On November 1, 2022, the Centers for Medicare & Medicaid Services (CMS) issued two important final rules: one that included updates and policy changes for Medicare payments under the Physician Fee Schedule (PFS) and aspects of Medicare Part B, and the other that finalized Medicare payment rates for hospital outpatient and ambulatory surgical center (ASC) services.

Hospital Outpatient Prospective Payment System (OPPS) and ASC Payment System Final Rule

CMS has indicated that in addition to setting payment rates, the final rule is intended to “align with several key goals of the Administration, including addressing the health equity gap, fighting the COVID-19 Public Health Emergency (PHE), encouraging transparency in the health system and promoting safe, effective, and patient-centered care.”

Although not fully inclusive, the following is a brief summary of some significant items addressed in the final rule:

• Rate Increases – CMS has implemented a 3.8% increase to Medicare hospital OPPS rates for hospitals that meet applicable quality reporting requirements. This is a significant increase from the 2.7% increase included in the proposed rule.
• 340B Program – CMS has established reimbursement for drugs and biologicals acquired through the 340B program at the average sale price plus 6%. This decision is consistent with the Supreme Court’s recent decision in American Hospital Association v. Becerra. CMS did not address the remedy for 340B drug payments for the years 2018-2022, which were the focus of the Becerra decision, but indicated it will do so in future rulemaking prior to the CY 2024 OPPS/ASC proposed rule.
• Rural Emergency Hospitals – CMS has established a new provider type known as the Rural Emergency Hospital (REH). Qualifying critical access hospitals and small rural hospitals will be able to convert to REHs and Medicare payments beginning January 1, 2023. REHs will be eligible for additional facility payments in the amount of $272,866 monthly.
• Exemption to Site-Neutral Clinic Visit Cuts – In 2019, CMS instituted a policy to pay for hospital outpatient clinic services furnished at grandfathered off-campus provider-based departments at a rate of 40% of the OPPS. For 2023, CMS has exempted rural small community hospitals from its earlier policy of site-neutral clinic visit cuts. For these facilities, CMS will pay the full OPPS payment rate.
• Telehealth Services – During the COVID-19 PHE, CMS allowed hospitals to provide and bill for remote telehealth behavioral health services. The new rule allows these remote services to continue to be provided beyond the expiration of the PHE. In a change from the proposed rule, CMS will allow these remote services to be provided without the physician’s physical presence in the hospital. CMS will also allow these services to be provided by way of audio-only communications. The rule provides additional requirements for intermittent in-person services. However, those requirements can be waived if the patient and physician agree, and document in the chart, that the risks of in-person services outweigh its benefits, and the patient has a regular source of general medical care.

CMS has published a Fact Sheet on its website providing additional details regarding the above items and many of the other changes found in the Medicare Hospital OPPS and ASC Final Rule.

Physician Fee Schedule Final Rule

CMS has identified the goal of its 2023 PFS final rule as reflecting “a broader Administration-wide strategy to create a more equitable health care system that results in better accessibility, quality, affordability, and innovation.”

While the final rule covers an expansive list of topics, the following is a list of some highlights:

• CY 2023 Conversion Factor – With the expiration of the 3% supplemental increase to PFS payments for CY 2022, and the budget neutrality requirements for Medicare spending, the CY 2023 PFS conversion factor will be $33.06, a decrease of $1.55 from the CY 2022 PFS conversion factor of $34.61.
• Evaluation and Management (E/M) Visits – CMS adopted most of the AMA CPT Editorial Panel changes to E/M visit codes and guidelines, effective January 1, 2023, which are intended to reduce administrative burden.
• Split (or Shared) E/M Visits – CMS finalized its policy for addressing how to bill for a shared visit by defining the “substantive portion” of the service as more than half of the total time dedicated to one or more of the following elements: (1) history; (2) performing a physical exam; (3) medical decision making; (4) spending time (more than half of the total time). This choice will be permitted until CY 2024.
• Telehealth Services – CMS has extended the temporarily available telehealth services permitted because of the PHE at least through CY 2023, in order to allow additional time for the collection of data. Several other updates were also implemented for telehealth services for CY2023.
• Behavioral Health Services – A new exception was added to the direct supervision requirement for “incident to” allowing behavioral health services to be provided under general supervision of a physician or non-physician practitioner when such services are provided by auxiliary personnel.

CMS has published a Fact Sheet on its website providing additional details regarding the above items and many of the other changes found in the Medicare PFS Final Rule.