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Four Final Payment Rules Issued by CMS

November 10, 2022

For more information about this blog post, please contact Khaled J. KleleRyan M. MageeRyan L. O’NeillConnor BrezaWilliam R. Meiselas or Labinot Alexander Berlajolli.

The United States Centers for Medicare & Medicaid Services (“CMS”) recently published multiple fact sheets outlining upcoming payment rule changes for Calendar Year (“CY”) 2023. The payment rule updates include changes to payment rates, coverage of new procedures, and the designation of a new type of healthcare facility. Below is a summary of several major changes and announcements.

CMS Issued CY 2023 OPPS Fee Schedule

CMS issued the final rule for the 2023 Outpatient Prospective Payment System and Ambulatory Surgical Center Fee Schedule.  Under the final rule, CMS increased payment rates by 3.8% for CY 2023. CMS explained that this increase was based on the projected 2023 hospital market basket percentage increase of 4.1%, reduced by 0.3 percentage point for the productivity adjustment.

Four new procedures were added to the covered procedures list ("CPL") for ambulatory surgery centers ("ASCs"). The four new procedures are:

  • CPT 19307: Mastectomy, modified radical, including auxiliary lymph nodes, with or without pectoralis minor muscle, but excluding pectoralis major muscle;
  • CPT 37193: Retrieval (removal) of intravascular vena cava filter, endovascular approach including vascular access, vessel selection, and radiological supervision and interpretation, intraprocedural roadmapping, and imaging guidance (ultrasound and fluoroscopy), when performed [sic];
  • CPT 38531: Biopsy or excision of lymph node(s); open, inguinofemoral node(s); and
  • CPT 43774: Laparoscopy, surgical, gastric restrictive procedure; removal of adjustable gastric restrictive device and subcutaneous port components.

CMS finalized a general payment rate of the average sale price plus 6 percent for drugs and biologicals acquired through the 340B drug pricing program.

The final rule also published the conditions of participation and payment policies for Rural Emergency Hospitals ("REHs"), a new designation created to help certain Critical Access Hospitals ("CAHs") and rural hospitals avert potential closure. Qualifying CAHs and rural hospitals will be permitted to convert into REHs by filing a change of information (Form CMS-855A) with their Medicare Administrative Contractor ("MAC") rather than a new initial enrollment application. CMS further stated that it will issue sub-regulatory guidance regarding updates to the Medicare provider enrollment regulations (42 CFR Part 424, subpart P) which will address the enrollment requirements for REHs.

The current version of the final rule (CMS-1772-FC) has not yet been published in the Federal Register. CMS issued a fact sheet regarding the new Rural Emergency Hospital provider type. CMS also issued a fact sheet outlining the updates under the final rule.

CMS Announces Reduction to CY 2023 Physician Fee Schedule Conversion Factor

CMS announced multiple changes to the upcoming Physician Fee Schedule ("PFS") for CY 2023. Significantly, CMS announced reductions to the PFS conversion factor ("CF") for CY 2023. As the name suggests, the CF is the amount per total revenue value unit ("RVU") that Medicare will pay for a particular procedure (Total RVU x CF = Medicare Payment). Accordingly, a change to the CF constitutes a change to the amount of reimbursement by Medicare.

Due to budget neutrality adjustments (legal requirements to ensure payment rates for individual services do not result in changes to estimated Medicare spending), the final CY 2023 PFS conversion factor is $33.06, a decrease of 1.6% from last year. In other words, Medicare will be paying $1.55 less per RVU for procedures listed under the PFS in CY 2023. Moreover, this change marks the lowest Medicare PFS CF in nearly thirty years.

CMS further announced definition changes to multiple other E/M (e.g. hospital inpatient, nursing facility, home or residence services, etc.), such as revising descriptor times and indicia for code level determinations, though it will maintain the current E/M billing policies. Regarding split (or shared) E/M visits, CMS finalized its current policy of permitting the clinicians to determine which provider rendered the “substantial portion” of the split visit and will be billed.

