CMS Releases 2022 Medicare Physician Fee Schedule Final Rule

On November 2, 2021, CMS published a proposed rule for the 2022 calendar year (CY) Medicare Physician Fee Schedule (PFS).

CY 2022 PFS Rate Setting and Medicare Conversion Factor

The final conversion factor for 2022 is $33.5983, which reflects the expiration of the 3.75% increase for services furnished in 2021, the 0.00% update adjustment factor specified under section 1848(d)(19) of the Act, and a budget neutrality adjustment of –0.10%.

Clinical Labor Pricing Update

CMS finalized the phased-in implementation of the clinical labor update over 4 years to transition from the current prices to the final updated prices in 2025. Clinical labor rates were last updated in 2002 using Bureau of Labor Statistics (BLS) data and other supplementary sources when BLS data points were not available. CMS finalized provisions to update the clinical labor rates in conjunction with the final year of the supply and equipment pricing update. This multi-year implementation aims to address concerns that current wage rates are inadequate, that they do not reflect current labor rate information, and that updating the supply and equipment pricing without updating the clinical labor pricing creates distortions in the allocation of direct PE.

CMS also makes additional technical changes to how the rates are calculated and how certain clinical labor types are priced when BLS data are not available. CMS will use the median BLS wage data rather than the proposed average or mean wage data for calculation of clinical labor rates. The updated data significantly increases the overall pool of direct costs. The direct practice expense data within the PFS is a fixed pool of resources. Therefore, implementation of these increased costs result in a redistribution. The total direct practice expense pool increases by 30% under this proposal, resulting in a significant budget neutrality adjustment.

Specialties that rely primarily on clinical labor rather than supply or equipment will receive the largest increases relative to other specialties. In contrast, specialties that rely primarily on supply or equipment items are anticipated to receive the largest decreases relative to other specialties. These payment impacts, however, do not show the impact of the expiration of the 3.75% increase to PFS payments for 2021 from the Consolidated Appropriations Act. Thus, the combined effect of RVU changes and the conversion factor is likely much larger than these impacts.

Comment Solicitation for Impact of Infectious Disease on Codes and Rate Setting During the COVID-19 Public Health Emergency

CMS heard stakeholders’ concerns regarding additional costs borne by physicians due to the pandemic that may impact the professional services furnished to Medicare beneficiaries. In the CY 2022 proposed rule, CMS sought comments on whether Medicare should make changes to payments for services or develop separate payments to account for costs related to the public health emergency (PHE), such as disease control measures, research-related activities and services, or PHE-related preventive or therapeutic counseling services. In comments on the proposed rule, the American Medical Association (AMA) reiterated the need for CMS to adopt common procedural terminology (CPT) code 99072. The AMA and 127 state medical and national specialty societies have urged CMS to implement and pay for CPT code 99072. Additional supplies, materials, and clinical staff time over and above those usually included in an office visit or other non-facility service(s), when performed during a PHE, as defined by law, due to respiratory-transmitted infectious disease, physician practices are to be compensated for the additional supplies and new staff activities required in order to provide safe patient care without patient cost-sharing. In the final rule, CMS stated that it will consider the comments received in future rulemaking.

Evaluation and Management (E/M) Services

Effective January 1, 2021, CMS implemented sweeping revisions to office and outpatient E/M visits as recommended by the CPT Editorial Panel and the RVS Update Committee, which allow physicians to bill the E/M visit level based on either total time spent on the date of patient encounter or on the medical decision-making utilized in the provision of the visit. Due to these changes and recent withdrawal of guidance in the Medicare Claims Policy Manual, CMS reviewed other E/M visit code sets and finalized clarifications regarding split (or shared) visits, critical care services, and teaching physician visits.

Communications Technology: Retention of Category 3 Services Through 2023

In the CY 2021 PFS final rule (85 FR 84507), CMS created a third category for the Medicare telehealth services, referred to as Category 3. This new category describes services that were added to the Medicare telehealth services list during the PHE for which there is likely to be clinical benefit when furnished via telehealth but there is not sufficient evidence on these services available to consider adding the services under the Category 1 or Category 2 criteria. Services added as a Category 3 telehealth service would ultimately need to meet the Category 1 or Category 2 criteria to be permanently added to the telehealth service list. CMS will continue to pay for services placed temporarily on the telehealth list through the end of 2023.

This proposal is consistent with ISASS’s advocacy that CMS maintain Medicare coverage and payment for the many services that were temporarily added to the Medicare telehealth list during the PHE for 2 years after the PHE ends in order to provide more time to evaluate whether these services should be permanently added to the telehealth list once the COVID-19 PHE is declared to be over.

In response to concerns about the uncertainty about when the PHE may end, CMS finalized its proposal to revise the timeframe for inclusion of the services added to the Medicare telehealth list on a Category 3 basis until the end of 2023. CMS believes this will allow additional time for stakeholders to collect, analyze, and submit data to support their consideration for permanent addition to the list on a Category 1 or Category 2 basis.

Expiration of PHE Flexibilities for Direct Supervision Requirements

Prior to the PHE, direct supervision of diagnostic tests, services incident to physician services, and other specified services required the immediate availability of the supervising physician or other practitioner. CMS interpreted this “immediate availability” to mean in-person availability—in other words, physical availability and not virtual availability. During the PHE, CMS changed the definition of “direct supervision” to allow the supervising professional to be immediately available through a virtual presence using real-time audio/video technology for the direct supervision of diagnostic tests, physicians’ services, and some hospital outpatient services. CMS finalized continuation of this policy through the end of the year in which the PHE ends or December 31, 2021.

CMS notes this temporary exception to allow immediate availability for direct supervision through a virtual presence also facilitates the provision of telehealth services by clinical staff of physicians and other clinicians incident to their own professional services. This allowed PT, OT, and SLP services provided incident to a physician to be provided and reimbursed.

In the proposed rule, CMS solicited comments on several items related to direct supervision and

In the proposed rule, CMS solicited comments on several items related to direct supervision and:

ISASS, the AMA, and several other commenters recommended that the policy be made permanent or, at a minimum, extended through the end of 2023 consistent with the policy for Category 3 telehealth services.

ISASS supports the current policy during the COVID-19 PHE allowing “direct supervision” to include immediate availability through the virtual presence of the supervising physician using real-time, interactive audio/video communications technology. ISASS believes it should be made permanent, or, at a minimum, the current policy should be continued through 2023, as is proposed for Category 3 Medicare telehealth services. The fact that remote supervision may be inappropriate in some cases does not justify refusing to pay for it under any circumstance. In many rural and underserved areas, patients may be unable to access important services if the only physician available has to supervise or deliver services at multiple locations and may not be available to supervise services when all patients need them. Failure to allow remote direct supervision can mean that a patient would be unable to receive the service at all, rather than forcing in-person supervision to occur. Both patients and CMS rely on physicians’ professional judgment to determine the most appropriate services to deliver, and the same principle should apply to how supervision is provided. In the final rule, CMS indicated that it will consider these comments in future rulemaking.

Appropriate Use Criteria

As urged by ISASS, CMS finalized its proposal to delay enforcement of the appropriate use criteria (AUC) program by at least 1 year, until the later of January 1, 2023, or the January 1 that follows the end of the PHE. The AUC program requires ordering physicians to consult appropriate use criteria using a clinical decision support mechanism prior to ordering advanced imaging services for Medicare beneficiaries and furnishing physicians to report this information on the claim. Previously, CMS was scheduled to begin denying claims that do not report AUC information on January 1, 2022. The finalized delay recognizes the significant disruptions caused by the COVID-19 pandemic and will allow more time for the education and operations testing period, which is critical given CMS’ finding that only 9% to 10% of 2020 diagnostic imaging claims would have met the AUC reporting requirements to be paid if enforcement had been in effect.

The final rule also acknowledges the complexity of the AUC program, and CMS states that it will continue to explore opportunities for reducing the burden of the AUC program.

Chronic Pain Management

CMS sought comments on whether it should create separate coding and payment for chronic pain management and achieving safe, effective dose reduction of opioid medications when appropriate, or whether these services are already appropriately recognized in the payment system. CMS cited multiple federal reports that urge better support for person-centered pain management, including the 2016 National Pain Strategy and the 2019 HHS Pain Management Best Practices Inter-Agency Task Force Report. It also noted the intersection between the problems with pain care and the worsening epidemic of drug overdose deaths, primarily due to illicitly manufactured fentanyl, other synthetic opioids, and methamphetamine. CMS also noted that untreated and inappropriately treated pain may translate to increased Medicare costs as more patients experience functional decline, incapacitation, and frailty. AMA comments supported patient-centered management of pain by clarifying, communicating, modifying, and/or expanding existing care management codes as needed to include patients with chronic pain and significant acute pain, in addition to patients with chronic diseases.

The final rule indicates that CMS will consider these issues in future rulemaking.

Billing for Physician Assistant Services

Section 403 of the Consolidated Appropriations Act (CAA) of 2021 amends section 1842(b)(6)(C)(i) of the Act to remove the requirement to make payment for physician assistant (PA) services only to the employer of a PA effective January 1, 2022. With the removal of this requirement, PAs will be authorized to bill the Medicare program and be paid directly for their services in the same way that nurse practitioners (NPs) and clinical nurse specialists (CNSs) do. PAs also may reassign their rights to payment for their services and may choose to incorporate as a group comprised solely of practitioners in their specialty and bill the Medicare program in the same way that NPs and CNSs may do.

To read more information on the final rule, see the following links:

• CY 2022 Physician Fee Schedule Final Rule
• CY 2022 Physician Fee Schedule Final Rule fact sheet