CMS Releases 2023 Physician Fee Schedule Final Rule

  • Regulations
  • 12/19/2022
Confident senior African American woman gestures as she asks a female healthcare professional a question about her prescription medication.

Key insights

  • The 2023 conversion factor is $33.06, a decrease of 4.4% from 2022.
  • CMS finalized adding 53 additional services to the telehealth services list though the end of 2023.
  • Several new policies related to the Shared Savings Program are finalized, with a focus on additional beneficiary participation and health equity.

Need additional clarity or guidance on this rule?

Talk to an Advisor

On November 1, the Centers for Medicare & Medicaid Services (CMS) released its final rule related to the 2023 Physician Fee Schedule (PFS). This regulatory advisor will summarize some of the key changes but does not include all provisions. To review the entire rule, visit the Federal Register.

Table of contents

  1. Payment provisions
    1. PFS conversion factor
    2. Medicare Economic Index (MEI) rebasing and revising
    3. Geographic practice cost indices (GPCIs)
    4. Evaluation and management visits
    5. Split/shared billing
    6. Remote therapeutic monitoring (RTM)
    7. Chronic pain management (CPM)
    8. Opioid treatment program payment policy
    9. Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs)
  2. Extending telehealth services
  3. Additional updates
    1. Audiology services provided without a physician order
    2. Payment for dental services
    3. Colorectal cancer screening proposals
    4. Hospital Outpatient Departments (HOPDs) and Ambulatory Surgical Centers (ASCs) to report discarded single-dose, single-use packaged drugs
  4. Medicare Shared Savings Program
  5. Quality program updates
  6. MIPs Value Pathways (MVPs)

1. Payment provisions

CMS finalizes CY 2023 conversion factor at $33.06

The final conversion factor is a 4.4% decrease from 2022, reflecting the expiration of a one-year 3% statutory increase in the 2022 conversion factor, as well as a budget neutrality adjustment.

Medicare Economic Index (MEI) rebasing and revising

The MEI is a measure of inflation experienced by physicians, reflected in practice costs and wage levels. The MEI includes a broad range of inputs and has not been adjusted for many years. In its 2023 rule, CMS finalized its intentions to both rebase and revise the MEI. Rebasing will alter the base year for the structure of costs of an input price index, and revising will impact the use of different data sources, cost categories, or price proxies in the input price index.

CMS will rebase the MEI with data from 2017 using a methodology that utilizes publicly available data for input costs that represents all types of practice ownership, rather than simply self-employed physicians. CMS' methodology chiefly utilizes annual expense data from the U.S. Census Bureau’s Services Annual Survey (SAS), supplemented by additional compensation data from sources such as the Bureau of Labor Statistics, among others.

The 2017 data was chosen because data collection efforts in 2018 and 2019 were scaled back and do not provide a comparably robust data set. Available 2020 information, while more detailed, was deemed to be less representative of typical expenditures due to the COVID-19 pandemic.

As detailed below, CMS did not use these changes in the 2023 GPCIs in order provide stakeholders opportunity for feedback.

In response to stakeholder feedback on its calculation methodology, CMS altered the proposed calculations related to physician compensation when determining final weights, resulting in slightly different category weights than initially proposed.

The table below summarizes Table 45 from the final rule, comparing the finalized 2017-based MEI categories and weights to the proposed 2017-based and the current 2006-based weights:

 Category  Finalized 2017-Based  Proposed 2017-Based  Current 2006-Based 
 Physician compensation  47.522% 47.261%   50.865% 
 Practice expense: 

 Non-physician compensation 

25.451% 24.716%   16.553% 

 Professional services 

 13.419%  13.914%   8.095% 


 7.473%  7.748%   10.031% 

 Other practice expenses 

 6.135%  6.361%   23.456% 

Geographic Practice Cost Indices (GPCIs)

GPCIs are a statutorily required measure used to reflect variance in costs across different locations compared to the national average. The GPCIs are made up of three categories: work, practice expense, and malpractice. CMS is required to review and adjust the GPCIs at least every three years.