Additionally, CMS announced that it would extend coverage for multiple telehealth services, which were included in the Medicare Teleservices List for the federal COVID-19 Public Health Emergency ("PHE"), for at least a period of 151 days following the end of the PHE. CMS further clarified that it would allow providers to continue billing telehealth services using the place of service ("POS") indicator that would have been reported had the service been furnished in-person through the end of CY 2023. However, such claims will require the modifier “95” to identify them as telehealth services. Finally, CMS announced that it increased its Telehealth Originating Site Facility Fee for CY 2023 to $28.63 (a 3.8% increase from CY 2022).

Other notable changes to the CY 2023 PFS include (i) permitting behavioral health services to be performed by auxiliary personnel under the general supervision of a physician or non-physician practitioner ("NPP") (in accordance with Medicare “incident to” billing requirements; 42 CFR 410.26); (ii) finalizing new HCPCS codes (G3002 and G3003) and valuation for chronic pain management and treatment services; (iii) revising the pricing methodology for the drug component of the methadone weekly bundle and the add-on code for take-home supplies of methadone prescribed for opioid treatment programs ("OTPs"); and, (iv) finalizing policies to allow beneficiaries direct access audiology services without an order from a physician or NPP for non-acute hearing conditions.

CMS has issued a fact sheet regarding upcoming CY 2023 PFS payment rate changes. Such changes were announced in the final rule (CMS-1770-F), which is on display and will be published in the Federal Register on November 18, 2022.

CMS Updates CY 2023 HHPPS Rate and Home Infusion Therapy Requirements

CMS published a final rule updating payment rates and methodologies for its Home Health Prospective Payment System ("HHPPS") and home infusion therapy services for CY 2023. These updates principally affect home health agencies ("HHAs") and other providers rendering in-home health services.

This rule finalizes routine, statutorily-required updates to the home health payment rates for CY 2023. CMS estimates that Medicare payments to HHAs in CY 2023 will increase in the aggregate by 0.7% compared to CY 2022 due, in part, to the implementation of the Patient-Driven Groupings Model ("PDGM") and the implementation of 30-day units of payment as required by the Bipartisan Budget Act of 2018. Notably, CMS stated that it will not implement further payment adjustments in CY 2023 as it continues to refine implementation of its new payment methodologies, such as PDGM.

Additionally, this rule updates the home infusion therapy services payment rates for CY 2023, as required by Section 1834(u)(3) of the Social Security Act. Under Section 1834(u)(3), such annual updates must be equal to the percent increase in the Consumer Price Index for all urban consumers ("CPI–U") for the 12-month period ending with June of the preceding year, reduced by the productivity adjustment for CY 2023. The final home infusion therapy payment rate update for CY 2023 is 8.7%, reflecting the CPI-U for June 2022 (9.1%) as reduced by the corresponding productivity adjustment (0.4%, based on IHS Global Inc.’s third-quarter 2022 forecast of the CY 2023).

CMS has issued a fact sheet regarding the HHPPS and home infusion therapy services payment updates. The final rule was published in the Federal Register on November 4, 2022 (87 FR 66790).

CMS Updates FY 2023 IPPS and LTCHPPS Payment Rates

CMS published a final rule updating payment rates and methodologies for the Medicare Hospital Inpatient Prospective Payment System ("IPPS") and Long-Term Care Hospital Prospective Payment System ("LTCH PPS") for fiscal year ("FY") 2023. Under the final rule, operating payment rates for hospitals paid under the IPPS and LTCHPPS, that successfully participate in the Hospital Inpatient Quality Reporting ("IQR") Program and meaningfully utilize electronic health records ("EHR"), will increase by 4.3%. However, hospitals participating in either program may be subject to further payment adjustments, due to excess readmissions, failure to meet program quality metrics, or due to rate modifications under the Hospital Value-Based Purchasing ("VBP") Program.

Additionally, under the final rule, CMS is revising its Hospital IQR Program criteria for FY 2023. Notably, CMS has announced that it is adopting ten measures, refining two current measures, making changes to the existing electronic clinical quality measure ("eCQM") reporting and submission requirements, updating eCQM validation requirements for medical record requests, and establishing reporting and submission requirements for patient-reported outcome-based performance measures. Hospitals participating in the IPPS and LTCHPPS programs will need to familiarize themselves with the updated IQR criteria in order to ensure compliance with program operating and reporting requirements.

CMS previously issued a fact sheet regarding the IPPS and LTCHPPS updates. The final rule was published in the Federal Register on November 4, 2022 (87 FR 66558).

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