What the CMS 2025 PFS proposed rule means for virtual care

The Centers for Medicare & Medicaid Services (CMS) issued its 2025 Physician Fee Schedule (PFS) proposed rule earlier this month. Alongside a 2.8 percent payment cut for physicians, the rule includes numerous proposals directed at virtual care, including brand new codes for certain digital therapeutics solutions.

The proposed rule provides several wins for telehealth proponents; however, these wins may be moot if Congress fails to extend pandemic-era telehealth flexibilities beyond 2024. In 2022, Congress passed a $1.7 trillion spending bill that extended telehealth waivers — including ones that eliminated restrictions on originating sites for telehealth services and allowed federally qualified health centers (FQHCs) and rural health centers (RHCs) to continue receiving telehealth reimbursement under Medicare — until December 31, 2024.

As the virtual care industry awaits the final word from Congress, the CMS proposed rule can be viewed as cautiously optimistic for stakeholders. However, it also reveals pitfalls in current approaches to paying for virtual care services.

A NEW PATHWAY FOR DIGITAL THERAPEUTICS PAYMENT

Perhaps the most significant proposal in the 2025 PFS proposed rule is the new payment pathway for digital mental health treatment devices used in conjunction with ongoing behavioral health treatment.

CMS proposes creating three Healthcare Common Procedure Coding System (HCPCS) codes and six G codes for mental healthcare practitioners “to mirror current interprofessional consultation CPT codes used by practitioners who are eligible to bill E/M visits.”

The codes cover the supply of the digital mental health treatment device and initial education and onboarding, the first 20 minutes of monthly treatment management services directly related to the patient’s therapeutic use of the treatment, and each additional 20 minutes of monthly treatment management services.

The move could signify a significant shift for the digital therapeutics industry if included in the final PFS rule.

According to Ateev Mehrotra, MD, MPH, professor of healthcare policy at Harvard Medical School and a hospitalist at Beth Israel Deaconess Medical Center, the new codes could resurrect “an industry that had basically collapsed on itself.”

Digital therapeutics are software-based programs and devices designed to treat various medical conditions, such as chronic pain, diabetes, and behavioral health issues.

However, the digital therapeutics industry has experienced significant upheaval in recent years, with one of the industry’s pioneers, Pear Therapeutics, filing for bankruptcy in 2023. There are numerous reasons behind failures in the arena, including a growing demand for rigorous clinical evidence and a payment model that may not work.

Mehrotra noted that the payment model involves clinicians writing prescriptions for a digital therapeutic, much like they did for medications, through the pharmacy benefits manager. Now, CMS is introducing a new model that would directly reimburse the clinician.

While Mehrotra generally supports the newly proposed model, he highlighted potential challenges in implementing it.

For instance, some of the new codes cover additional monitoring of data from the digital therapeutic, which overlaps with remote patient monitoring (RPM) reimbursement codes and could overwhelm clinicians.

“Docs can barely keep track of the codes they have now,” Mehrotra said in an interview with mHealthIntelligence. “Having separate codes for remote patient monitoring versus digital therapeutic monitoring is very confusing, and I'm not sure I would've gone that way, but so be it.”

The model also assumes standardized costs of care across the spectrum of digital therapeutics use. However, the investment costs can vary significantly for digital therapeutics. Mehrotra noted that clinicians typically have to float the cost upfront and then get reimbursed by CMS, which can cause administrative challenges.

“While I'm supportive and interested in the idea of paying for digital therapeutics, I just want to emphasize some of the issues,” he said. “One is, do we have the evidence base that these really work? And is this the right way to pay for them? It is unclear to me.”

Still, the proposal for digital therapeutics-specific codes, even just for mental healthcare solutions, is noteworthy, not only because it is the first time CMS has proposed digital therapeutic codes but also because of the Access to Prescription Digital Therapeutics Act introduced in Congress last year, said Miranda Franco, senior policy advisor and a member of the Public Policy & Regulation Group at Holland & Knight law firm.

The act aims to expand Medicare coverage to include prescription digital therapeutics. While it hasn’t moved forward in Congress, Franco explained that the sponsors had written to CMS “to clarify that coding and payment for FDA-approved digital therapeutics use incident to clinician services are necessary for treatment and that they could do that under their own authority.”