CMS based 2023 updated GPCIs off the current 2006-based MEI cost share rates, despite the MEI rebasing for 2023. Table 25 from the final rule, reproduced below, summarizes the current GPCI cost share weights and 2023 finalized cost share weights, as well as illustrating the effect that changes to the MEI would have on cost share weights:

Expense Category   Current GPCI Cost Share Weights   Final CY 2023 GPCI Cost Share Weights    Rebased and Revised Cost Share Weights 
 Work  50.866%   50.866%   47.522% 
 Practice expense:   44.839%   44.839%   51.129% 

Employee compensation

 16.553%   16.553%   25.451% 

Office rent

 10.223%   10.223%   5.684% 

Purchased services

 8.095%   8.095%   13.419% 

Equipment, supplies, other

 9.968%   9.968%   6.575% 
 Malpractice insurance   4.295%   4.295%   1.349% 
 Total  100.000%   100.000%   100.000% 

Evaluation and management visits

As a part of CMS’s ongoing multi-year effort to update coding and payment for evaluation and management (EM), it finalized revisions to current billing policies for remaining EM visits, including:

  • Inpatient and observation visits
  • Emergency department visits
  • Nursing facility visits
  • Rest home visits
  • Home visits
  • Cognitive assessments and care planning

Effective January 1, 2023, visit levels will be determined by the time spent performing services or the level or medical decision-making required, rather than history and a physical examination. The updates specifically exclude critical care services.

In addition, CMS finalized consolidation of inpatient and observation care into a single code set, and home and domiciliary care into a single home or residence-based services code set. The residence-based code set would include assisted living, group homes, custodial care facilities, and residential substance abuse treatment facilities.

Split/shared billing

In the 2022 PFS rule, CMS finalized revised policies relating to EM visits provided by both a physician and non-physician practitioner (NPP), allowing payment to a physician who performed the “substantive portion” of the visit. The definition of the substantive portion for 2023 was finalized to be limited to more than half the total time of a visit, rather than the broader qualifications of history, exam, medical decision making — or half the total visit time that applied in 2022.

CMS finalized that implementation of the redefinition of the substantive portion of a visit will be delayed until January 1, 2024, to allow other coding and payment changes for EM visits to take effect.

In addition to deferring the change in the definition of a substantive visit, CMS clarified that the policy for split/shared critical care services is the same whether the patient receives care from one provider, two or more providers, or a mix of physicians and NPPs billing as a shared visit.

Remote therapeutic monitoring (RTM)

In the 2022 final rule, CMS finalized payment for three physician expense-only RTM codes, along with two codes for RTM treatment management. Due to concerns raised that treatment management codes included clinical labor, and that the codes were considered “incident to” services that cannot be billed independently by physical therapists and other practitioners who are not physicians, CMS proposed four new HCPCS G-codes: a pair for RTM treatment management services provided by physician or NPP and a pair for RTM assessment services. However, after consideration of public comment on the RTM proposals, CMS is not finalizing the creation of the four new G-Codes. Current policies for RTM treatment management codes will be maintained, with two modifications:

  • Any RTM services may be provided under general supervision requirements
  • CMS will accept the RUC recommendation to contractor price 989X6, a PE-only device CPT code

Chronic pain management (CPM)

CMS finalized the definition of chronic pain as “persistent or recurrent pain lasting longer than three months,” and finalized two new HCPCS G-codes for bundled monthly CPM services, beginning January 1, 2023. Code descriptions are below:

HCPCS Code    Description 

 CPM and treatment, monthly bundle including diagnosis, assessment, and monitoring; includes the following (not an exhaustive list):

  • Administration of a validated pain rate scale or tool 
  • Development, implementation, and revision of a person-centered treatment plan
  • Facilitation and coordination of any necessary behavioral health treatment 
  • Related crisis care
  • Communication and care coordination between relevant practitioners, as appropriate 
G3003   Each additional 15 minutes of CPM and management by a physician or other qualified health care professional, per calendar month 

These new codes could be billed along with certain other care management codes.

Opioid treatment program payment policy

CMS finalized its revision of the methodology used for pricing the drug component of the methadone weekly bundle to $39.27. For 2023 and subsequent years, CMS will base the payment amount for methadone on the payment amount in 2021, updated for inflation using the producer price index for Pharmaceuticals for Human Use.

CMS is finalizing its proposal to modify the payment rate for the non-drug component of the bundled payment by basing the rate for individual therapy on a crosswalk to CPT code 90834 (Psychotherapy, 45 minutes with patient) rather than code 90832 (Psychotherapy, 30 minutes with patient) to better reflect care commonly received. By making this change, CMS finalized they will exchange the 2019 rate for code 90832 ($68.47) with the 2019 rate for code 90834 ($91.18). CMS will then apply MEI updates to determine the rate for the code. The 2023 MEI update is 3.8%.

