Medicare Payment and Reimbursement

Even as costs surge, Medicare physician payments are scheduled to decrease in 2023

July 11, 2022 1:32 am
  • Medicare physician payments would decrease by more than 4% in 2023, according to a proposed rule.
  • Projected payment impacts vary from one specialty to the next.
  • E/M visit coding and documentation policies would continue to undergo changes.
  • Telehealth and behavioral health coverage policies would be affected.

Amid increasing costs throughout healthcare, Medicare anticipates reducing physician payments in 2023, according to a newly released proposed rule.

The conversion factor is projected to decrease from $34.61 in 2022 to $33.08 in 2023, meaning physician payments would decrease by more than 4%. The change is based on:

  • A statutorily required update of 0% from 2020 through 2025
  • The expiration of a onetime 3% increase for 2022 that, per statute, may not factor into payment rates for subsequent years
  • A statutorily required budget neutrality reduction of 1.55% stemming from proposed changes to RVUs

Physician advocacy groups criticized the projected payment, noting the reduction would come on top of a 4% Medicare payment cut that’s scheduled to begin Jan. 1 as a result of pay-for provisions in the 2021 COVID-19 relief legislation. In addition, a 2% Medicare payment sequester has been in effect since July 1.

“It is immediately apparent that the rule not only fails to account for inflation in practice costs and COVID-related challenges to practice sustainability, but also includes a significant and damaging across-the-board reduction in payment rates,” Jack Resneck Jr., MD, president of the American Medical Association (AMA), said in a written statement. “Such a move would create long-term financial instability in the Medicare physician payment system and threaten patient access to Medicare-participating physicians. We will be working with Congress to prevent this harmful outcome.”

Congress has shown a willingness to avert substantial physician payment cuts. Legislation that was passed in late 2021, for example, reduced a scheduled 3.75% reduction for 2022 to 0.75%. Now, however, that 3% boost is set to expire.

The payment provisions could have an especially big impact because practices are contending with substantial cost increases in an inflationary environment. For example, in its latest report, Kaufman Hall found that total direct expense per physician FTE in Q1 2022 was up 7.1% from the previous quarter and 10.5% year-over-year.

Here are some other key points in the 2,066-page proposed rule.

Different payment impacts for different specialties

Among numerous specialties that would be affected by proposed RVU changes, most would see a negative adjustment. Those for which the projected impact would be -2% or more include:

  • Allergy/immunology
  • Clinical psychologist
  • Clinical social worker
  • Interventional radiology (-4%)
  • Nuclear medicine (-3%)
  • Oral/maxillofacial surgery
  • Podiatry
  • Radiology (-3%)
  • Rheumatology
  • Vascular surgery (-3%)

Positive adjustments of 2% or greater would be in store for:

  • Diagnostic testing facility
  • Geriatrics (3%)
  • Infectious disease (5%)
  • Internal medicine (3%)
  • Nurse practitioner
  • Physical medicine
  • Psychiatry
  • Pulmonary disease

The changes “can largely be attributed to the revaluation of the other E/M services and/or the second-year transition to updated clinical labor pricing,” the proposed rule states. Of note, however, the projections don’t account for the expiration of the 3% payment increase that’s in place for 2022.

CMS also clarifies that the projections “may not necessarily be representative of what is happening to the particular services furnished by a single practitioner within any given specialty.”

E/M visit coding overhaul continues

Starting with the 2021 payment year, CMS and the AMA’s CPT Editorial Panel have been working to update coding and payment for evaluation and management (E/M) visits to ensure they “better reflect the current practice of medicine, are less administratively complex and are paid more accurately.”

“This work is critical to help reduce practitioner burnout in general, especially in light of the COVID-19 pandemic,” the proposed rule states.

Codes for office/outpatient E/M visits were revised for 2021. For 2023, changes have been proposed for visits in the following settings, collectively referred to as other E/M visits: inpatient and observation (to be combined as a single set), emergency department, nursing facility, home, and domiciliary and rest home, as well as for cognitive impairment assessments.

As with office/outpatient visits, “visit level will be selected based on the amount of practitioner time spent with the patient or the level of medical decision making as redefined in the CPT E/M Guidelines,” the proposed rule states. “History and physical exam … will no longer impact the visit level.”

New CPT codes and descriptors would be adopted for the group of “other E/M visits” with the exception of prolonged services, for which Medicare-specific coding would be used.

For split services, which refer to visits in which services are delivered jointly by a physician and nonphysician practitioner in a facility setting, the definition of a substantive portion of an E/M visit had been set to change to “more than half the total time” of a visit when determining who should report the visit for billing purposes. But the proposed rule would delay that change by a year.

Telehealth flexibilities remain (for now)

The rule incorporates statutory provisions ensuring that telehealth flexibilities will continue for five months after the end of the COVID-19 public health emergency (PHE). If the PHE expires in October 2022 as is currently scheduled, these flexibilities would expire in March 2023.

The accommodations include:

  • Allowing telehealth services to be furnished to patients anywhere in the U.S.
  • Allowing practitioners such as physical therapists, occupational therapists, speech-language pathologists and audiologists to deliver telehealth services
  • Waiving in-person visit requirements for mental health services provided via telehealth
  • Extending audio-only options for certain services, such as diagnosis and treatment of mental health conditions
  • Extending payment for telehealth services provided by rural health clinics and federally qualified health centers

More than 50 services, including several audio-only services, would be removed from the coverage list five months after the expiration of the PHE.

But more than 50 services would remain available to be covered on a Category 3 basis throughout 2023, allowing CMS to collect data that could support inclusion of those services as permanent additions to the Medicare telehealth services list. The “95” modifier would cease to be required for telehealth claims five months after the end of the PHE, with the claims instead requiring the appropriate place-of-service indicator.

Efforts to bolster behavioral health services

Medicare would cover a new “general behavioral health integration” service performed by a clinical psychologist or clinical social worker on a monthly basis, according to the proposed rule. A psychiatric diagnostic evaluation, which would serve as the initiating visit, also would be covered.

In addition, services would be covered when provided by licensed behavioral health professionals under the general supervision of a physician or advanced practitioner. Previously, regulations have required that the behavioral health professionals be under “direct supervision.”

“Practically speaking, this means that these behavioral health practitioners would be able to provide services without a doctor or nurse practitioner physically on site, expanding access to behavioral health services like counseling and cognitive behavioral therapy in additional communities, particularly rural or underserved communities where care can be hard to find,” CMS leaders wrote in a blog post.

Proposed new HCPCS codes are designed to encourage a team-based approach to chronic pain management and treatment. The codes would cover:

  • Diagnosis
  • Assessment and monitoring
  • Administration of a validated pain rating scale or tool
  • Development and maintenance of a person-centered care plan
  • Treatment management
  • Medication management
  • Pain and health literacy counseling
  • Crisis care
  • Communication and coordination among practitioners

A new accommodation also would allow opioid treatment programs to bill Medicare for services performed by mobile units without obtaining a separate registration. And payment rates for those programs would be increased to “better reflect the costs of the counseling services,” the CMS leaders wrote.

Comment period is underway

Provisions in the proposed rule are subject to change based on stakeholder comments, which can be submitted during a 60-day period following release of the proposed rule. CMS has not yet specified the deadline, but given that the rule was released July 7, the due date would fall on or around Sept. 5.


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