News & Insights


December 7, 2020

Health Headlines – December 7, 2020

CMS Finalizes the Physician Fee Schedule Rule for Calendar Year 2021 – On December 2, 2020, CMS issued a final rule updating the payment policies and rates for services to be furnished under the Medicare Physician Fee Schedule (PFS) in calendar year (CY) 2021.  The final rule includes significant rate increases for evaluation and management services (and a corresponding budget-neutrality adjustment for all other services), an expansion of the telehealth services covered by Medicare, an expansion to the range of covered services for non-physician practitioners, and revisions to the definition of “direct supervision” to include virtual presence for the remainder of the public health emergency.

Evaluation and Management Services

CMS is implementing changes to the CPT coding framework for evaluation and management (E/M) services in accordance with recommendations by the American Medical Association (AMA).  It is projected that these changes will significantly increase payments for E/M services.  As described by the AMA, these changes are intended to “better describe and recognize the resources involved in clinical office visits as they are performed today.”  

CMS has implemented a budget neutrality adjustment to account for these changes.  In CY 2021, the conversion factor applicable to all payments under the PFS will be $32.41—a decrease of $3.68 from the CY 2020 PFS conversion factor of $36.09.  Commenters, including the AMA, roundly opposed this adjustment, stating that it would impose a significant financial burden on health care professionals—particularly those who do not report office visit codes.  CMS nonetheless decided that it was required by statute to impose a budget neutrality adjustment. 

Changes to Telehealth Services

In the final rule, CMS added nineteen services to the list of Medicare-covered telehealth services for CY 2021.  The new services include seven permanent additions and twelve temporary additions that will remain on the list for the remainder of the public health emergency. 

The seven permanent additions include Group Psychotherapy (CPT code 90853), Psychological and Neuropsychological Testing (CPT code 96121), and Prolonged Services (HCPCS code G2212).  The twelve temporary additions include Home Visits, Established Patient (CPT codes 99349-99350), Hospital discharge day management (CPT codes 99238-99239) and Critical Care Services (CPT codes 99291-99292). 

In addition to expanding the number of covered telehealth services, CMS also: (i) changed the frequency limitation for subsequent nursing facility visits from 30 days to 14 days; (ii) clarified that clinical social workers, psychologists, physical therapists and speech-language pathologists can furnish online assessment and management services; and (iii) clarified that the telehealth rules do not apply to services furnished via telecommunications when the physician and patient are in the same building. 

Scope of Practice Changes

In the final rule, CMS expanded the range of Medicare covered services for certain non-physician practitioners.  Medicare will now cover diagnostic tests supervised by non-physicians who are operating within the scope of their practice (as permitted by state law), including nurse practitioners (NPs), clinical nurse specialists (CNSs), physician assistants (PAs), and certified nurse-midwives (CNMs). 

The final rule clarifies that pharmacists may provide services incident to the services of (and under the supervision of) the billing physician if payment for the pharmacist’s services is not made under Medicare Part D.  The final rule also clarifies that physical therapists and occupational therapists can delegate the furnishing of maintenance therapy services to therapy assistants. 

Teaching Physicians and Moonlighting Services

The final rule changes the requirement that teaching physicians be physically present for the key portions of procedures performed by residents to bill for the procedure.  Teaching physicians can now meet the requirement by interacting with the resident virtually.  This exception does not apply in the case of surgical, high risk or other complex procedures.  In addition, for primary care services furnished by residents in rural areas, teaching physicians can interact with their residents virtually to provide the necessary direction, management and review.

The final rule also expands the settings in which residents can provide moonlighting services.  Prior to the rule, services of residents were covered by the PFS if the resident was working outside the scope of his or her training program, but only in the outpatient setting.  The final rule expands moonlighting services to include services furnished in the inpatient setting. 

Direct Supervision by Interactive Telecommunications Technology

The final rule also finalizes an interim final rule adopted in April 2020 authorizing physicians to provide “direct supervision” by using real-time, interactive audio and video technology.  This exception now applies through the later of the end of the public health emergency or the end of CY 2021. 

The final rule is available here, and the CMS fact sheet is available here.

