CMS Issues CY 2023 Final Rule for Medicare Physician Fee Schedule (MFPS) and Hospital Outpatient Prospective Payment System (HOPPS)/Ambulatory Surgery Center (ASC)

The Centers for Medicare and Medicaid Services (CMS) issued the final rule for the MPFS and HOPPS/ASC These final rules cover physician and hospital outpatient/ambulatory surgery services furnished to beneficiaries on or after January 1, 2023. Highlights are described below:

For MFPS:

  • The finalized conversion factor (CF) is $33.0607, which reflects the CY 2022 CF without the Protecting Medicare American Farmers for Sequester Cuts Act increase ($33.5983), and with the application of the statutory update factor of 0.00 percent and budget neutrality factor of -1.60 percent.
  • The finalized changes in RVUs will have an estimated impact for select specialties:
    • Cardiac Surgery -2% (proposed -1%)
    • Cardiology -1% (proposed -1%)
    • Interventional Radiology -3% (proposed -4%)
    • Vascular Surgery -3% (proposed -3%).
  • CMS calculated the MP RVUs finalized for CY 2023 based on MP data received from state insurance filing, which is similar to the CY 2020 update. CMS has finalized to improve and develop a more comprehensive data set when CMS specialty names are not clearly identified in the insurer filings by using rates mapped from the more commonly reported specialties within risk class. CMS has also finalized their proposal to create a specialty-level risk index for the calculation of MP RVUs. After identifying an impact threshold of 1/3, CMS finalized to phase in the reduction of MP RVU over 3 years (preceding the next update) by 1/3 of the change in MP RUVs for those specialties in each year that have a 30 percent or greater threshold in the risk index value as a result of the update.
  • CMS finalized their proposal to change several California locality identities, which will decrease the 32 California payment locales to 29. Due to timing constraints relating to implementing the locality changes, application of these changes will begin in CY 2024. These changes will be reflected in Addenda D and E for CY 2024 when they become operational.
  • The Medicare Economic Index (MEI) is the “reasonable charge-based payment methodology” that was in place for physicians’ services prior to the MPFS. This measure is used for relative weights of work, PE and MP. The MEI has not been updated since 2014. CMS proposed to rebase and revise the MEI to reflect more current market conditions faced by physicians in providing services and is finalizing their proposal based on the 2017 annual expense data for the U.S. Census Bureau’s Services Annual Survey (SAS). CMS also finalized to delay the implementation of the rebased and revised MEI for use in the CY 2023 PFS ratesetting and finalized CY 2023 GPCIs.
  • The following new codes are among the codes selected for work RVU valuation by CMS in the final rule:
    • 36836 and 36837 – Percutaneous arteriovenous fistula creation, upper extremity;  
    • 49591-49618 – Repair of anterior abdominal hernia(s) (i.e., epigastric, incisional, ventral, umbilical, spigelian);
    • 49621 and 49622 – Repair of parastomal hernia;
    • 49623 – Removal of total or near total non-infected mesh or other prosthesis at the time of initial or recurrent abdominal hernia repair or parastomal hernia repair; and
    • G0316-G0318 – Prolonged hospital inpatient or observation care, E/M service beyond the total time for the primary service.  
  • CMS finalized their intention to accept and move forward with the AMA CPT® Editorial Panel changes to what they are calling “Other E/M” visits (inpatient and observation visits, emergency department (ED) visits, nursing facility visits, domiciliary or rest home visits, home visits, and cognitive impairment assessment) except critical care services to match the framework (medical decision making or time-based) of the outpatient and office E/M visits which changed in 2021. A full listing of the changes can be found on the AMA website:
    • The definitions for “initial” and “subsequent” services were amended in relation to E/M visits for inpatient services, and a billing provider can only bill for one hospital inpatient or observation care code for an initial visit, a subsequent visit, or inpatient or observation care (including admission and discharge), as appropriate, once per calendar date.  
    •  For split (or shared) visits, only the physician or nonphysician practitioner who performs the substantive portion of the split visit can bill for the visit. With the exception of the critical care visits, the substantive portion will be defined by one of three key components (history, exam, MDM) or more than half of the total time spent by the physician and NPP performing the split (or shared) visit and require a defined modifier when billed on the claim. This policy will be fully integrated in CY 2024, allowing a one-year delay. 
  • All services added to the Medicare telehealth services under Category 3 (temporary addition for the COVID-19 PHE) will remain on the list until the end of CY 2023. Nearly 50 additions to the Category 3 list. Codes that are not identified as permanent telehealth services or temporary telehealth services as Category 3 will end on day 152 after the end of the PHE.   
  • For communication technology-based services, codes 99441-99443 (telephone E/M services) are considered non-face-to-face services; therefore, they are not equivalent to in-person care or face-to-face services outside the PHE. CMS is finalizing to not keep these telephone E/M services on the Medicare telehealth services list after the end of the PHE and the 151-day post PHE extension period.
  • CMS will continue to process claims for payment of telehealth services when modifier “95” is appended to service codes through the later part of the end of the year in which the PHE ends or CY 2023; and will continue to instruct providers to report the place of service (POS) code that would have been reported if the service had been provided in-person during the 151-day period after the end of the PHE, “02” – telehealth provided other than in patient’s home or “10” – telehealth provided in patient’s home.
  •  For audio-only communications technology services, CMS is requiring modifier “93” (Synchronous Telemedicine Service Rendered Via Telephone or Other Real-Time Interactive Audio-Only Telecommunications System) be appended to those services.  
  • For the duration of the PHE, CMS redefined “direct supervision” to be provided through virtual presence using interactive real-time audio-video telecommunication technology. CMS is seeking comment on the possibility of permanently allowing this policy to continue, as it needs more information to make a determination.