CMS clarified that services via mobile units are included in the set considered for Medicare bundled payment reimbursements.

Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs)

CMS finalized the creation of two new codes (G3002, G3003) for a specified set of pain management and treatment services for RHCs and FQHCs. CMS additionally finalized that rather than creating a new HCPCS code, chronic pain management and general behavioral health integration activities, both in person and non-face-to-face, can be billed under HCPCS code GO511, the code used for general care management.

2. Extending telehealth services

The finalized telehealth originating site facility fee is $28.64 for 2023.

CMS maintains a list of covered telehealth services, called the Telehealth Services List, which includes three categories to use as avenues to add services to the list:

  • Category 1: New services that are similar to those already on the list.
  • Category 2: New services are not similar to services already on the list, but there is evidence that telehealth services improve diagnosis or treatment of illness or injury, or improves function.
  • Category 3: Services added to the telehealth list during the COVID-19 PHE for which there is likely to be a benefit when provided during telehealth but have insufficient evidence to be added in Categories 1 or 2. The inclusion of these services is temporary; the services would need to meet Category 1 or 2 criteria to be added permanently.

In the 2023 rule, CMS finalized addition of 53 services to the Medicare Telehealth Services List on a Category 3 basis. The services in question are currently included in the allowed telehealth list temporarily due to the COVID-19 PHE; moving to a Category 3 designation guarantees inclusion through the end of 2023 regardless of the PHE status and allows CMS additional time for data analysis and consideration before making a decision whether to add these services to the list permanently.

The services added to the Telehealth Services list on a Category 3 basis are as follows:

HCPCS Code    Descriptor 
 90875  Psychophysiological therapy 
 90901  Biofeedback train any meth 
 92012  Eye exam estab pat 
 92014   Eye exam & tx estab pt 1/>vst 
 92507   Speech/hearing therapy 
 92550  Tympanometry & reflex thresh 
 92552   Pure tone audiometry air 
92553 Audiometry air & bone 
92555 Speech threshold audiometry 
92556 Speech audiometry complete 
92557 Comprehensive hearing test 
92563 Tone decay hearing test 
92567  Tympanometry 
92568  Acoustic refl threshold tst 
92570  Acoustic immitance testing 
92587  Evoked auditory test limited 
92588 Evoked auditory tst complete 
92601  Cochlear implt f/up exam <7 
92625  Tinnitus assessment 
92626  Eval aud funcj 1st hour 
92627  Eval aud funcj ea addl 15 
94005 Home vent mgmt supervision 
95970  Alys npgt w/o prgrmg 
95983  Alys brn npgt prgrmg 15 min 
95984  Alys brn npgt prgrmg addl 15 
96105  Assessment of aphasia 
96110 Developmental screen w/score 
96112  Devel tst phys/qhp 1st hr 
96113  Devel tst phys/qhp ea addl 
96127  Brief emotional/behav assmt 
96170  Hlth bhv ivntj fam wo pt 1st 
96171  Hlth bhv ivntj fam w/o pt ea 
97129  Ther ivntj 1st 15 min 
97130  Ther ivntj ea addl 15 min 
97150 Group therapeutic procedures 
97151  Bhv id assmt by phys/qhp 
97152  Bhv id suprt assmt by 1 tech 
97153  Adaptive behavior tx by tech 
97154  Grp adapt bhv tx by tech 
97155  Adapt behavior tx phys/qhp 
97156  Fam adapt bhv tx gdn phy/qhp 
97157  Mult fam adapt bhv tx gdn 
97158 Grp adapt bhv tx by phy/qhp 
97537 Community/work reintegration 
97542  Wheelchair mngment training 
97530  Therapeutic activities 
97763  Orthc/prostc mgmt sbsq enc 
98960  Self-mgmt educ & train 1 pt 
98961  Self-mgmt educ/train 2-4 pt 
98962 Self-mgmt educ/train 5-8 pt 
99473 Self-meas bp pt educaj/train 
0362T  Bhv id suprt assmt ea 15 min 
0373T  Adapt bhv tx ea 15 min 

Under current policy, all services that were added to the Telehealth Service List temporarily due to the COVID-19 pandemic that are not considered Category 1, 2, or 3 services are set to be removed from the list immediately upon the conclusion of the PHE. In the 2023 rule, CMS finalized its proposal to extend the period for these 53 services to continue for an additional 151 days following the end of the PHE. CMS believes this extension will help simplify the expiration of flexibilities afforded during the PHE.

In addition, CMS will implement telehealth provisions in the Consolidated Appropriations Act, 2022 that extend certain flexibilities for 151 days after the end of the PHE, including:

  • Waiving geographic and site-of-service requirements for telehealth services
  • Allowing audio-only services
  • Permitting PT, OT, SLT, and audiologists to conduct telehealth services
  • Allowing revised telehealth policies for FQHCs and RHCs
  • Waiving the in-person visit requirement for initiating mental health services

In addition to adding the codes above on a temporary basis, CMS finalized adding five service codes to the Telehealth Services List on a permanent (Category 1) basis:

HCPCS Code Descriptor
G0316  Prolonged inpatient or observation services by physician or other qualified healthcare professional (QHP) 
G0317  Prolonged nursing facility services by physician or other QHP 
G0318  Prolonged home or residence services by physician or other QHP 
G3002 Chronic pain tx monthly b 
G3003  Addition 15m pain mang 

3. Additional updates

Audiology services provided without a physician order

Medicare policy requires that all diagnostic tests, including audiology tests, have a physician order. However, to broaden access to audiology services, CMS finalized its proposal to remove the order requirement for certain hearing conditions. In response to stakeholder feedback, the finalized policy will use a new modifier to allow for better accuracy of reporting, rather than a new HCPCS code. Audiologists will be allowed to bill for this access once every 12 months per beneficiary.

Payment for dental services

Medicare statute generally precludes coverage of a variety of dental services under Medicare Parts A and B, with an exception for inpatient hospital services in situations where the severity of dental procedures requires inpatient hospital stays. In the 2023 Final Rule, CMS finalized a policy to allow for coverage of dental services, whether inpatient or outpatient, if services are “inextricably linked” and are an integral part of a covered primary service or procedure.

In addition, CMS finalized a policy expansion to allow coverage of dental services when a patient has an organ transplant, cardiac valve replacement, or valvuloplasty procedures in situations where the patient has an oral infection and the procedure’s success could be significantly impacted if the infection is not properly treated. CMS is finalizing payment for necessary exams and treatments prior to treatment for head and neck cancers beginning in CY 2024. Finally, CMS has developed a process starting in CY 2023 to review and consider public recommendations for similar scenarios for Medicare payment for dental services.

Colorectal cancer (CRC) screening proposals

CMS finalized two main updates to CRC screening policies:

  1. Expand Medicare coverage of certain screening tests by reducing the minimum age from 50 to 45 years, following changes in clinical recommendations
  2. Expand the regulatory definition of a covered CRC screening test to include a follow-up colonoscopy in cases where a stool test returns a positive result. Expanding the definition of a screening test will waive beneficiary cost sharing for follow-up screenings.

Hospital Outpatient Departments (HOPDs) and Ambulatory Surgical Centers (ASCs) to report discarded single-dose, single-use packaged drugs

CMS finalized implementation policies for HOPDs and ASCs related to language in the Infrastructure Investment and Jobs Act (Pub. L. 117– 9) enacted in November 2021. This language requires manufacturers to provide a refund to CMS for certain discarded amounts from a refundable single-dose container or single-use package drug.

As such, CMS finalized that the JW modifier would be used to determine the total number of billing units of the HCPCS code (that is, the identifiable quantity associated with an HCPCS code, as established by CMS) of a refundable single-dose container or single-use package drug, if any, that were discarded for dates of service during a relevant quarter for the purpose of calculating the refund amount. CMS also finalized the use of a separate modifier, JZ, in cases where no billing units of such drugs were discarded and for which the JW modifier would be required if there were discarded amounts.

CMS finalized how it will determine the refund amount, dispute resolution procedures, civil monetary penalties, and excluded drugs. CMS will issue a preliminary report on estimated discarded drug amounts based on the first two calendar quarters of 2023 no later than December 31, 2023, and will revisit the report timing in the future as system efficiencies are created.