Reporter, Alek Pivec, Washington D.C., +1 202 626 2914,

CMS Releases Calendar Year 2021 Outpatient Prospective Payment System and Ambulatory Surgical Center Final Rule– On December 2, 2020, CMS issued the calendar year (CY) 2021 Medicare Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System final rule.  Through these policy changes, CMS seeks to provide Medicare beneficiaries and their healthcare providers with more choices to obtain care at a lower cost in an outpatient setting.  The provisions of the final rule are effective January 1, 2021.

Through the final rule, CMS is eliminating the Inpatient Only (IPO) list over the course of three calendar years, beginning with the removal of 266 musculoskeletal related services. When removed from the IPO list, these procedures will become eligible for Medicare when provided in a hospital outpatient setting when outpatient care is appropriate.  These services will continue to be reimbursed when furnished in the inpatient setting if inpatient care is deemed appropriate by the physician.  Procedures removed from the IPO list will now be indefinitely exempted from: (i) site-of-service claim denials under Medicare Part A; (ii) Beneficiary and Family-Centered Care-Quality Improvement Organization (BFCC-QIO) referrals to Recovery Audit Contractors (RACs) for noncompliance with the 2-Midnight rule; and (iii) RAC reviews for “patient status,” i.e., site of service.  CMS is additionally removing thirty-two additional HCPCS codes from the IPO list for CY 2021.

CMS also finalized the addition of eleven procedures to the ASC covered procedures list (CPL), including total hip arthroplasty.  CMS is revising the criteria that it uses to add covered surgical procedures to the ASC CPL, providing that previously used criteria will be considered by physicians when deciding whether a specific beneficiary should receive a covered surgical procedure in an ASC.  CMS additionally finalized a 2.4 percent increase in reimbursements to ASCs in 2021.

In addition, CMS is continuing to pay for drugs and biologicals acquired under the 340B program at an adjusted amount of the average sales prices minus 22.5 percent.  CMS is continuing to exempt Rural Sole Community Hospitals, PPS-exempt cancer hospitals and children’s hospitals from the 340B payment policy.

Despite the payment cuts for 340B drugs, hospitals should see increased reimbursements for services provided in accordance with the Outpatient Department (OPD) fee schedule.  CMS is increasing the payment rates under the OPPS by an OPD fee schedule increase factor of 2.4 percent.  CMS estimates that total payments to OPPS providers for CY 2021 will amount to $83.888 billion, approximately $7.541 billion compared to estimated CY 2020 OPPs payments.

CMS has additionally removed certain provisions in the expansion exception process for hospitals that qualify as “high Medicaid facilities.”  In particular, CMS removed:  (i) the limit on the number of additional operating rooms, procedure rooms, and beds that can be approved in an exception; and (ii) the limitation that the expansion must occur only in facilities on the hospital’s main campus.  A “high Medicaid facility” may now apply for an exception for the prohibition on facility expansion more than once every two years from the time that CMS makes a decision, provided that the hospital submits only one expansion exception request at a time.

The final rule additionally updates the methodology utilized to calculate the Overall Hospital Quality Star Ratings.  The changes to the methodology are intended to increase comparability between hospital star ratings, as well as predictability of the ratings themselves. CMS is also adding critical access hospitals and Veterans Health Administration hospitals to the Overall Star Rating. 

CMS is adding two categories of services to the prior authorization process for hospital outpatient departments beginning for dates of services on or after July 1, 2021.  These categories include cervical fusion with disc removal and implanted spinal neurostimulators.  Effective January 1, 2021, CMS is additionally approving five device pass-through applications for BAROSTIM NEO™ System, Hemospray® Endoscopic Hemostat, the SpineJack® Expansion Kit, CUSTOMFLEX® ARTIFICIALIRIS, and EXALT™ Model D Single-Use Duodenoscope.

The final rule is available here, and the CMS fact sheet is available here.

Reporter, Jennifer Siegel, Washington D.C., +1 202 626 5595,

HHS Amends PREP Act Declaration, Including Expansion of Telehealth for COVID-19 Countermeasures On December 3, 2020, HHS issued its fourth amendment to the Declaration for Medical Countermeasures Against COVID-19 under the Public Readiness and Emergency Preparedness Act (PREP Act).  The PREP Act authorizes the Secretary of HHS to issue a declaration to provide liability protections to certain individuals and entities (Covered Persons) against any claim of loss caused by, arising out of, relating to, or resulting from, the manufacture, distribution, administration, or use of certain medical countermeasures (Covered Countermeasures).  Among other measures, the amendment authorizes qualified healthcare personnel using telehealth to order or administer medical Covered Countermeasures for patients in a state other than the state where the healthcare personnel are already permitted to practice.

Although many states already permit healthcare personnel in other states to provide telehealth services to patients within their borders, not all states have done so.  Accordingly, the amendment will expand the ability of qualified healthcare providers to provide services to out-of-state patients via telehealth for Covered Countermeasures, such as authorized COVID-19 diagnostic tests.

The amendment also addresses other non-telehealth issues.  For instance, the amendment expands the scope of PREP Act immunity to cover more healthcare providers who could administer COVID-19 and other vaccines by modifying and clarifying what training is required for certain providers to order or administer COVID-19 vaccines or vaccines for children.

In addition, the amendment provides an additional pathway to secure immunity for Covered Persons under the PREP Act if they use on-label Covered Countermeasures licensed, approved, cleared, or authorized by the FDA (or that are permitted to be used under an Investigational New Drug Application or an Investigational Device Exemption) to combat the COVID-19 public health emergency.

The amendment also clarifies additional issues concerning PREP Act immunity and incorporates the HHS Office of the General Counsel’s advisory opinions concerning the PREP Act and Declaration.

The HHS press release is available here, and the fourth amendment to the PREP Act Declaration is available here.  Additional information regarding the PREP Act is available here.

Reporter, Lauren S. Gennett, Atlanta, + 1 404 572 3592,  

Medicare Announces Geographic-Based Approach to Value-Based Care On December 3, 2020, CMS unveiled a new payment and care delivery model, the Geographic Direct Contracting Model (Model).  The Model is a geographic-based approach to value-based care aimed at improving the quality of care and reducing costs for Medicare beneficiaries across an entire geographic region.  This new experimental program advances Medicare’s shift towards value-based care.

The Model will enable Direct Contracting Entities (DCEs) to build integrated relationships with healthcare providers and community organizations in a region to better coordinate care and address the clinical and social needs of Medicare beneficiaries.  DCEs will take responsibility for the total cost of care for Medicare Fee for Service (FFS) beneficiaries in a specific region and implement region wide care delivery and value-based payment systems with the goal of improving care.  DCEs–which may include sophisticated Accountable Care Organizations (ACOs), health systems, healthcare provider groups, and health plans–will have the flexibility to utilize a variety of tools to achieve their goals.  In addition to beneficiaries keeping all of their original Medicare benefits, DCEs will also have the option to offer a variety of beneficiary engagement incentives, including but not limited to:

  • Vouchers for over-the-counter medications,
  • Transportation vouchers for healthcare visits,
  • Wellness program memberships, seminars, and classes,
  • Vouchers for those with malnutrition to access meal programs,
  • Up to $75 in gift cards annually for adhering to disease management programs,
  • Vouchers for vision and dental care services,
  • Home air filtering systems for asthma patients, and
  • Rail installations for patients who have a high risk of falls.

Beneficiaries will not be able to opt-out of the new Model, but they will have the option to select a DCE in their region at the start of each performance period, as well as to change DCEs either quarterly or annually.  If they do not select a DCE, they will be randomly assigned to one.

The Model will run for six years, split into two three-year performance periods. The first performance period will take applications in 2021 and run from January 1, 2022 through December 31, 2024.  The second performance period will take applications in 2024 and run from January 1, 2025 through December 31, 2027.

CMS has already announced a Letter of Interest (LOI) to organizations interested in serving as DCEs to indicate and rank the 15 candidate regions for the Model.  These LOIs are due by December 21, 2020.  The 15 candidate regions include: Atlanta; Dallas; Denver; Detroit; Houston; Los Angeles; Miami; Minneapolis; Orlando; Phoenix; Philadelphia; Pittsburgh; Riverside, Calif.; San Diego; and Tampa, Fla. 

