What you need to know: Medicare CY 2023 PFS and OPPS and ASC final rules

United States Publication November 2022

The Centers for Medicare and Medicaid Services (CMS) recently released its annual payment final rules under the Medicare Physician Fee Schedule (PFS) and the Hospital Outpatient Prospective Payment (OPPS) and Ambulatory Surgical Center (ASC) Payment Systems for CY 2023 (collectively, the PFS and OPPS final rules). There are a number of notable changes and certain changes quickly led to calls for Congress to make statutory changes, specifically with regard to forthcoming physician payment cuts. In addition, during the lame duck session, Congress is expected to address the five percent bonus for providers that participate in Advanced Alternative Payment models that is set to expire and the Medicare sequestration reductions.

In previous alerts, Norton Rose Fulbright professionals addressed the CY 2023 PFS and OPPS proposed rules that providers should evaluate for their potential consequences and impacts. Policy changes from these proposed rules and key highlights in the final rules include the following:

Medicare CY 2023 Physician Fee Schedule final rule

CY 2023 payment update

The PFS final rule reduces the CY 2023 physician fee schedule conversion factor from US$34.61 to US$33.06 – a 4.48 percent decrease for CY 2023. The new conversion factor, which reflects a zero percent statutory update factor, a budget neutrality adjustment and the expiration of a temporary three percent increase to help physicians during the COVID-19 public health emergency (PHE), comes in the wake of mounting inflation pressure and labor supply challenges for Medicare-participating physicians.

Evaluation and management visits

A split (or shared) visit refers to an evaluation and management (E/M) visit performed in part by both a physician and a non-physician practitioner (NPP) in the same group practice. In the CY 2022 PFS final rule, CMS provided that whether the service should be billed under the national provider identifier (NPI) of the physician or NPP should be determined by the practitioner who performs more than half of the total (non-duplicated) time spent on the E/M visit. CMS also defined "substantive portion" and provided for billing of split (or shared) visits in certain settings and for certain patient types. The policy was set to become effective on January 1, 2023. The CY 2023 PFS final rule delays this policy until January 1, 2024. As a result, clinicians who furnish split (or shared) visits will continue to have a choice of history, or physical exam, or medical decision-making, or more than half of the total time, to define the substantive portion through CY 2023.

Telehealth services

The CY 2023 PFS final rule extends coverage and payment for Category 3 telehealth services through the end of 2023. According to CMS, Category 3 describes services added to the Medicare Telehealth Services List during the PHE for which there is likely to be a clinical benefit when furnished via telehealth, but there is not yet sufficient evidence available to consider the services for permanent addition under Category 1 or Category 2 criteria. The PFS final rule also adds services to the Medicare Telehealth Services List on a Category 3 basis through the end of 2023. In alignment with the Consolidation Appropriations Act of 2022 (CAA), CMS extended the duration that temporary services (i.e., services not added to the list on a Category 1, 2 or 3 basis) are included on the Medicare Telehealth Services List to 151 days following the end of the PHE. As required by the CAA, the PFS final rule also extends the following flexibilities implemented during the PHE for an additional 151 days following the end of the PHE:

  • Allowing telehealth services to be furnished in any geographic area and in any originating site setting (including the beneficiary's home)
  • Permitting certain services to be furnished via audio-only telecommunications systems, and
  • Allowing physical therapists, occupational therapists, speech-language pathologists and audiologists to furnish telehealth services

The CAA also delays the in person visit requirements for behavioral health services furnished via telehealth until 152 days after the end of the PHE. Lastly, CMS finalized a proposal to allow physicians and practitioners to continue to bill with the place of service (POS) indicator that would have been reported had the service been furnished in person. However, these claims must use the modifier "95" to indicate telehealth services were performed.

Medicare Shared Savings Program

For providers that are new or not reentering as an accountable care organization (ACO), the PFS final rule allows for savings for "low-revenue" ACOs of a one-time payment of US$250,000 and quarterly payments for the next two years of the ACO's five year period. Once the ACO generates shared savings in its current and next agreement periods, these advanced payments are recouped. CMS notes in the PFS final rule that payments will not be recouped if the ACO is not generating savings. However, the ACO must remain in the program for five years. CMS also finalized several policies to increase ACO participation in rural and underserved areas, including a health equity adjustment to an ACO's quality score, revising the benchmark methodology and allowing ACOs to have more time to become adjusted to accountable care before they are liable for downside risk.