4. Medicare Shared Savings Program

As a response to CMS’s focus on growing the number of beneficiaries in accountable care organizations (ACOs) and advancing health equity, along with feedback from health care providers that treat underserved populations, CMS is finalizing many policies related to the Medicare Shared Savings Program, a few of which are highlighted below:

  • Provide advance investment payments (AIPs) to low-revenue ACOs that are new to the shared savings program, provide care to underserved populations, have applied under the BASIC track, and are unfamiliar with Medicare’s risk-based models. Additional eligibility requirements are that these ACOs may not include a hospital (other than a Critical Access Hospital or small, rural PPS hospital) and cannot be owned by a health plan. The AIP is a one-time fixed payment of $250,000 along with quarterly payments for the first two years of an ACO’s 5-year agreement period.

    CMS will calculate upcoming quarterly payments prior to the start of the quarter, using latest available assignment list. The quarterly payments are equal to a risk-factor-based score from 0 – 100 for up to 10,000 beneficiaries. Each beneficiary score will be derived from the ADI national percentile rank of the beneficiary’s census block group (based on their most recent address). Based on this score, an associated dollar amount is applied. Dual eligibility status or enrollment in the Medicare Part D Low Income Subsidy (LIS) would automatically equal a score of 100 and the maximum associated dollar amount. ACOs receiving AIPs must use those dollars in specific ways, such as increased staffing, health care infrastructure, and providing accountable care to beneficiaries. CMS will recoup AIPs made to an ACO from any shared savings it earns. However, if an ACO receives AIPs that exceed the amount of shared savings in any given year, CMS will not require repayment of these funds.

  • Provide an alternative sliding scale approach for determining shared savings for ACOs if they do not meet the quality performance standard in order to share in savings at the maximum sharing rate under its track (or payment model within a track). A similar shared losses sliding scale approach would be used with Enhanced Track ACOs.
  • To establish a health equity adjustment that would support ACOs serving high proportions of underserved populations while incentivizing all ACOs to treat such populations, CMS would multiply the measure performance scaler and the ACO’s underserved multiplier. Up to 10 bonus points would be available based on a multiplication of an ACO’s underserved multiplier and a performance measure scaler.

    CMS finalized the use of the ACO’s proportion of assigned beneficiaries residing in a census block group with an ADI national percentile rank of at least 85 or the proportion of an ACO’s dually eligible beneficiaries to calculate the underserved multiplier. In response to public comment, CMS will also incorporate enrollment in the LIS in the calculation. CMS established a 20% floor for the underserved multiplier.

    For the scaler, CMS will group an ACO’s measure performance compared to other ACOs into high, middle, or low performance — which will then be assigned points of 4, 2, or 0, respectively, and summed.

  • To change benchmarking methodologies to encourage health care providers who provide care to beneficiaries with high clinical risk factors and dually eligible beneficiaries to participate in the program, CMS finalized incorporating a prospectively projected administrative growth factor CMS refers to as the Accountable Care Prospective Trend (ACPT), into a three-way blend with national and regional growth rates to update an ACO’s historical benchmark for each performance year in the ACO’s agreement period. CMS also finalized creating a “guardrail” to protect ACOs from this change.

5. Quality payment program

CMS finalized the following performance category weights for 2023, presented with 2022 final weights for comparison:

 Performance Category   2022 Final Rule   2023 Final Rule 
 Quality  30%   30% 
 Costs   30%   30% 
 Improvement Activities   15%   15% 
 Promoting Interoperability   25%   25% 

Finalized changes to traditional MIPs include increasing the data completeness threshold 5%, from 70 to 75% for quality measures, establishing a maximum cost category improvement score of 1% out of 100%, and discontinuing the automatic reweighting of the Promoting Interoperability category to 0% for certain medical professionals. CMS also finalized its amendment to the definition of “high priority measure” to include those pertaining to health equity. CMS finalized many modifications, additions, or removals of its suite of quality measures.

MIPS Value Pathways (MVPs)

CMS finalized five new value pathways:

  • Advancing cancer care
  • Optimal care for kidney health
  • Optimal care for neurological conditions
  • Supportive care for cognitive-based neurological conditions
  • Promoting wellness

In addition to the five new pathways, CMS finalized revisions to all seven existing pathways to reflect additional quality measures and remove improvement activities that are irrelevant to each particular MVP. CMS also finalized additional requirements related to subgroup reporting.

How we can help

Trying to work through all the ways new CMS regulations could impact your organization? Our health care team is on the front lines of regulatory, policy, and payment changes for providers across the continuum and can provide guidance to meet your specific needs.

Experience the CLA Promise