CMS Settles on Physician Fee Schedule Conversion Factor Cut of $1.55

November 02, 2022 - UPDATED 11/02/2022: CMS has released the Calendar Year (CY) 2023 Physician Fee Schedule (PFS) final rule, which will reduce the conversion factor while expanding access to behavioral health and other benefits.

The federal agency announced earlier today that the final CY 2023 PFS conversion factor is $33.06, a decrease of $1.55 to the CY 2022 PFS conversion factor of $34.61. The final conversion factor is slightly higher than the one proposed in a July 2022 rule, which had a $1.53 decrease.

A fact sheet on CMS’ website says that the conversion factor decrease accounts for budget neutrality adjustments required by law, which will be 0 percent next year, as well as the expiration of the 3 percent supplemental increase to PFS payments.

Congress had granted the supplemental payment increase to help healthcare providers offset the financial losses and rising expenses associated with the ongoing COVID-19 pandemic. Healthcare industry groups have been calling on CMS to prevent PFS cuts, citing ongoing labor shortages, high expenses, and other financial issues.

CMS’ decision to move forward with a conversion factor decrease will draw industry ire. However, the federal agency is leading with new behavioral health access.

READ MORE: Providers Face Cuts in Medicare Physician Fee Schedule Proposed Rule

The final rule will expand access to behavioral health care by allowing behavioral health clinicians like licensed professional counselors and marriage and family therapists to offer services under general (versus direct) supervision of a Medicare practitioner.

Additionally, CMS says Medicare will pay for opioid treatment programs that employ telecommunications to initiate buprenorphine treatment. The programs will also be able to bill for opioid disorder treatment services provided through mobile units, such as vans, as long as they align with Substance Abuse and Mental Health Services Administration (SAMHSA) and Drug Enforcement Administration (DEA) guidance.

The final rule also provides payment for clinical psychologists and licensed clinical social workers delivering behavioral health as part of a primary care team and establishes a monthly payment for “comprehensive treatment and management services” for patients with chronic pain.

The expanded access to behavioral health is meant to support “a whole-person approach to care,” CMS says in a press release. The final rule will also expand access to cancer screening coverage and dental care next year.

“Access to services promoting behavioral health, wellness, and whole-person care is key to helping people achieve the best health possible,” CMS Administrator Chiquita Brooks-LaSure says in the release. “The Physician Fee Schedule final rule ensures that the people we serve will experience coordinated care and that they have access to prevention and treatment services for substance use, mental health services, crisis intervention, and pain care.”

READ MORE: Physicians Slam Fee Schedule Cuts, Call for Medicare Payment Reform

The CY 2023 PFS final rule also continues the update to evaluation and management (E/M) visit codes and related coding guidelines, particularly around “Other E/M visits,” including hospital inpatient, hospital observation, emergency department, nursing facility, home or residence services, and cognitive impairment assessment. The updates include new descriptor times, revised interpretative guidelines for levels of medical decision-making, choice of medical decision-making or time to select code level, and the elimination of history and exam for code level determinations.

The Medicare Shared Savings Program will also see changes in 2023. The final rule includes policies to incorporate advance shared savings payments to certain new ACOs and adjust ACO quality scores based on health equity performance. ACOs in the Program will also be allowed to stay in one-side financial tracks longer.

CMS says the changes to the Medicare Shared Savings Program are “some of the most significant reforms since the program was established in 2011.”

Physician Pay Cuts to Threaten Access to Care, Docs Say

Physicians treating Medicare beneficiaries are up against more than the PFS conversion factor cut, and, combined, the payment cuts will threaten access to care, leading physician advocacy groups are saying.

“The Medicare payment schedule released today puts Congress on notice that a nearly 4.5 percent across-the-board reduction in payment rates is an ominous reality unless lawmakers act before Jan. 1. The rate cuts would create immediate financial instability in the Medicare physician payment system and threaten patient access to Medicare-participating physicians,” Jack Resneck Jr., MD, president of the American Medical Association (AMA) said in a statement Tuesday.

READ MORE: Will Medicare Physician Fee Schedule Changes Drive Value-Based Care?

Physicians are also facing the end of the 4 percent Pay-As-You-Go (PAYGO) sequestration by the year’s end. Like the temporary boost in PFS payments, Congress also paused PAYGO cuts in Medicare to support healthcare providers during the COVID-19 pandemic.

Combined, the looming cuts are expected to reduce physician payment by nearly 8.5 percent, Resneck reported.

With significant physician payment cuts looming, physician advocacy groups worry about the future of patient care access and are calling on Congress to step in.

“Ninety percent of medical practices reported that the projected reduction to 2023 Medicare payment would reduce access to care,” reported Anders Gilberg, senior vice president of government affairs at the Medical Group Management Association (MGMA), in a public statement following the final rule’s release. “This cannot wait until next Congress — there are claims processing implications for retroactively applying these policies.”

Like AMA, MGMA said it “looks forward to working with both Congress and the Administration to mitigate these cuts and develop sustainable payment policies to allow physician practices to focus on treating patients instead of scrambling to keep their doors open.”

Groups like the Surgical Care Coalition are putting their support behind H.R. 8800, the Supporting Medicare Providers Act of 2022. The Act would extend certain increases in physician payments through 2023 to provide continued support.

“At a bare minimum, Congress must pass H.R. 8800 to prevent these cuts whose effects would be to harm Americans most in need of care,” said Patricia L. Turner, MD, MBA, FACS, executive director and CEO of the American College of Surgeons. “Without Congressional action, vulnerable seniors’ nationwide access to timely, high quality, and essential surgical care will be negatively impacted. If allowed to go into effect, these reductions will be yet another blow to an already stressed healthcare system.”

However, ACO Changes Are a Win for Accountable Care

While physician advocacy groups have focused on PFS payment cuts, the National of ACOs (NAACOS) is praising CMS for the “positive” alterations to the Medicare Shared Savings Program finalized in the new rule.

“Today’s finalized changes to Medicare’s largest ACO program bring a win to patients and will absolutely help providers deliver accountable care to more beneficiaries,” Clif Gaus, ScD, president and CEO of NAACOS, said in a statement yesterday.

The ACO association commended CMS for giving ACOs more to time assume two-sided financial risk, which for some new ACOs will be up to seven years, and making the Enhanced Track optional. The association also supports giving advance payments to some ACOs, adding a health equity quality adjustment, and modifying financial benchmarks by accounting for prior shared savings, which will help to stop ACO benchmarks from dropping over time.

However, NAACOS expressed concerns with CMS’ use of a prospectively projected administrative growth factor for determining ACO financial benchmarks.

“As we stated in our comments on the proposed rule, more than a third of ACOs would be harmed by this change,” Gaus explained. “Instead, we ask for more collaboration between CMS and the ACO community to build a better bridge to a more sustainable benchmarking strategy. Specifically, CMS should consider correcting the ‘rural glitch,’ where ACOs no longer benefit from the regional adjustment when lowering the spending of their assigned patients. This change would greatly help ACOs, but remains in effect even after today’s changes.”

In total, NAACOS still believes that the finalized changes to the Medicare Shared Savings Program will increase ACO participation, which has seen more downs than ups lately. There are currently 483 ACOs participating in the Program this year, which is up from a historic low the previous year when just 477 ACOs participated.

A version of this article was originally published on Nov. 1, 2022.