Thus, the digital therapeutics-specific code proposal in the 2025 PFS proposed rule is another step toward Medicare coverage for digital therapeutics.

“I think a lot of people see [digital therapeutics] as an element of the future of healthcare, particularly in the behavioral health space,” she said in an interview with mHealthIntelligence. “We are continuing to see more and more trials in this arena as well. And so, while there might be some skepticism, I think this shows that CMS is committed to trying to find a path forward, albeit tiptoeing and cautiously.”

OTHER PROPOSALS CONCERNING VIRTUAL CARE

Aside from the new digital therapeutics codes, the provisions in the 2025 PFS proposed rule that affect virtual care are largely continuations from previous PFS rules.

For instance, CMS plans to continue allowing distant site practitioners to use their practice location instead of their home address when providing telehealth services and allowing teaching physicians to virtually supervise residents who are providing telehealth services in teaching settings.

Additionally, the agency proposed permanently adopting a definition of direct supervision that allows the physician to provide such supervision through real-time audio and visual telecommunications, permanently changing the definition of an interactive telecommunications system to include audio-only, and temporarily allowing payment for non-behavioral health visits furnished via telecommunication technology at FQHCs and RHCs. The agency also proposed continuing to delay the in-person visit requirement for telemental health services furnished by RHCs and FQHCs until January 1, 2026.

Notably, the agency is proposing to make permanent the current flexibility allowing opioid use disorder (OUD) treatment programs to provide periodic assessments via audio-only telecommunications beginning January 1, 2025.

Kyle Zebley, senior vice president of public policy at the American Telemedicine Association (ATA) and executive director of ATA Action, said in an interview with mHealthIntelligence that these proposals “reflect CMS’ goal to maintain and expand the scope of and access to telehealth services where appropriate.”

In particular, the proposals are a big win for the RHC and FQHC community and Medicare beneficiaries receiving OUD treatment, he added.

Still, even though the PSF proposed rule included some wins for virtual care, the ongoing adoption and utilization of virtual care modalities rests in the hands of Congress.

WILL THE PROPOSALS AFFECT VIRTUAL CARE’S TRAJECTORY?

Virtual care appears to have bipartisan support in Congress; however, debates on the contours of virtual care regulations and flexibilities are ongoing.

In a subcommittee hearing in April, members of the House Energy and Commerce Committee grilled physicians, policy experts, and patients about virtual care. Not only did they ask questions about the benefits of telehealth but also telehealth reimbursement and licensure challenges.

The committee eventually advanced a bill extending telehealth flexibilities through 2026, as did the House Ways and Means Committee.

These moves indicate that Congress will at least pass an extension in a year-end package and, eventually, consider making the flexibilities permanent.

“Efforts will continue to look at permanency as we get more utilization data and understanding of its use, or at least the service lines where it's been most beneficial as long as it's not creating a two-tier system of healthcare,” said Franco.

With the proposed rule, CMS appears to be signaling its support of pandemic-era virtual care flexibilities, which may influence Congress.

“Within the proposed rule, CMS is strongly supportive of telehealth and encourages Congress to act to maintain the Medicare statutory flexibilities post CY2024,” Zebley said. “I believe this will encourage Congress to extend the statutory flexibilities to ensure beneficiaries do not lose access to critical healthcare services and maintain certainty for providers across the country.”

He added that the rule could prompt congressional action sooner rather than later. If the final PFS rule comes before Congress acts on telehealth policy and includes these virtual care proposals, it could cause great confusion for virtual care stakeholders.

Franco echoed Zebley, adding that “CMS would [then] be stuck issuing a separate interim final regulation that updates or creates new telehealth policies. I don't know to what extent Congress is considering the arduous process of that for CMS, but that could expedite their timeline to trying to do something in September as opposed to year-end.”

Only time will tell whether the proposed rule will spur Congressional action on telehealth policy. However, the proposed rule does crystallize the ongoing support for virtual care within the government — an ultimately positive sign for telehealth proponents nationwide.