CMS Releases 2022 Medicare Physician Fee Schedule Proposed Rule

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CMS Releases 2022 Medicare Physician Fee Schedule Proposed Rule

On July 13, 2022, CMS published a proposed rule for the 2022 calendar year (CY) Medicare Physician Fee Schedule (PFS). The Medicare Physician Fee Schedule sets the annual payment rates, policies, and regulations related to physician practices. Comments in response to the letter will be due September 13, 2021.

Since 1992, Medicare payment has been made under the PFS for the services of physicians and other billing professionals. Physicians’ services paid under the PFS are furnished in a variety of settings, including physician offices, hospitals, ambulatory surgical centers (ASCs), skilled nursing facilities and other post-acute care settings, hospices, outpatient dialysis facilities, clinical laboratories, and beneficiaries’ homes. Payment is also made to several types of suppliers for technical services, most often in settings for which no institutional payment is made.

For most services furnished in a physician’s office, Medicare makes payment to physicians and other professionals at a single rate based on the full range of resources involved in furnishing the service. In contrast, PFS rates paid to physicians and other billing practitioners in facility settings, such as a hospital outpatient department or an ASC, reflect only the portion of the resources typically incurred by the practitioner in the course of furnishing the service.

Payments are based on the relative resources typically used to furnish the service. Relative value units (RVUs) are applied to each service for work, practice expense, and malpractice expense. These RVUs become payment rates through the application of a conversion factor. Geographic adjusters (geographic practice cost index) are also applied to the total RVUs to account for variation in practice costs by geographic area. Payment rates are calculated to include an overall payment update specified by statute.


CY 2022 PFS Rate-setting and Conversion Factor

With the proposed budget neutrality adjustment to account for changes in RVUs (required by law), and expiration of the 3.75% payment increase provided for CY 2021 by the Consolidated Appropriations Act, 2021 (CAA), the proposed CY 2022 PFS conversion factor is $33.58, a decrease of $1.31 from the CY 2021 PFS conversion factor of $34.89. The PFS conversion factor reflects the statutory update of 0.00% and the adjustment necessary to account for changes in RVUs and expenditures that would result from the proposed policies. Stakeholders, including ISASS, will actively encourage Congress to provide relief from the scheduled expirations so that the conversion factor does not see a reduction as proposed.

Evaluation and Management (E/M) Visits

CMS is proposing to refine our long-standing policies for split (or shared) E/M visits to better reflect the current practice of medicine, to reflect the evolving role of non-physician practitioners (NPPs) as members of the medical team, and to clarify conditions of payment that must be met to bill Medicare for these services. The CY 2022 PFS proposed rule includes the following proposed changes:

  • Split (or shared) E/M visits defined as E/M visits provided in the facility setting by a physician and an NPP in the same group.
  • The practitioner who provides the substantive portion of the visit (more than half of the total time spent) would bill for the visit.
  • Split (or shared) visits could be reported for new as well as established patients and for initial and subsequent visits as well as prolonged services.
  • Reporting of a modifier required on the claim to help ensure program integrity.
  • Documentation in the medical record that would identify the two individuals who performed the visit. The individual providing the substantive portion must sign and date the medical record.

Similarly, CMS is proposing to refine policies for critical care services. In CY 2022, those proposals include:

  • Using American Medical Association (AMA) Current Procedural Terminology (CPT) prefatory language as the definition of critical care visits, including bundled services.
  • Allowing critical care services to be furnished concurrently to the same patient on the same day by more than one practitioner representing more than one specialty, and allowing critical care services to be furnished as split (or shared) visits.
  • Clarifying that no other E/M visit can be billed for the same patient on the same date as a critical care service when the services are furnished by the same practitioner, or by practitioners in the same specialty and same group, to account for overlapping resource costs.
  • Stipulating that critical care visits cannot be reported during the same time period as a procedure with a global surgical period.

Teaching Physician Services

The AMA CPT office/outpatient E/M visit coding framework that CMS finalized for CY 2021, under which practitioners can select the office/outpatient E/M visit level to bill, was based either on use of the total time personally spent by the reporting practitioner or medical decision-making. Under existing regulations, if a resident participates in a service furnished in a teaching setting, a teaching physician can bill for the service only if they are present for the key or critical portion of the service. CMS is proposing to clarify that the time when the teaching physician was present can be included when determining the E/M visit level. Under the primary care exception specifically, only medical decision-making would be used to select the visit level to guard against the possibility of inappropriate coding that reflects residents’ inefficiencies rather than a measure of the time required to furnish the services. 

