Final 2024 Physician Fee Schedule Reflects System’s Flaws; Includes Some Wins

First, the bad news: The final 2024 Physician Fee Schedule rule rolled out by the U.S. Centers for Medicare & Medicaid Services contains virtually the same cuts to payment under Medicare Part B as were in the proposed rule. But this time around, there’s also good news: Many of the more positive elements in the proposed rule also remain, as does the possibility for future favorable shifts, particularly around PTA supervision. While final rule’s 3.4% reduction to the conversion factor shows the agency continuing down an unsustainable path that will require both short- and long-term congressional intervention, several of the provisions set to be put in place Jan. 1 are clear advocacy wins for APTA and its supporters.

Here’s an overview of the major elements of the final rule. (For additional insights, join us on Nov. 16 for a live webinar on the final rule. It’s free for APTA members and available at a significantly reduced rate for non-members.)

The conversion factor cuts are harmful, but they could’ve been worse, and KX modifier thresholds were adjusted.
The final rule includes another decrease in the conversion factor, one of the elements used in calculating final payment amounts for various codes. This time around, the conversion factor as initially reported by CMS is $32.7375, a 3.4% decrease from the $33.8872 conversion factor adopted in 2023. The impact of the cut is far-reaching, affecting more than 27 specialties including physical therapy.

While still damaging, the cut was less than the anticipated 4.2% drop. The reason, according to CMS, is that it reconsidered utilization estimates of a particular evaluation and management add-on code, which in turn allowed the agency to lessen the cuts to the conversion factor. CMS must make the reductions to the conversion factor to offset the evaluation and management increases in order to maintain budget neutrality.

Now that the final rule has been issued, the only possibility for relief from the cuts comes by way of Congress, which could step in with last-minute appropriations, as it did for the past three years.

APTA will be advocating for a similar short-term fix this year. At the same time, the association will continue its press for long-term solutions, pointing to the cuts as symptomatic of an outdated payment system. APTA, APTA Private Practice, the American Occupational Therapy Association, and the American Speech-Language-Hearing Association have presented Congress with a set of policy principles as a first step toward an overhaul.

Also in the final rule: CMS set the threshold for use of the KX modifier — the modifier indicating that a service meets the criteria for a payment ceiling exception — at $2,330 for PT and speech-language pathologist services combined, and $2,330 for occupational therapy services. The Medical review threshold remains at $3,000 through 2027.

The practice expense elements for 19 therapy codes could potentially increase.
In early 2023, APTA made the case to CMS that several codes frequently used by PTs are subject to a kind of double jeopardy that unfairly cut values. The association offered two arguments: First, that   codes including therapeutic exercises, neuromuscular reeducation, gait training, and therapeutic activities were undervalued by the AMA Relative Value Scale Update Committee, or AMA RUC, that sets payment rates typically adopted by CMS; and second, that these codes simultaneously were subject to reductions associated with the Multiple Procedure Payment Reduction system. APTA asserted that both devaluations are being made for the same ostensible reason — to account for a duplicative practice expense when multiple codes are used on the same day. APTA told CMS that discounting codes twice for the same rationale didn’t make sense.

CMS listened, and in the final rule directs the AMA RUC to re-review its earlier value recommendations — a provision unchanged from the proposed rule. The list of affected codes can be found on Page 96 of the final rule. The codes up for reconsideration have already been added to the AMA RUC’s January meeting agenda; APTA believes that the values of many of the codes will be increased.

New caregiver training codes are on the books.
In another win for APTA, CMS finalized the adoption of codes that would allow PTs, OTs, SLPs, and other providers to bill for providing training to caregivers when a patient with a functional deficit is not present. APTA created the codes, submitted them for AMA consideration, and argued for their valuation levels at the AMA RUC level.

The final rule includes a definition of caregiver that’s broader than CMS’ earlier definition, which had limited the term to relatives of the beneficiary. The new definition, strongly supported by APTA, expands “caregiver” to include “an adult family member or other individual who has a significant relationship with, and who provides a broad range of assistance to, an individual with a chronic or other health condition, disability, or functional limitation,” and “a family member, friend, or neighbor who provides unpaid assistance to a person with a chronic illness or disabling condition.”