Under the Model, providers interested in signing up with a DCE as a “Geo Preferred Provider” may be paid through capitation, sub-capitation, quality bonuses, shared savings, or in any other arrangement agreed to between the DCE and Geo Preferred Provider.  Moreover, Geo Preferred Providers may qualify for an APM Incentive Payment under the Quality Payment Program.  Providers may also sign up with more than one DCE in their region. DCE and Geo Preferred Provider agreements may be added as amendments to any existing contracts that already exist between DCEs and DC Preferred Providers, such as contracts that exist for the purposes of ACO or Medicare Advantage programs. Healthcare providers that choose not to enter into an arrangement with a DCE will continue to be reimbursed at 100% Medicare FFS rates.

CMS intends for the Model to improve the quality of care and lower costs for Medicare beneficiaries across an entire region and shift providers from fee-for-service payments towards value-based payment arrangements.  The CMS Fact Sheet with additional information on the Model is available here.  A copy of the CMS press release and LOI is available here.

Reporter, Kathryn T. Han, Los Angeles, +1 213 443 4336,

Senator's Letter Focuses on Nonprofit Hospitals' Tax-Exempt Status and Price Transparency – Last week, Iowa Senator Chuck Grassley wrote a letter to the United States Senate Committee on Finance (the Letter) concentrating on nonprofit hospitals’ debt collection and financial assistance practices and price transparency.  According to the Letter, Senator Grassley wants to strengthen the nonprofit hospital requirements under section 501(r) of the Internal Revenue Code and increase hospital price transparency for consumers.

Hospitals must comply with the requirements in Section 501(r) to obtain tax-exempt status under Section 501(c)(3).  Section 501(r) was added to the Code by the Patient Protection Affordable Care Act ten years ago and placed additional requirements on hospitals that wish to maintain their tax-exempt status.  The Letter mentions that nonprofit hospitals have been struggling to comply with the Code requirements, however, Senator Grassley advocates for strengthening these requirements to avoid nonprofit billing and debt collection practices that, in his opinion, violate the purpose of their nonprofit status.

The Letter summarizes the Senator’s previous correspondence with two nonprofit hospitals in Virginia and Tennessee requesting more information about their billing and debt collection practices and financial assistance policies.  Since that correspondence, both hospitals have dismissed certain lawsuits against patients below a certain income level and revised payment arrangements with low-income patients.

The Letter also outlines the Senator’s previous correspondence requesting information about each hospitals’ price transparency, who pays the hospitals’ chargemaster prices, and the cost of treating patients including those diagnosed with COVID-19.  Senator Grassley emphasizes one hospital’s response to his question about chargemaster pricing.  The Virginia hospital states that primarily out-of-network payors and noncovered services are paid at full price, whereas each health plan contract has a different payment arrangement.  Based on his correspondence with these hospitals, the Senator reiterates the need for greater price transparency, stressing that each patient needs to know how much their hospital visit will cost.  With hopes for a COVID-19 vaccine on the horizon, the Senator’s Letter may prove to be a bellwether for Congress turning its attention back to nonprofit hospital’s billing and debt-collection practices and price transparency in the near future.

The Letter is available here.

Reporter, Taylor Whitten, Sacramento, +1 916 321 4815,


King & Spalding Webinar – COVID-19’s Impact on the Senior Care Industry: A Discussion on Crisis Management in the Face of Litigation and Enforcement Activity – On December 9, 2020, from 1:30 – 2:30 p.m. ET, King & Spalding partners Sally Yates (former Acting Attorney General and Deputy Attorney General), Jim Boswell (Team Leader of the national Healthcare Team) and Geoffrey Drake (a leader of the Mass Torts Litigation practice) will lead a discussion on crisis management in the face of the COVID-related compliance, liability and enforcement landscape for senior care and other long-term-care facilities.

Topics of discussion will include:

  • Public relations, community outreach and external communications;
  • Interface with government agencies, regulators and Congress;
  • Coordinating and developing strategies for wrongful death litigation targeting post-acute providers;
  • Immunity protections on the state and federal levels for COVID-related care;
  • Insurance limitations and challenges;
  • Congressional inquiries into post-acute providers and their handling of the COVID-19 pandemic; and
  • Increased oversight of post-acute providers by the OIG, CMS, and State Survey Agencies.