Behavioral health services

CMS finalized its proposal to add an exception to the direct supervision requirement under the Medicare "incident to" rule to allow behavioral health services to be furnished under the general supervision of a physician or an NPP when these services or supplies are provided by auxiliary personnel incident to the services of a physician or NPP. The PFS final rule also establishes a new General Behavioral Health Integration (BHI) code performed by clinical psychologists (CPs) or clinical social workers (CSWs) to account for monthly care integration where the mental health services furnished by a CP or CSW are serving as the focal point of care integration.

The Medicare CY 2023 PFS Final Rule was published in the November 18, 2022 Federal Register. A pair of Fact Sheets released by CMS details changes to the CY 2023 Quality Payment Program and the Medicare Shared Savings Program.

Medicare CY 2023 OPPS and ASC final rule

OPPS and ASC payment rates for CY 2023

CMS updated the ASC and OPPS payment rates for facilities that meet the applicable quality reporting requirements by 3.8 percent, an increase of 1.1 percent from the proposed rule that proposed to update the OPPS and ASC payment rates by only 2.7 percent. Based on these updates, CMS predicates that total payments for CY 2023 through the OPPS payment system will be approximately US$86.5bn and through the ASC payment system, will be approximately US$5.3bn.  

OPPS payment for the 340B Program

To address the American Hospital Association v. Becerra Supreme Court decision, CMS restored for CY 2023 the default payment rate of the average sales price (ASP) plus six percent for all drugs and biologics acquired through the 340B Program and removed the increase in CY 2018 to the conversion factor that was made to try to make the 340B policy budget neutral. CMS is still considering how to apply the US Supreme Court's decision to CY 2018-2022 and stated it will address this in future rulemaking prior to the CY 2024 OPPS proposed rule.

Rural emergency hospitals

In accordance with Section 125 of the Consolidated Appropriations Act, 2021, CMS finalizes Conditions of Participation for the new Rural Emergency Hospital (REH) Medicare provider type and the payment rates applicable to REHs, effective January 1, 2023. REHs will be facilities that are converted from either a critical access hospital (CAH) or a rural hospital that has less than 50 beds and that do not provide acute care inpatient services, with the exception of skilled-nursing facility services furnished in a distinct part unit. Facilities will be able to apply to convert to a REH by submitting a CMS-855A change of information application rather than an initial enrollment application. Under the OPPS final rule, REHs will be paid on a per-service basis at the OPPS payment rate increased by five percent and beneficiaries will not be charged any coinsurance on the additional five percent rate. REHs will also be paid a monthly facility rate, which will increase in subsequent years based on the hospital market basket percentage increase. CMS also finalized the Conditions of Participation that REHs must meet to participate in the Medicaid and Medicare programs and revisions to certain Stark Law exceptions to make them applicable to compensation arrangements for REHs. 

Exemption of Rural Sole Community Hospitals from site neutrality  

CMS finalized its proposal to exempt Rural Sole Community Hospitals (SCH) when the service is provided in an off-campus provider-based department from the site-specific Medicare PFS-equivalent payment rate for the clinic visit service.

Behavioral health services in beneficiaries' homes

In order to ensure that beneficiaries continue to receive access to behavioral health services in their homes and those services are not connected to a PHE waiver, CMS will now consider behavioral health services furnished to beneficiaries in their homes as covered outpatient services that can be paid under the OPPS. As proposed, beneficiaries will need to have an in-person visit six months within the initiation of services and then within every 12 months after the first in-person visit, with certain exceptions being permitted based on the beneficiary and documented in the beneficiary's record.

The Medicare CY 2023 OPPS Final Rule was published in the November 23, 2022 Federal Register. A corresponding Fact Sheet on the OPPS Final Rule was also released by CMS along with information on the new REH provider type.

Please contact professionals from the Norton Rose Fulbright healthcare team to assist with the evaluation of these final rules and their impact on provider operations.

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