Telehealth Services Under the PFS

As CMS continues to evaluate the temporary expansion of telehealth services that were added to the telehealth list during the COVID-19 public health emergency (PHE), CMS is proposing to allow certain services added to the Medicare telehealth list to remain on the list to the end of December 31, 2023, so that there is a glide path to evaluate whether the services should be permanently added to the telehealth list following the COVID-19 PHE.

CMS is proposing to amend the current regulatory requirement for interactive telecommunications systems—which are defined as multimedia communications equipment that includes, at a minimum, audio and video equipment permitting two-way, real-time interactive communication between the patient and distant site physician or practitioner—to include audio-only communication technology when used for telehealth services for the diagnosis, evaluation, or treatment of mental health disorders furnished to established patients in their homes. CMS is proposing to limit the use of an audio-only interactive telecommunications system to mental health services furnished by practitioners who have the capability to furnish two-way audio/video communications, but where the beneficiary is not capable of using, or does not consent to, the use of two-way audio/video technology. CMS is also proposing to require use of a new modifier for services furnished using audio-only communications, which would serve to certify that the practitioner had the capability to provide two-way audio/video technology but instead used audio-only technology due to beneficiary choice or limitations.

CMS is also soliciting comment on the following: (1) whether additional documentation should be required in the patient’s medical record to support the clinical appropriateness of audio-only telehealth; (2) whether audio-only telehealth should be precluded for some high-level services, such as level 4 or 5 E/M visit codes or psychotherapy with crisis; and (3) whether any additional guardrails should be put in place to minimize program integrity and patient safety concerns.

Physician Assistant (PA) Services

CMS is proposing to make direct payment to PAs for professional services they furnish under Part B beginning January 1, 2022. Currently, Medicare can only make payment to the employer or independent contractor of a PA. Consequently, PAs could not bill and be paid by the Medicare program directly for their professional services; they also did not have the option to reassign payment for their services or to incorporate with other PAs to bill the program for PA services. Beginning January 1, 2022, PAs would be able to bill Medicare directly for their services and reassign payment for their services. This direct payment to PAs is dictated by Congressional legislation signed into law early in 2021.

Electronic Prescribing of Controlled Substances—Section 2003 of the SUPPORT Act

Section 2003 of the SUPPORT Act requires electronic prescribing of controlled substances (EPCS) for schedule II, III, IV, and V controlled substances covered through Medicare Part D. The statute provides the Secretary with discretion on whether to grant waivers or exceptions to the EPCS requirement and specifies several types of exceptions that may be considered. It also gives the Secretary authority to enforce noncompliance with the requirement and to specify appropriate penalties for noncompliance through rulemaking. In December 2020, CMS implemented the first phase of this mandate by naming the standard that prescribers must use for EPCS transmissions and delaying compliance actions until January 1, 2022.

In the PFS proposed rule, CMS is proposing to implement the second phase of this mandate by proposing certain exceptions to the EPCS requirement. The proposed exceptions would apply (1) where the prescriber and dispensing pharmacy are the same entity; (2) for prescribers who issue 100 or fewer controlled substance prescriptions for Part D drugs per calendar year; and (3) for prescribers who are in the geographic area of a natural disaster or who are granted a waiver based on extraordinary circumstances, such as an influx of patients due to a pandemic.

CMS is proposing that prescribers be able to request a waiver where circumstances beyond the prescriber’s control prevent the prescriber from being able to electronically prescribe controlled substances covered by Part D. They are proposing to initially enforce compliance by sending compliance letters to prescribers violating the EPCS mandate.

CMS is also proposing to extend the start date for compliance actions to January 1, 2023, in response to stakeholder feedback.

Appropriate Use Criteria (AUC) Program

CMS is proposing to begin the payment penalty phase of the AUC program on the later of January 1, 2023, or the January 1 that follows the declared end of the COVID-19 PHE. This flexible effective date is intended to take into account the impact that the PHE for COVID-19 has had and may continue to have on practitioners, providers, and beneficiaries. Currently, the payment penalty phase of the AUC program is set to begin January 1, 2022.