For HOPPS/ASC:

  • CMS finalized their proposal to use CY 2021 data to set the CY 2023 HOPPS and ASC rates since the CY 2021 claims data was not  impacted by the COVID-19 PHE.
  • Payment rates under HOPPS/ASC are increased by an Outpatient Department (OPD) fee schedule increase factor of 3.8 percent. This increase is based on the final hospital inpatient market basket percentage increase of 4.1 percent reduced by a proposed productivity adjustment of 0.3 percentage point.
  • CMS is also finalizing to continue implementing a statutory 2.0 percentage reduction for hospitals failing to meet the hospital outpatient quality reporting requirements set forth by the Hospital Outpatient Quality Reporting (OQR) Program.
  • The finalized conversion factor for CY 2023 for hospitals that meet the hospital OQR program requirements is $85.585 in the calculation for national unadjusted rates. For those hospitals that fail to meet the hospital OQR program requirements, the CF is $83.934.
  • The wage indexes for CY 2023 include the continued implementation of the OMB labor market area delineations based on 2010 census data with updates. CMS finalized to continue implementing a 5 percent cap on wage index decreases.
  • The continuation of the rural adjustment factor of 7.1 percent to certain rural sole community hospitals was finalized for CY 2023.
  • Code G0463 will continue to be the standardized code for the HOPPS relative payment weights and will be continued to be reimbursed at 40 percent.
  •  Based on the established criteria used for annual review of the Inpatient Only List (IPO) list, CMS identified and proposed to remove 10 services in CY 2023. CMS finalized this proposal with modification to remove 11 services rather than 10 services. In addition, CMS is finalizing 8 services to the IPO list. Of interest are the new hernia repair codes which now include insertion of mesh when performed (49596, 49616-49618, 49621-49622). After clinical review, CMS determined they require a hospital inpatient admission, and as such, will received a status indicator of “C” (inpatient only procedure) for CY 2023.
  • The finalized conversion factor for CY 2022 for ASCs that meet the ASCQR program requirements is $51.854 in the calculation for national unadjusted rates. For those hospitals that fail to meet the hospital ASCQR program requirements, the CF is $50.855.
  • Clinical software, including clinical decision support software, clinical risk modeling and computer aided detection (CAD) are becoming more available to providers. Identified as Software as a medical Service (SaaS) procedures, CPT® codes have been developed for their reporting and payment by Medicare, sometimes by add-on codes. HOPPS payment rules dictate add-on codes are packaged into the primary procedure. Because of this, CMS proposed not to recognize the SaaS add-on codes under HOPPS but establish C-codes to describe these add-on codes as standalone services for billing with an associated imaging service. CMS finalized their proposal with modification, specifically not to establish C-codes for these services, but rather recognize SaaS CPT® add-on codes and pay separately for them under identical APCs with the same status indicator as their standalone codes.

The complete MPFS and HOPPS/ASC PPS final rule summaries can be found on the GORE Coding Resource Center website under “Education – CMS Rules Updates”: https://gore.rccsclients.com/education/rules-updates/.