CMS Releases 2023 Physician Fee Schedule Proposed Rule

  • Regulations
  • 9/2/2022
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Key insights

  • The 2023 proposed conversion factor is $33.08, a decrease of 4.4% from 2022.
  • CMS proposes adding 53 additional services to the telehealth services list though the end of 2023.
  • Several new policies related to the Shared Savings Program are proposed, with a focus on additional beneficiary participation and health equity.

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On July 7, the Centers for Medicare & Medicaid Services (CMS) released its proposed rule related to the 2023 Physician Fee Schedule (PFS), with a public comment window ending September 6, 2022. This regulatory advisor will summarize some of the key changes but does not include all provisions. To review the entire proposed 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)
  7. Additional requests for comment

1. Payment provisions

CY 2023 proposed PFS conversion factor is $33.08

The proposed 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 of -1.55%.

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 is proposing 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 is proposing to 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 proposes to chiefly utilize 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.

CMS additionally proposes to continue to apply a productivity adjustment to the full MEI increase factor to reflect productivity gains across all inputs. As detailed below, CMS does not propose to use these changes yet in the 2023 GPCIs in order provide stakeholders opportunity for feedback.

The table below summarizes Table 30 from the proposed rule, comparing the proposed 2017-based MEI categories and weights to the current 2006-based weights:

 Category  Proposed 2017-Based   Current 2006-Based 
 Physician compensation   47.260%   50.865% 
 Practice expense: 

 Non-physician compensation 

 24.716%   16.553% 

 Professional services 

 13.914%   8.095% 

 Capital

 7.749%   1.031% 

 Other practice expenses 

 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 is proposing updated GPCIs for 2023, based off the current 2006-based MEI cost share weights, despite the proposed MEI rebasing for 2023. CMS proposes phasing in the adjustment, reflecting 50% of the adjustment to the GPCI in 2023 and deferring 50% to 2024.

CMS is seeking public comment regarding the implementation of the updated MEI cost share rates for current year GPCI and PFS rate-setting, as well as whether the rebased MEI rates should be utilized in calculating GPCIs for 2024.

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 proposes 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 proposed updates specifically exclude critical care services.

In addition, CMS proposes to consolidate 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 proposes to delay implementation of the redefinition of the substantive portion of a visit 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 clarifies 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 is proposing four HCPCS G-codes: a pair for RTM treatment management services provided by physician or NPP and a pair for RTM assessment services:

 HCPCS Code   Code Descriptor 
 GRTM1   RTM treatment management, physician, or NPP professional time over a calendar month requiring at least one interactive communication with the patient/caregiver during the calendar; first 20 minutes 
 GRTM2   RTM treatment management, physician, or NPP professional time over a calendar month requiring at least one interactive communication with the patient/caregiver during the calendar; each additional 20 minutes 
 GRTM3   RTM treatment assessment services, first 20 minutes furnished personally/directly by a non-physician qualified health care professional over a calendar month requiring at least one interactive communication with the patient/caregiver during the month 
 GRTM4   RTM treatment assessment services, each additional 20 minutes furnished personally/directly by a non-physician qualified health care professional over a calendar month requiring at least one interactive communication with the patient/caregiver during the month 

CMS notes that it did not propose a generic device code and seeks comment on the following topics to help inform their view:

  • RTM devices used that meet the “reasonable and necessary” standard for Medicare coverage
  • Types of data collected by RTM devices, along with how this data solves specific health conditions and what those are
  • Costs associated with RTM devices
  • Duration of the typical episode of care for each condition
  • The number of beneficiaries that could potentially use an RTM device by health condition

Chronic pain management (CPM)

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

HCPCS Code    Description 
 GYYY1 

 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 
 GYYY2   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.

CMS is seeking comment on the following issues related to CPM:

  • Whether the definition of chronic pain is appropriate in both interval and description
  • Documentation requirements for chronic pain in the medical record
  • Ways pain and health literacy counseling can be effectively used as an element to help beneficiaries with chronic pain make informed decisions about their care

Opioid treatment program payment policy

CMS proposed to revise the methodology used for pricing the drug component of the methadone weekly bundle to $39.29, a 5.1% increase from 2022. For 2023 and subsequent years, CMS will be based on the payment amount for methadone in 2021, updated for inflation using the producer price index for Pharmaceuticals for Human Use.

In addition, the base rate for the nondrug component would be changed, increasing to $91.18 for 45 minutes of individual therapy for 2023. CMS would then apply MEI updates to determine the CY 2023 payment amounts. CMS proposed a clarification that includes services via mobile units in the set considered for Medicare bundled payment reimbursements. An additional proposal would allow services to begin treatment with buprenorphine, rather than methadone.