Medicare Shared Savings Program

CMS is proposing a longer transition for Accountable Care Organizations (ACOs) reporting electronic clinical quality measure/Merit-based Incentive Payment System clinical quality measure (eCQM/MIPS CQM) all-payer quality measures under the Alternative Payment Model (APM) Performance Pathway (APP) by extending the availability of the CMS Web Interface collection type for 2 years, through performance year (PY) 2023. This proposal responds to ACOs’ concerns about the transition to all-payer eCQM/MIPS CQM measures, including with respect to aggregating all-payer data across multiple electronic health record (EHR) systems and multiple health care practices that participate in ACOs.

CMS is proposing to revise the methodology for calculating repayment mechanism amounts for risk-based ACOs to reduce the percentage used in the existing amount by 50%. ACOs accepting performance-based risk must establish a repayment mechanism (eg, escrow, line of credit, surety bond) to assure CMS that they can repay losses for which they may be liable upon reconciliation. They are also proposing to modify the threshold for determining whether an ACO is required to increase its repayment mechanism amount during its agreement period. These proposals would result in lower required initial repayment mechanism amounts as well as less frequent repayment mechanism amount increases during an ACO’s agreement period, thereby lowering potential barriers for ACOs’ participation in two-sided models and increasing available resources for investment in care coordination and quality improvement activities. They are also proposing to allow a one-time opportunity for certain ACOs that established a repayment mechanism to support their participation in a two-sided model beginning on July 1, 2019; January 1, 2020; or January 1, 2021 to elect to decrease the amount of their existing repayment mechanisms.

Updates to the Open Payments Financial Transparency Program

Open Payments is a national transparency program that requires drug and device manufacturers and group purchasing organizations (known as “reporting entities”) to report payments or transfers of value to physicians, teaching hospitals, and other providers (known as “covered recipients”) to CMS. The changes proposed for Open Payments in the proposed rule are intended to support the usability and integrity of the data for the public, researchers, and CMS.

Under Open Payments, there are three kinds of records reported: (1) general (with categories like food and travel), (2) research, and (3) ownership interest. Several thousand payments in the general payments category are flagged by reporting entities for publication delay in each program year. The purpose of this delay is to keep a record from being publicly available because it contains sensitive information for research and development. Only payments that are associated with research should be delayed for publication. To address this, CMS is proposing language that will clarify the impermissibility of delaying general payments and that research-related payments do not need to have been specifically outlined in the original research agreement to be reported as research payments. The research payment format allows CMS to verify that the payment is being delayed correctly.

Under Open Payments, reporting entities are required to report payments to teaching hospitals. Over the course of the program, CMS has heard from stakeholders that there is often not enough information included in teaching hospital records for verification that the record was correctly reported. This often leads to disputes, a process by which the covered recipient initiates a conversation with the reporting entity to get more information, creating work for both parties. CMS is proposing to add a required field to teaching hospital records to address this issue. The field would only be visible to the teaching hospital disputing the information.

Physician-owned distributorships (PODs) are a subset of group purchasing organizations but are not specifically defined in the Open Payments regulation. Accordingly, CMS is proposing to include a specific definition for PODs and to make explicit the requirement for PODs to report and self-identify. The potential conflict of interest between providers and reporting entities is the heart of the Open Payments program, so quick and clear identification of physician-owned businesses would be beneficial.

CMS is also proposing changes to address an overlap between general and ownership payments. Currently, there is a nature of payment category for ownership. This general record for ownership is separate from ownership and investment interest, which is its own type of record. An entity may submit one or both types of records for ownership. CMS’s proposal would eliminate the confusion caused by the two types of ownership records and would facilitate easier understanding and analysis of the data by having only one type of ownership record.

Recertification is part of the annual process that reporting entities undertake when they submit records, primarily allowing for the companies to update their system information. However, this process is not available for companies that do not have any records to report. CMS is proposing to give companies the option to recertify and attest to the fact that they do not have any records to submit for a reporting year.

ISASS will review the proposed rule in detail and provide written comments to CMS to all relevant issues in advance of the comment deadline.

To read the CMS Press Release, see here:

To read the full rule, see here: