July 15, 2021

Another Major Regulation Released: CMS Issues the 2022 Physician Fee Schedule Proposed Reg

Another week, another major regulation. A couple weeks ago, federal agencies released the No Surprises Act Interim Final Regulation, and this week, the Centers for Medicare & Medicaid Services (CMS) issued the Calendar Year (CY) 2022 Physician Fee Schedule (PFS) and Quality Payment Program (QPP) proposed regulation. As a reminder, the PFS and QPP regulation is the major annual reg that impacts Medicare payments for physicians and other health care practitioners for the next calendar year. The rates included in the PFS often serve as the basis for which many private payors revise their reimbursement levels. The reg also includes updates to the Merit-based Incentive Payment System (MIPS)—the quality performance program established by the Medicare Access and CHIP Reauthorization Act (MACRA).

ACEP is still digging our way through the 1,700+ page reg, but I wanted to share some key highlights.

PFS “Conversion Factor”

As you may recall, CMS decided in last year’s reg to increase the values of the office and outpatient evaluation and management (E/M) services. These are the commonly-used office visit codes that represent roughly 20 percent of total physician spending in Medicare. There is an existing budget neutrality requirement under the Medicare PFS which forces CMS to make an overarching negative adjustment to physician payments to counterbalance any increases in code values that CMS implements. CMS usually does this by adjusting the Medicare “conversion factor” which converts the building blocks of PFS codes (relative value units or RVUs) into a dollar amount.

The increases in the office and outpatient E/M values would have led to a significant downward adjustment to the conversion factor in 2021—but Congress stepped in to avert the majority of the cut in the Consolidated Appropriations Act. Specifically, Congress added back 3.75 percent to the conversion factor. However, that was only a one-year fix, and Congress needs to act again or the conversion factor will be cut by that same 3.75 percent in 2022. Thus, the proposed CY 2022 PFS conversion factor reflects the 3.75 percent cut (and a few other adjustments)—and is $33.58, a decrease of $1.31 from the CY 2021 PFS conversion factor of $34.89. Emergency medicine reimbursement in 2022 is held flat EXCEPT for the across-the-board reduction of 3.75 percent.

Evaluation and Management Visits

CMS is proposing a number of refinements to current policies for split or shared E/M visits, critical care services, and services furnished by teaching physicians. Specifically, CMS is proposing to continue its current policy allowing billing of certain “split” or “shared” E/M visits by a physician, when the visit is performed in part by both a physician and a non-physician practitioner (NPP), who are in the same group and the physician performs a substantive portion of the visit. CMS is limiting split or shared visits in the institutional setting to E/M codes only, not procedures.

With respect to determining the appropriate E/M level to use, office and outpatient services use time as a major factor. Certain activities (like preparing to see the patient, obtaining a patient’s medical history, etc.) are used to calculate the time. However, time is NOT used to determine payment for emergency department (ED) services. In the reg, CMS seeks public comment on whether there should be a different listing of qualifying activities for purposes of determining the total time and substantive portion of split (or shared) ED visits.


In last year’s reg, CMS examined which of the codes that are temporarily on the list of approved Medicare telehealth services during the COVID-19 public health emergency (PHE) would remain on the list for an extended period or permanently. CMS broke out the codes that it temporarily added to the list of approved telehealth services into three buckets:

  • BUCKET 1: Codes that CMS decided to include on the list of approved telehealth services permanently.
  • BUCKET 2: Codes that CMS decided to include on the list of approved telehealth services for the remainder of the calendar year in which the PHE ends (i.e. until December 31, 2021).
  • BUCKET 3: Codes that CMS has decided to remove from the list of approved telehealth services once the PHE ends.

CMS placed all the ED E/M codes (the codes that you as emergency physicians typically bill in the ED), the critical care codes, and some observation codes on the approved telehealth list for the remainder of the year after the PHE expires (i.e., Bucket 2). CMS did note last year that it still needs to see more data and evidence about the benefits of providing ED E/M, critical care, and observation services via telehealth in order to permanently add these codes to the list of approved telehealth services.

In this year’s reg, CMS is proposing to extend the amount of time the codes in Bucket 2 would remain on the list of telehealth services through December 31, 2023. This will allow CMS more time to collect more information regarding utilization of these services during the pandemic and provide stakeholders the opportunity to continue to develop support for the permanent addition of these services to the list of approved telehealth services. In all, this means that you as emergency physicians can continue to provide emergency telehealth services and bill Medicare using the ED E/M codes, critical care codes, and some observation codes at least through the end of 2023. However, it is important to remember that other telehealth flexibilities (like the waivers to the “originating site” and geographic restrictions) expire once the COVID-19 PHE ends.

CMS is also implementing a provision of the Consolidated Appropriations Act that removed the geographic restrictions and added the home as originating site for telehealth services specifically when treating patients with a mental health disorder. CMS is also allowing audio-only telehealth services to be used for the treatment of these patients.

Further, per the Consolidated Appropriations Act, CMS is adding rural emergency hospitals (REHs) as an originating site starting in 2023. More details on REHs should be included in the CY 2022 Outpatient Prospective Payment System (OPPS) proposed reg—which will be released in the next couple of weeks.

Appropriate Use Criteria Program

Created in the Protecting Access to Medicare Act (PAMA), the Appropriate Use Criteria (AUC) program will eventually require physicians ordering advanced imaging for Medicare beneficiaries to first consult AUC through approved clinical decision support mechanisms in order for the furnishing provider to be able to receive payment. The AUC requirements, which were originally supposed to go into effect in 2017, have already been delayed several times, most recently to January 1, 2022. In this reg, CMS proposes to delay the effective date again, this time to January 1, 2023.

As background, PAMA exempts emergency services defined as an “applicable imaging service ordered for an individual with an emergency medical condition” from the requirements. As a result of ACEP’s advocacy, in the CY 2019 Physician Fee Schedule final reg (page 59699), CMS clarified that exceptions granted for an individual with an emergency medical condition include instances where an emergency medical condition is suspected, but not yet confirmed. This may include, for example, instances of severe pain or severe allergic reactions. In these instances, the exception is applicable even if it is determined later that the patient did not, in fact, have an emergency medical condition. In other words, if physicians think their patients are having a medical emergency (even if they wind up not having one), they are excluded from the AUC requirements.

ACEP has a webpage dedicated to the action we have taken on this and other EHR-related issues.

Electronic Prescribing of Controlled Substances

CMS is continuing to implement a provision of the SUPPORT Act, which requires that the prescribing of controlled substances under Medicare Part D be done electronically. In the reg, CMS:

  • Proposes certain exemptions to the electronic prescribing of controlled substances (EPCS) requirement.
  • Proposes to allow prescribers to 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.
  • Proposes to extend the start date for compliance actions to January 1, 2023 in response to stakeholder feedback. However, CMS is soliciting comment on whether the original date of January 1, 2022 should remain, in light of the proposed exceptions to the mandate.


  • 2021 Reporting Exemptions Due to COVID-19: As described here, CMS had already announced that it was instituting hardship exemptions on a case-by-case basis due to COVID-19. It is therefore possible for a clinician or group to request to be exempted from all four performance categories in 2021. If clinicians submit a hardship exception application for all four MIPS performance categories, and their application is approved, they will be held harmless from a payment adjustment in 2023—meaning that they will not be eligible for a bonus or potentially face a penalty based on their MIPS performance in 2021.

  • MVPs: CMS has heard feedback, including from ACEP, that MIPS reporting should be streamlined and more meaningful to clinicians. Therefore, CMS created the MIPS Value Pathways (MVPs), an approach that will allow clinicians to report on a uniform set of measures on a particular episode or condition in order to get MIPS credit.

ACEP developed and proposed an emergency medicine-focused MVP and CMS is proposing to adopt it. The first batch of seven MVPs, which includes ACEP’s MVP, will start in 2023. The delayed start date of 2023 will provide practices the time they need to review requirements, update workflows, and prepare their systems as needed to report MVPs.

CMS is also proposing additional MVP requirements, a process for registering for an MVP, and a revised scoring methodology. Participation in an MVP will initially be voluntary. CMS also seeks comment on fully transitioning away from traditional MIPS to MVPs after 2027.

  • Performance Category Weighting in Final: MIPS includes four performance categories: Quality, Cost, Improvement Activities, and Promoting Interoperability. Performance on these four categories (which are weighted) roll up into an overall score that determines an upward, downward, or neutral payment adjustment that providers receive two years after the performance period (for example, performance in 2022 will impact Medicare payments in 2024). In the reg, CMS is proposing to reduce the quality category weight from 40 to 30 percent and increase the Cost category from 20 to 30 percent. These new weights are required by law.

General Performance Category Weights Proposed for 2022:

    • Quality: 30% (down from 40% in 2021)
    • Cost: 30% (up from 20% in 2021)
    • Promoting Interoperability (EHR): 25%
    • Improvement Activities: 15%
  • The Performance Threshold: The performance threshold is the score that clinicians need to achieve to avoid a penalty and receive a bonus. For the first five years of the program (2017-2021), CMS had the discretion to set the performance threshold at any level it chose. CMS used this flexibility to set artificially low thresholds, making it easier for clinicians to avoid a penalty. However, starting in 2022, CMS is required by law to set the threshold at the mean or median of prior performance. CMS therefore is proposing to set the threshold at 75 points in 2022 (the mean score during the 2017 performance period), a significant increase from the 2021 threshold of 60 points. There is also an additional bonus for exceptional performance. CMS is proposing to set that exceptional bonus threshold at 89 points.

The maximum negative payment adjustment in 2024 (based on performance in 2022) is -9%, and the positive payment adjustment can be up to 9% (before any exceptional performance bonus). Since MIPS is a budget neutral program, the size of the positive payment adjustments is ultimately controlled by the amount of money available through the pool of negative payment adjustments. In other words, the 9% positive payment adjustment can be scaled up or down (capped at a factor of + 3%). Likewise, the exceptional performance bonus is capped at $500 million across all eligible Medicare providers, so the more providers who quality for the bonus, the smaller it is. In the first few years of the program, most clinicians qualified for a positive payment adjustment, so the size of the adjustment was relatively small. For example, if a clinician received a perfect score of 100 in 2019, the clinician will only receive a positive adjustment of 1.79 percent in 2021 (much less than the 7 percent permissible under law). However, since the performance threshold is increasing so much in 2022, CMS expects that many more clinicians will receive a downward payment adjustment. Therefore, the maximum bonus for achieving a perfect score is projected to be 14 percent.

  • Other MIPS Proposals: CMS is proposing to:
    • Update quality measure scoring to remove end-to-end electronic reporting and high-priority measure bonus points as well as the 3-point floor for scoring measures (with some exceptions for small practices).
    • Use performance period benchmarks, or a different baseline period, such as calendar year 2019, for scoring quality measures in the 2022 performance period.
    • Update the quality measure inventory (a total of 195 proposed for the 2022 performance period).
    • Increase the data completeness requirement to 80% beginning with the 2023 performance period.
    • For the cost performance category, add 5 new episode-based cost measures in 2022.
      • Make updates to the Improvement Activities Category
      • 7 new improvement activities, 3 of which are related to promoting health equity.
      • Modify 15 current improvement activities, 11 of which address health equity.
    • Remove 6 previously adopted improvement activities.
    • Make adjustments to the Promoting Interoperability Summary.

As a reminder, all of the policies in the reg are proposed, and stakeholders, including ACEP, have an opportunity to formally comment by September 13, 2021 on the proposals before they are finalized and become effective on January 1, 2022.

If you have any questions about these policies or any others in the proposed reg, feel free to email me. Until next week, this is Jeffrey saying, enjoy reading regs with your eggs.

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