Registration for the event is free. Click here to sign up.

King & Spalding Webinar – The World Changed in 2020: What This Means for Healthcare Fraud Enforcement and You – On December 16, 2020, from 12:30 – 1:30 p.m. ET, King & Spalding attorneys Amy Garrigues, Mike Paulhus, Stephanie Johnson, Ethan Davis, and Lee Nutini will lead a discussion on the government’s new priorities in healthcare fraud enforcement in a year like no other.

This discussion will include the following areas related to fraud and abuse enforcement:

  • The CARES Act and other pandemic legislation and related enforcement;
  • Increased governmental focus on telemedicine / telehealth enforcement;
  • Evolving procedural trends in FCA enforcement, including developing definitions of falsity and knowledge;
  • Updates to DOJ guidelines for evaluating compliance programs; and
  • Practical tips on proactive compliance strategies to mitigate risk.

Registration for the event is free. Click here to sign up.

King & Spalding Webinar – 2021 Outlook for California Healthcare Providers – On December 17, 2020, from 12:00 – 1:00 p.m. ET, King & Spalding attorneys John Barnes, Travis Jackson, and Kyle Gotchy will lead a discussion on how California will usher in 2021 with a number of new laws designed to respond to COVID-19, increase access to healthcare, and promote transparency in healthcare pricing.  Key topics include:

California’s strategy to combat COVID-19, including PPE stockpiles, nursing home staffing requirements and outbreak notification obligations;

  • State measures designed to promote access to care, such as mental health parity requirements and scope of practice changes for nurse practitioners;
  • Pricing transparency measures adopted by the state including California’s effort to collect data on the amount state-regulated health insurers pay for specific medical services;
  • Responses by California to the potential repeal of the Affordable Care Act and the effect of the 2020 election on federal health policy.

Registration for the event is free.  Click here to sign up.

King & Spalding Webinar – Recalculating:  Major Stark, Anti-Kickback and CMP Final Rules Changes are Taking Us in a New Direction


Part One
Thursday, January 7, 2021
1:00 P.M. – 2:30 P.M. ET

Part Two
Thursday, January 14, 2021
1:00 P.M. – 2:30 P.M. ET

Part Three

Thursday, January 21, 2021
1:00 P.M. – 2:00 P.M. ET

CMS and OIG recently finalized the most significant changes to the Stark Law rules, the Anti-Kickback Statute (AKS) safe harbors and the Beneficiary Inducements CMP regulations that the agencies have adopted in recent years. The final rules address value-based arrangements, introduce major changes to other key Stark Law concepts and definitions, address the donation of cybersecurity technology and services, and create flexibility to provide patient incentives in value-based arrangements and with respect to telehealth. Click here to read King & Spalding’s Client Alert highlighting the key proposals.

We are hosting a three-part webinar series to discuss these changes in greater detail, described below. We will cover new flexibilities and limitations created by these final rules, as well as how they may impact enterprise risk and future enforcement actions.

  • In Part One, we will discuss the changes to fundamental Stark Law concepts such as taking into account the volume or value of referrals or other business generated, fair market value, commercial reasonableness and the definition of indirect compensation arrangements. We also will address changes to the definition of “group practice,” writing requirements, changes to several commonly used compensation exceptions and new provisions related to cybersecurity technology and related services.
  • In Part Two, we will discuss changes related to value-based arrangements and patient incentives. This will include the new AKS safe harbors and Stark Law exception for value-based arrangements, modifications to existing AKS safe harbors and Stark Law exceptions to address value-based arrangements, new AKS safe harbors for patient incentives, revisions to the local transportation safe harbor and the warranties safe harbor and a new telehealth exception to the Beneficiary Inducements CMP.
  • In Part Three, we will explore how future enforcement theories and litigation of False Claims Act cases with Relators and the Department of Justice may evolve based primarily on changes to the Stark Law concepts of indirect compensation arrangements, taking into account the volume or value of referrals, fair market value, and commercial reasonableness.

Registration is coming soon.  You do not have to be a client to attend, and there is no charge.  We hope you will be able to join us.