed rule on changes to the Medicare physician fee schedule (PFS) for calendar year 2021. The proposed rule extends access to virtual care, adding some services to the Medicare list of telehealth services for reimbursement on a permanent basis; allowing direct supervision virtually by physicians and nonphysician practitioners (NPPs), such as physician assistants and nurse practitioners, of certain services provided to patients; and clarifying the use of remote physiological monitoring (RPM) services for chronic and acute conditions. 

In response to the COVID-19 public health emergency (PHE), CMS made the broad provision of telehealth services to Medicare fee-for-service (FFS) beneficiaries possible in mid-March when it significantly loosened telehealth regulations, temporarily paying clinicians the same rates as for in-person visits to provide various services virtually to Medicare beneficiaries in any location, including their homes. CMS also temporarily added 135 services to the Medicare telehealth services list, more than doubling the number on the list. 

Published by CMS annually, the PFS contains payment rates for physicians, NPPs and technical service providers, like independent diagnostic testing facilities. Since 2003, CMS has added and removed services from the list of telehealth services payable by Medicare under the PFS. 

Historically, CMS has assigned telehealth services payable by Medicare to either category 1, services similar to those already included on the Medicare telehealth list; or category 2, services not similar to those on the Medicare telehealth list but which provide a clinical benefit to the patient, such as reduced rates of complication or decreased pain. 

The proposed rule adds a third category of services, which would remain on the Medicare telehealth list through the end of the calendar year in which the COVID-19 PHE ends. Category 3 services have a potential likelihood of clinical benefit but have not yet shown sufficient clinical benefit to patients. Examples of category 3 services proposed include emergency department visits, psychological and neuropsychological testing, and home visits for established patients. 

The proposed rule also seeks to extend an interim final policy from June that revises the definition of direct supervision of Medicare beneficiaries receiving healthcare services by physicians or NPPs to include the virtual supervision using interactive audio/video real-time communications technology. This interim policy is intended to reduce exposure risk to COVID-19 for patients and providers and increase the capacity of providers to respond to COVID-19. 

Last, the proposed rule states that practitioners may furnish RPM services to remotely collect and analyze data from patients with acute and chronic conditions, clarifying the description of RPM services in the 2019 PFS final rule

Comments on the proposed rule are due Oct. 5. The final rule will take effect Jan. 1

HRI impact analysis

Providers and patients may benefit from RPM services. These services can be used to monitor patients for acute COVID-19 symptoms in their homes. They can also be used to monitor and manage chronic conditions. In a survey conducted in early May, HRI found that nearly 40% of consumers with Medicare, including Medicare FFS and Medicare Advantage, who have a chronic or complex chronic disease as their primary diagnosis had delayed some care during the pandemic and not received it. Getting these patients in for care will be crucial to avoiding worse health outcomes and higher spending in the future. 

Before the COVID-19 PHE, direct supervision usually meant that the physician or NPP was physically present with the beneficiary when the service was provided and in some cases immediately available to assist with the visit or procedure.

In the proposed rule, CMS aims to extend the expanded definition of direct supervision to include virtual supervision but expresses concerns about patient safety and clinical appropriateness of virtual supervision as well as the potential for induced utilization, fraud, waste and abuse, and is seeking comments on these concerns.

The ability to provide direct supervision virtually could continue to be a way to increase capacity for COVID-19 and non-COVID-19 care during the pandemic, especially for quarantined asymptomatic clinicians.   

Telehealth adoption during the COVID-19 pandemic has been strong, with usage by Medicare FFS beneficiaries growing by 13,000%. The temporary expansion of telehealth regulations by CMS has driven this growth. Before the pandemic, Medicare paid for limited telehealth services under limited circumstances: The service had to be conducted in real time via interactive audio and video, and the beneficiary had to be in a medical facility in a designated rural area for the telehealth visit. 

The expanded telehealth regulations are set to lapse at the end of the public health emergency. The proposed rule for the 2021 PFS aims to make some of those changes permanent, adding some services to categories 1 and 2 of the Medicare list of telehealth services permanently.

The proposal also would continue reimbursement through the end of the calendar year in which the COVID-19 PHE ends for the proposed third category of telehealth services that have a potential clinical benefit but have not yet sufficiently demonstrated that benefit.

By labeling services as category 3 and extending reimbursement for those services, CMS is allowing more time to collect data on those services and evaluate their clinical benefit in order to determine whether to add them permanently to the Medicare list of telehealth services. 

While CMS has authority to add services to the Medicare list of telehealth services permanently, it cannot permanently remove the geographic and site-of-service restrictions outlined in section 1834(m) of the Social Security Act. CMS was able to waive these restrictions for the duration of the PHE under section 1135(b) of the act. Under current law, once the PHE ends, Medicare reimbursement of telehealth services will once again be limited.

Legislators are looking to permanently expand access to telehealth services beyond rural areas and facilities. In July, Rep. Mike Thompson, D-Calif., along with members of the House telehealth caucus, introduced a bill that would expand Medicare telehealth sites to include federally qualified health centers, expand telehealth beyond designated rural areas and allow telehealth to continue to be delivered in the home.

Read our research

Contact us

Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Ingrid Stiver

Senior Manager, Health Research Institute, PwC US

Erin McCallister

Senior Manager, Health Research Institute, PwC US

Follow us