The Centers for Medicare and Medicaid Services (CMS) issued proposed regulations this week on a variety of issues. This bulletin summarizes two of the proposed rules that will be of particular interest to hospitals and physicians and other practitioners. The first is a proposed new billing code to be used by physicians and qualified nonphysician practitioners providing post-discharge transitional care management services to Medicare beneficiaries. The second is a proposed rule requiring a written order for certain items of durable medical equipment (DME) to be issued by a physician documenting that a physician or advanced practitioner has had a face-to-face encounter with the Medicare beneficiary.

New Billing Code for Post-Discharge Transitional Care Management Services

CMS has proposed a new billing code that could be used by physicians and qualified nonphysician practitioners providing post-discharge transitional care management services to patients discharged from a hospital or other institutional setting. CMS believes that the successful transition of a beneficiary from care furnished by a physician in the hospital to care furnished by the patient’s primary care physician or qualified nonphysician practitioner could avoid adverse events such as readmissions or subsequent illnesses, improve beneficiary outcomes and avoid a financial burden on the health care system.

CMS recognizes, however, that care coordination post-discharge involves many non-face-to-face care management services that currently are bundled into the payment for face-to-face evaluation and management (E/M) visits. Moreover, Medicare does not pay for services furnished to parties other than the beneficiary, for example, communication with caregivers, telephone calls, medical team conferences or prolonged services without patient contact. CMS agrees with the physician community that the current E/M codes represent the typical outpatient office visit and do not reflect the significant care coordination activities that need to occur when a patient transitions from institutional to community-based care, including establishing or revising a plan of care for the beneficiary after discharge.

The proposed code would describe all non-face-to-face services related to the transitional care management furnished by the community physician or qualified nonphysician practitioner within 30 calendar days following the date of discharge from an inpatient acute care hospital or other institutional setting. These services would include non-face-to-face care management services furnished by clinical staff members or office-based care managers under the supervision of the community physician or qualified nonphysician practitioner.

Not only will the proposed rule compensate community physicians for care coordination and case management services for patients transitioning back to the community after a hospital stay, it may also indirectly benefit discharging hospitals by reducing readmissions following discharge as a result of better care coordination post-discharge. Beginning in FY 2013, a portion of Medicare’s payment amounts for inpatient services to hospitals will be reduced based on the hospital’s excess Medicare readmissions for heart attack, pneumonia or congestive heart failure.

DME Face-to-Face Encounters and Written Orders Prior to Delivery

The Affordable Care Act (ACA) requires a written order for certain DME items to be issued by a physician documenting that a physician, physician assistant (PA), nurse practitioner (NP) or clinical nurse specialist (CNS) has had a face-to-face encounter with the beneficiary to reduce the risk of fraud, waste and abuse by ensuring that the beneficiary’s condition warrants the covered DME item.

To implement this statutory requirement, CMS has proposed a rule that requires, as a condition of payment for certain covered DME items, that a physician must have documented and communicated to the DME supplier that the physician, PA, NP or CNS has had a face-to-face encounter with the beneficiary no more than 90 days before the order is written or within 30 days after the order is written. This is consistent with the Medicare and Medicaid home health face-to-face requirements.

CMS proposed a list of DME items that would require a written order prior to delivery. It initially considered making all DME items (including prosthetic and orthotic items) subject to the face-to-face encounter requirement, but instead proposed a more limited criteria-driven list to balance the statutory intent to establish a face-to-face requirement to prevent waste, fraud and abuse with concerns that including all items might have an undue negative effect on practitioners and suppliers. The initial list includes DME products only; CMS will use future rulemaking to apply the ACA to prosthetics and orthotics.