The codes, found on Page 285 of the final rule, will be considered “sometimes therapy” and thus not subject to the Multiple Procedure Payment Reduction system. Despite APTA’s advocacy otherwise, the codes won’t be eligible for use in association with telehealth.

CMS provided clarifications on telehealth coding and reporting remote therapeutic monitoring treatment management codes.
CMS followed through from the proposed rule and corrected its mistake that excluded PTs in institutional settings from participating in the telehealth extension that is in place through 2024. Under the final rule, these PTs can participate in telehealth in the same way as PTs in private practice settings — by using the same 95 modifier that they’ve been using since the beginning of the public health emergency. The CMS decision settles, for now, the issue of whether PTs would be required to use new Place of Service codes that CMS adopted. They aren’t.

Also in the final rule, CMS responded to a criticism from APTA that requiring 16 days of monitoring for codes 98980 and 98981 — treatment management codes that account for time spent in a calendar month — isn’t appropriate for these types of services. CMS agreed, and clarified that the 16-day collection requirement doesn’t apply to the two codes.

The rule features more positive movement on PTA supervision, including deeper consideration of general supervision in private practice settings, an extension of virtual supervision allowances, and relaxation of supervision associated with RTM.
The proposed rule included a request for comments on the possibility of moving away from direct supervision of PTAs and occupational therapy assistants in private practice — currently the only setting under Medicare in which 100% on-site supervision is required — in favor of general supervision. APTA made this topic a central feature of its comments to CMS on the proposed rule and urged members to do the same in their individual letters to the agency.

While the final rule doesn’t change the current requirement, it does include a lengthy discussion of the evidence APTA and other commenters provided, including reference to a report commissioned by a coalition of provider groups including APTA that found that a change to general supervision of PTAs in private practice settings could result Medicare savings of $271 million over 10 years. CMS offered its standard language on comment solicitations in the final rule, stating that “we will take these comments into consideration for possible future rulemaking” — but the sheer length of the discussion in the rule may be a good sign.

The final rule also follows through on a proposal to extend virtual supervision of PTAs and OTAs through the end of 2024, and finalizes a general supervision-only requirement for PTAs performing remote therapeutic monitoring regardless of setting.

PTs get their first-ever opportunity to participate in the MIPS Value Pathways Program by way of the first cost measure they’ll be able to report — and will begin MIPS reporting on interoperability.
The rule finalizes several proposed changes to the PT’s role in the CMS Quality Payment Program, or QPP, specifically within the Merit-based Incentive Payment System, or MIPS, and its MIPS Value Pathways program, or MVP.

First, the rule incorporates a new, APTA-recommended MVP based on musculoskeletal care, with a single — and also first-ever — cost measure PTs can use on low back pain. The rule also calls for APTA and other entities to submit existing measure recommendations through the MVP maintenance process, and to work with measure developers to create additional measures for inclusion in the MIPS measure inventory.

Second, CMS will no longer exempt physical therapy practices of 16 or more clinicians from the promoting interoperability category of MIPS, which will in turn require practices to have certified electronic health records technology in place for at least six months in 2024 (practices of 15 or fewer clinicians will still qualify for the exemption). Bottom line: All clinicians (except for clinical social workers), including PTs, will have their MIPS scoring weighted normally in the interoperability category in the 2024 performance year. The change wouldn’t apply to hospital-based clinicians and clinicians in small practices. APTA will issue extensive guidance on how to comply with the new QPP policies in the coming weeks.

Want to take a deeper dive into the 2024 fee schedule?  Join us on Nov. 16, 2023, for a special edition live webinar led by APTA staff: CMS 2024 Physician Fee Schedule Final Rule. The event, which offers CE credits, is free to APTA members and available to non-members at a significantly reduced rate. Register today and spread the word.