Opioid treatment services are currently allowed to be provided via two-way audio-visual technology, with exceptions for cases where audio only is necessary. CMS is seeking comment on whether this flexibility should be extended past the end of the COVID-19 public health emergency (PHE).

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

CMS proposes the creation of two new codes for a specified set of pain management and treatment services for RHCs and FQHCs, along with a new code for general behavioral health integration. The respective payment system amounts for these codes do not include non-face-to-face time required to coordinate care; CMS proposes to allow for separate payment of this time, which would be billed using the HCPCS code used to bill for all care management services.

2. Extending telehealth services

The proposed telehealth originating site facility fee is $28.61 for 2023. The final fee will be determined after MEI rebasing is finalized.

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 proposed rule, CMS proposed to add 53 additional 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 proposed services 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. CMS is proposing in the 2023 rule 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 proposes to 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 proposes to add three service codes to the Telehealth Services List on a permanent (Category 1) basis:

HCPCS Code Descriptor
 GXXX1  Prolonged inpatient or observation services by physician or other qualified healthcare professional (QHP) 
 GXXX2  Prolonged nursing facility services by physician or other QHP 
 GXXX3   Prolonged home or residence services by physician or other QHP 

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 proposes to remove the order requirement for certain hearing conditions. CMS proposes to create HCPCS code GAUDX for such services. The proposed rule limits use of this code to once per 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. Additionally, CMS proposes to allow for coverage, whether inpatient or outpatient, if services are “inextricably linked” and are an integral part of the covered primary service or procedure.

In addition, CMS proposes to expand the policy 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 also requesting public comment on procedures that may fall under this exception and may consider expanding the set of approved procedures. CMS is requesting public comment on other clinical situations where dental services may be critical to proceeding with a primary medical procedure.

Colorectal cancer (CRC) screening proposals

CMS proposes 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 a covered CRC screening test to include a follow-up colonoscopy in cases where a stool test returns a positive result. The proposal waives frequency limitations and considers follow-up screenings preventive services, waiving beneficiary cost-sharing

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

CMS proposes 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 proposes 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 proposes to 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 proposes how it will determine the refund amount, dispute resolution procedures, civil monetary penalties, and excluded drugs.

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 proposing 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 agreement period.
  • 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. For example, a beneficiary with a score between 0 – 24 is associated with $0, but a beneficiary between 85 – 100 is associated with $45. Dual eligibility status would automatically equal a score of 100 and the maximum associated dollar amount of $45. ACOs receiving AIPs must use those dollars in specific ways, such as increased staffing, health care infrastructure, and providing accountable care to beneficiaries.
  • 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 so those do not necessarily revert to the full 75% loss rate.
  • 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.

    For the underserved multiplier, CMS proposes to take the higher 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 ACO’s proportion assigned beneficiaries that are dually eligible for Medicare and Medicaid. CMS establishes a 20% floor.

    For the scaler, CMS would group an ACO’s measure performance compared to other ACOs into high, middle, or low performance — which would 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 proposes 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 proposes a “guardrail” to protect ACOs from this change. CMS also proposes to reintroduce a prior savings adjustment to allow rebased benchmarks to continue to serve as a reasonable baseline with limitations and proposes modifications to its risk adjustments.

CMS seeks feedback on the potential future inclusion of health disparities and price transparency questions and whether there are other questions that should also be considered for potential future inclusion in the Consumer Assessment of Healthcare Providers (CAHPS) for Merit-Based Incentive Payment System (MIPS) survey — along with whether a shortened version of the CAHPS for MIPS survey measure should be created such that it is more applicable to specialty groups.

5. Quality payment program

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

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

Proposed 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%, and discontinuing the automatic reweighting of the Promoting Interoperability category to 0% for certain medical professionals. CMS would also amend its definition of “high priority measure” to include those pertaining to health equity. CMS proposes many modifications, additions, or removals of its suite of quality measures.

MIPS Value Pathways (MVPs)

CMS proposes 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 proposes revisions to all seven existing pathways to reflect additional quality measures and remove improvement activities that are irrelevant to each particular MVP. CMS also proposes additional requirements related to subgroup reporting.

6. Additional requests for comment

In addition to the topics noted above, CMS requests comment on the following topics:

  • How to identify and define high-value services that promote health or well-being of Medicare beneficiaries
  • The ways in which community health workers may merit separate reimbursement for providing necessary services to Medicare beneficiaries, including:
    • Whether current supervision requirements apply to community health workers (CHWs)
    • To what extent CHWs are already compensated by other sources
    • What differences in required qualifications for CHWs exist among states

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