Temporary and Permanent Changes to PATH Billing and FTE Cap Transfers: Part 2 of Our Series on Graduate Medical Education in 2021

The Centers for Medicare and Medicaid Services (“CMS”) published numerous updates to its rules for graduate medical education in 2020, many of which take effect in the early part of 2021. This client alert is Part 2 of our series providing insight into these CMS changes and more recent statutory changes. Part 1, which addresses resident moonlighting and redocumentation requirements, is available here.

PATH Billing Expanded Temporarily in All Settings During the PHE and Permanently in Rural Settings

Traditionally, under the billing rules for physicians at teaching hospitals (commonly known as the “PATH” rules), Medicare only pays for services furnished by a resident when the teaching physician is physically present for key portions of the service or if certain regulatory exceptions apply, such as the primary care clinic exception. For the duration of the COVID-19 public health emergency (“PHE”), CMS has introduced four flexibilities into the PATH reimbursement criteria. These flexibilities are as follows:

Permit physician presence requirements to be met through virtual presence;
Expand the list of E/M services that a resident may furnish in the primary care setting without a teaching physician’s presence;
Permit residents to perform interpretation of diagnostic radiology and other diagnostic tests; and
Permit the teaching physician’s virtual presence to fulfill the unique teaching physician presence requirement for psychiatric services.

In the 2021 Physician Fee Schedule Final Rule (“Final Rule”), published December 28, 2020, CMS announced that these flexibilities will be available for all settings for the duration of the PHE. Importantly for rural settings, CMS also announced that the new flexibilities will be made permanent for rural residency training sites located outside of Metropolitan Statistical Areas (“MSAs,” referred to throughout as “rural settings”). In making certain flexibilities permanent in rural settings, CMS noted that it was compelled by the argument that such flexibilities could increase beneficiary access to Medicare-covered services in rural settings and address provider shortages.

I. Virtual Presence During a Key Portion of a Service

For teaching settings where exceptions don’t apply, to receive reimbursement for a resident‑furnished service, a teaching physician must be present during the key portions of the service. Before the PHE, the PATH rules required the physician’s physical presence with the resident and the patient onsite during the key portion of a service, subject to other limitations. Through the Final Rule, CMS will permit teaching physicians to meet this requirement through interactive audio/video real-time communications technology in both rural and non-rural residency training sites for E/M services. Physical presence will still be required for those surgical, high‑risk, complex, anesthesia or endoscopic procedures otherwise requiring the teaching physician’s physical presence under existing PATH rules. CMS recognized that a teaching physician may be under quarantine or otherwise at home, or the physical proximity of the teaching physician to the resident or patient might present additional exposure risks. For non-rural settings, this flexibility will last for the duration of the PHE, at which point it will expire. For rural settings, this flexibility will continue to be permanently available and codified in the PATH rules.

Teaching physicians will have to meet several requirements to take advantage of the new virtual presence flexibilities permitted under the Final Rule. First, they must be virtually present using a synchronous, interactive combination of both audio and video communications technology. The Final Rule does not allow audio-only technology or audio-only communications for any portion of the furnished service. Additionally, the medical record must document how the teaching physician is fulfilling the presence requirement. For example, the medical record must indicate whether the teaching physician was present virtually or in person. This is necessary to ensure that the level of the teaching physician’s presence is adequate to support billing for the service rendered by the resident.

This flexibility is available for multiple aspects of the PATH rules. For example, the primary care exception under the PATH rules requires that the teaching physician direct the patient’s care and that the teaching physician review resident-furnished services during or immediately after the visit. The Final Rule allows teaching physicians to perform these duties remotely. Virtual presence may even be established for telehealth services furnished by a resident as long as the teaching physician is also present via audio-visual real-time communications technology during the telehealth services (e.g., a three-way, real-time video call with the resident, teaching physician and patient). The application of virtual presence to the interpretation of diagnostic tests and psychiatric services is further discussed below.

However, even though virtual presence is an option, a teaching physician should still ensure that the level of teaching physician “presence” is adequate to support billing for the services rendered by the resident. All other billing criteria for teaching physicians and resident-furnished services within the PATH rules continue to apply. In certain circumstances, the teaching physician’s physical presence or immediate availability may still be required. CMS gave the example of a post-surgical mental status evaluation, pursuant to which a resident may not have identified any concerns and the teaching physician’s virtual presence would not have been sufficient to identify hypoactive delirium in the patient. Additionally, CMS is particularly concerned about certain vulnerable patient populations, such as patients with cognitive impairment or dementia where the teaching physician’s physical presence may be necessary to identify the specialized needs of the patient. In this respect, virtual presence should be viewed as the floor for establishing necessary presence requirements to bill for services rendered. Providers always have the discretion to exceed what is minimally required as indicated by patient care interests.

II. Primary Care Exception

Traditionally, under the Primary Care Exception (“PCE”), CMS reimburses for lower and mid‑level complexity services furnished by a resident in certain outpatient settings without the physical presence of a teaching physician. There are many other requirements, however. For instance, the billing teaching physician must supervise no more than four residents at a time and may not have other duties while doing so. The rationale behind this exception is that services of low and mid-level complexity do not require teaching physician presence for safe performance of the service and may therefore be reimbursed by CMS without teaching physician presence, so long as the other requirements are also met.

Under the Final Rule, CMS will temporarily reimburse all residency training sites for all levels of outpatient E/M services furnished under the Primary Care Exception without requiring teaching physician presence. This expanded array of E/M services includes certain services that CMS deems moderate to high complexity, but it is important to note that the expanded array of services does not alter the need to meet all applicable PCE requirements. This flexibility will expire when the PHE expires.

Following the PHE, CMS will permanently reimburse rural settings for an expanded array of services without requiring teaching physician presence, so long as the other requirements are also met. In accordance with the original rationale of the PCE, the list of permanently expanded services includes low to medium complexity E/M services, including communication-technology based services and interprofessional consults. The following codes reflect the expanded E/M services (“Expanded Services Codes”) that may be furnished in rural settings without teaching physician presence:

CPT codes 99421, 99422, 99423 and 99452;
HCPCS codes G2010 and G2012; and
Medicare telehealth services that are furnished by residents.

At the end of the PHE, the following CPT codes will no longer be reimbursed unless the service is furnished in the presence of a teaching physician, regardless of whether the setting is rural or urban. CMS notes that the following CPT codes reflect moderate to high-complexity services that are not appropriate for independent performance by residents, once the PHE has ended:

99204
99214
99205
99215
99495
99496

As noted above, the expansion of the PCE does not impact or otherwise alleviate any of the remaining reimbursement requirements for the PCE that must be met, including that the services must be furnished in a center that is located in an outpatient department of a hospital or a location that qualifies for DGME reimbursement, the resident furnishing the service without teaching physician presence must have completed more than six months of an approved residency program and the teaching physician must still provide review of the services furnished by the resident during or immediately after the visit. An overview of the applicable PCE requirements is available here.

III. Interpretation of Diagnostic Tests

CMS typically does not reimburse for a resident’s interpretation of radiologic or diagnostic tests. For the duration of the PHE, CMS will reimburse residents’ interpretation of diagnostic radiology and other diagnostic tests, if a teaching physician is virtually present as discussed above in Section I, in both rural and non-rural settings. CMS has made this change permanent for rural settings.

IV. Psychiatric Services Exception

Traditionally, CMS will reimburse a residency training site for psychiatric services furnished by a resident when the teaching physician is present via observation of the service by use of a one-way mirror, video equipment or similar device. For the duration of the PHE, CMS will reimburse all settings for psychiatric services furnished by a resident if the teaching physician is virtually present as discussed above in Section I. CMS has made this change permanent for rural settings.

