Breaking: CMS finalizes 4.5% rate cut in ’23, confirms E/M trajectory in Medicare PFS

by DecisionHealth Staff on Nov 1, 2022
Start your look-ahead to CY 2023: Payment cuts are coming, significant changes to E/M services are finalized and key reporting revisions are hitting telehealth and audio-only services, according to the final 2023 Medicare physician fee schedule released today.
Proposed payment cuts that drew vocal criticism from physician advocacy groups will move forward as planned, as CMS announced a 4.5% reduction to the CY 2023 Medicare Part B conversion factor (CF), effective Jan. 1.
The CF will fall to $33.0607 in 2023, down from $34.6062 in 2022, largely due to budget neutrality adjustments. The final CF for 2023 is two cents lower than the rate CMS first proposed in July.
Calculating the CY 2023 PFS conversion factor (CF)
CY 2022 CF
CY 2023 CF
YTY % change
CY 2022 anesthesia CF
CY 2023 anesthesia CF
YTY % change
The anesthesia conversion factor will also take a hit next year, down 4.4% as proposed.
Not all specialties will fare the same under the final fee schedule. When considering the impact on relative value units (RVU), interventional radiology and vascular surgery, each down -3%, are projected to see the largest percentage decrease. Diagnostic testing facilities lead those in the black, at +7% combined RVU impact, followed by infectious disease (+4%) and internal medicine (+3%).
E/M, telehealth, modifiers and more
CMS confirmed in the final rule that it will adopt the framework of the AMA’s revised E/M guidelines for facility and residential visits, including payment based on medical decision-making or time. The agency will diverge from the AMA on some points, however:
  • Medicare will continue to not recognize subspecialties for the purposes of defining an initial vs. subsequent service. The AMA states that an initial service may be reported when the patient has not received any professional services during the facility stay from the physician or other qualified health care professional or another such practitioner of the exact same specialty and subspecialty who belongs to the same group practice. CMS does not recognize subspecialties, so the agency would not allow different subspecialists to report separate initial visits.
  • 8-24-hour rule remains in place. CMS finalized its plan to continue to apply the 8-to-24-hour rule for the newly consolidated inpatient or observation and discharge codes to deter what the agency views as the potential for duplicative payments. That means that:
    • For stays of less than eight hours, report initial hospital or observation services (99221-99223).
    • When the hospital admission is at least eight but less than 24 hours, report same day admission and discharge from hospital (99234-99236).
    • When a patient is admitted for more than 24 hours you should report an initial hospital/observation code for the date of admission (99221-99223) and hospital discharge day management code (99328-99239).
  • Transitions between types of care. CMS agrees with the AMA facility guidelines that if a patient transitions from observation to inpatient status it does not constitute a new stay in the facility. However, when a patient is admitted to observation or inpatient status during a visit on the same day at a different site of service (e.g., office, hospital ED or nursing facility), Medicare will continue to consider that visit bundled as part of the initial hospital inpatient or observation care service. The AMA in its 2023 E/M guidelines states that the admission in another setting should be separately billable with modifier 25.
  • Medicare will continue its swing-bed policy. CMS will keep the policy that: “If the inpatient care is being billed by the hospital as inpatient hospital care, the hospital care codes … apply.” When the hospital bills the inpatient care as nursing facility care, then nursing facility E/M codes apply.
  • More guidance for telehealth during and after the PHE. The ability to report audio-only services under the COVID-19 telehealth waiver will be around for five months after the public health emergency (PHE) expires, thanks to a provision of the Consolidated Appropriations Act of 2022. But CMS will not add telephone E/M visits to the list of permanent telehealth codes. “We continue to believe that, outside the circumstances of the PHE, these services will no longer serve as a substitute for in-person care that is ordinarily furnished in a face-to-face encounter,” the agency writes in the final rule.
CMS intends to adopt the telehealth waiver extension that Congress passed in Consolidated Appropriations Act of 2022. The extension locks in a wide range of telehealth waivers for 151 days after the PHE expires, including the audio-only exceptions that have been popular with providers; the waiver of geographic and other limits ordinarily required for telehealth services; and the ability of therapists, occupational therapists, speech-language pathologists, and audiologists to bill such codes under telehealth.
Providers using telehealth will continue to bill under the place of service (POS) code that reflects their usual mode of operation, along with modifier 95.
The agency gave more insight into what it will – and will not – do during the five-month extension period. For example, it will continue to cover Category 3 telehealth services. Category 3 services were slated for removal from the telehealth list when the PHE ends. However, CMS declined to add additional grace periods to allow practices to adjust to the end of the extension period.
  • Use modifier 93 next year for audio-only. During the PHE, practices should continue to report telehealth services with modifier 95, but beginning Jan. 1, 2023, CMS wants telephone modifier 93 with all audio-only services. “We believe that using modifier “93”, which is a CPT modifier, will simplify billing, as this modifier is used by payers outside of Medicare. Currently, these modifiers can only be applied to Medicare telehealth mental health services and those telehealth services for the treatment of a SUD or a co-occurring mental health disorder when the originating site is the beneficiary’s home,” CMS writes.
  • Component-based split (or shared) services spared. CMS will delay the requirement that practices use time to determine who performed the substantive portion of a visit under its split/shared rule until Jan. 1, 2024. CMS listened to feedback from the medical community and will allow practices to determine the substantive portion of a visit for all level-based codes except emergency department visits with total time or performance of history, physical exam or medical decision making through 2023.
  • 3 new prolonged service codes coming soon. Practices will have to juggle four prolonged service G codes based on the service setting. CMS stuck with its proposed policy to add three new prolonged service codes that may be reported with level-based E/M visits that are coded based on time and meet CMS’ time requirements. As a result, practices will report G2212 with office visits; G3016 with inpatient and observation visits; G0317 with nursing facility visits; and G0318 with home and residence visits. However, in a major departure from CPT policy that could benefit practices, depending on the service, providers will be able to count time work performed on days other than the date of the face-to-face encounter.
  • You can report prolonged services with 99484. CMS stood by its proposal to set the work RVU figure for cognitive-assessment service 99483 at 3.84. Perhaps more significantly, the agency backtracked on a proposal that would have disallowed prolonged service time for the code. You can report 15 minutes or more of service time by using HCPCS code G2212 (Prolonged office/outpatient E/M services) starting Jan. 1.
“Time that is spent by the physician or NPP on any date within the surveyed timeframe for CPT code 99483 (within 3 days prior or 7 days after the date of the in-person visit) may be counted toward the reporting of prolonged services,” the agency states.
For the Merit-based Incentive Payment System (MIPS), the category weight in 2023 will be 30% for Quality, 30% for Cost, 15% for Improvement Activities and 25% for Promoting Interoperability. The data completeness threshold rises from 70% to 75%.
MVP is on: CMS will take applications for the MIPS Value Pathways (MVP) program that will eventually replace the current MIPS structure. The agency will add five new MVPs to the seven in its MVP inventory -- Advancing Cancer Care; Optimal Care for Kidney Health; Optimal Care for Neurological Conditions; Supportive Care for Cognitive-Based Neurological Conditions; and Promoting Wellness. The subgroup reporting requirement for MVP reporters from multispecialty organizations that CMS hinted it would advance in the proposed rule is finalized.
On the Advanced APM track, AAPMs get their usual 5% lump sum incentive payment; starting in 2026, they’ll get a differential payment update instead. (That still leaves a "gap year" in 2025 for which no bonus is arranged, which only Congressional action can fix.) The 8% minimum Generally Applicable Nominal Risk standard for Advanced APMs, currently set to expire in 2024, is made permanent.
Shared Savings
As proposed, CMS will front money to ACOs with low revenue that treat underserved communities with “advance investment payments” (aka advance shared savings payments). The agency also will provide “greater flexibility in the progression to performance-based risk” to some ACOs, a CMS press release says, “allowing these organizations more time to redesign their care processes to be successful under risk arrangements.”
CMS also will extend its incentive for voluntary reporting of eCQMs/MIPS CQMs through performance year 2024 (at which time it will replace the Web Interface reporting method for all Shared Savings ACOs) and institute a “health equity adjustment” for MSSP performance reporting. 
Vaccine payments
CMS finalized its proposed changes to the provider payment formula for preventive administration of influenza, pneumococcal, hepatitis B, and COVID-19 vaccines under Part B, based on the Medicare economic index MEI and the appropriate geographic adjustment factor (GAF). Medicare will continue to pay for at-home COVID vaccinations.
In addition to COVID vaccines, CMS will permanently cover monoclonal antibody products used as pre-exposure prophylaxis for prevention of COVID-19 under Part B. And, in the event the emergency use authorization (EUA) expires for the COVID vaccines, Medicare will still cover through the end of the calendar year in which it is terminated.
Colorectal cancer screening benefit. The minimum age for preventive colorectal cancer screening will drop from 50 to 45, and a follow-up screening colonoscopy after a non-invasive stool-based test comes back positive also will be considered a covered preventive benefit.
Resources for the final 2023 Medicare physician fee schedule:
This is a breaking news story. Stay tuned to Part B News for more coverage of the final 2023 Medicare physician fee schedule.

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