Changes to Graduate Medical Education FTE Cap Temporary Transfer Rule and Opportunities to Apply for Permanent Transfer

As discussed here in a prior Hall Render article, CMS recently finalized a proposal to address the temporary transfer of GME FTE cap slots when a teaching hospital or a resident training program closes. The rule went into effect on October 1, 2020.

Under prior regulations, a hospital that accepted and trained displaced residents from a hospital or program that closed was eligible to receive cap slots from the closing hospital or hospital closing a program only if the displaced residents were physically present at the closed hospital/closed program on the day prior to, or the day of, closure of the hospital or program. This “day prior to or day of” rule caused significant difficulty for residency programs, residents and teaching hospitals to align continuity of training with possible CMS GME reimbursement.

CMS’s new rule allows the temporary transfer of Medicare GME FTE cap slots from teaching hospitals that close (i.e., terminate their Medicare provider agreement) or close a residency program to hospitals that continue training their departing residents or fellows. The new rule also addresses situations faced by matched entering residents who have not yet started, residents assigned to off‑site rotations and residents on leave at the time the hospital or program closes. It also changes the key date to be the date that the closure is publicly announced—rather than the actual date of closure—allowing residents to pursue other training opportunities after learning of an impending closure.

Additionally, when a hospital closes, regulations promulgated pursuant to Section 5506 of the Affordable Care Act permit a hospital that meets certain requirements to apply to permanently increase its GME FTE resident cap following a hospital closure. Hospitals that take the residents and complete training under the temporary process get some priority under the permanent process, although the priority determination process is complicated.

In the most recent Hospital Outpatient Prospective Payment rule, CMS announced the closure of Westlake Community Hospital in Melrose Park, Illinois and Astria Regional Medical Center in Yakima, Washington and an application process to permanently apply for the resident slots made available by the closures. Applications for Westlake will be identified as Round 18 applications and applications for Astria will be identified as Round 19 applications.

Hard-copy applications must be received by the CMS Central Office by March 29, 2021. Notably, applications may not be postmarked by the due date but must be actually received by CMS to be considered. Following submission of the hard-copy application, hospitals are encouraged to notify CMS. Applying hospitals are encouraged to review the Section 5506 Application Form and application guidance materials available here.

Practical Takeaways

PATH Billing During the PHE (All Settings)
- To establish a virtual presence for inpatient E/M services, resident interpretation of radiologic and other diagnostic tests, psychiatric services and post-service reviews ensure that there is simultaneous, interactive audio/visual, real-time, telecommunications technology being used between the physician and the resident.
- The medical record must document whether the physician was present in-person or via virtual presence.
- CMS will reimburse all settings for expanded list of outpatient E/M service codes identified above furnished pursuant to the PCE, provided all other PCE requirements are met.
- Teaching physicians should use their judgment and discretion to identify whether a higher level of teaching physician involvement or presence is needed. The temporary flexibilities permitted during the PHE and made permanent in rural settings merely set a floor. A higher level of presence or supervision may be necessary to ensure appropriate billing and patient care quality for services rendered.

PATH Billing after the PHE
- CMS will continue to reimburse rural settings for teaching physician virtual presence for inpatient E/M services, psychiatric services and resident interpretations of diagnostic tests.
- CMS will continue to reimburse rural settings for the Expanded Services Codes identified above under the PCE.
- CMS will stop reimbursing all other (non-rural) settings for teaching physician virtual presence. Non-rural settings will revert back to the prior list of low or mid‑complexity E/M services and will not be able to bill for the expanded codes available to rural settings.
- CMS will stop reimbursing all settings (rural and non-rural) for the moderate and high complexity E/M services identified above unless onsite physician presence is established in accordance with existing PATH rules requirements.

FTE Cap Transfer
- For teaching hospitals interested in applying for permanent transfer and increase in GME FTE resident caps made available by the closure of Westlake or Astria hospitals, hard-copy applications are due to the CMS Central Office by March 29, 2021.

For more information on this topic, please contact: