November 2, 2022

SPECIAL EDITION: The 2023 Physician Fee Schedule Final Reg-- Highlights and Analysis

Yesterday, the Centers for Medicare & Medicaid Services (CMS) released the calendar year (CY) 2023 physician fee schedule (PFS) final regulation. As a reminder, this 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). CMS had issued a proposed reg in July, which ACEP responded to with a robust set of comments.

We are still digging our way through the 3,300+ page final reg, but we have posted a high-level overview of the major policies. We are also hosting a webinar, "Hot Off the Presses: 2023 Reimbursement Update and CMS Final Rule," with Dr. Michael Granovsky from 1-2 pm CT, Tuesday, November 8.

Overall, CMS finalized most of the proposals that the agency initially proposed in the CY 2023 PFS proposed reg. In fact, we did a search of the use of the terms “finalized/ing as proposed” and “without modification” in the reg and found them over 90 times. While ACEP supported some of the policies in the proposed reg, we, along with the rest of the physician community, asked for modifications to others. In most circumstances, when public commenters requested changes or asked CMS not to finalize a policy, the agency ultimately decided to finalize it anyway.

Even though some may say that CMS chose to ignore a lot of the comments (and therefore may ask: why comment at all?), I still believe that it is extremely important for the agency to receive input on its proposals. Even if CMS chooses to reject the comments, by law, the staff still needs to read them and may take the comments into account in the future.

Before going into the highlights of the CY 2023 PFS and QPP proposed reg, it is also important to note that the CY 2023 Outpatient Prospective Payment System (OPPS) proposed reg was also released on Tuesday. It was a busy regulatory day! With respect to that reg, CMS finalizes conditions of participation (CoPs) for a new facility-type in Medicare called rural emergency hospitals (REHs), as well as other REH and hospital outpatient policies that were included in the CY 2023 OPPS proposed reg. I’ll cover the highlights of the OPPS final reg in a future blog, but in the meantime, if you are interested in learning more about the major final policies included in it, you can review this summary, prepared by ACEP’s External Affairs Coordinator, Erin Grossmann.

Physician Fee Schedule (PFS) Policies

PFS Conversion Factor

As noted in last week’s Regs & Eggs post, we were hoping that CMS would finalize a smaller cut to the PFS conversion factor (a factor used to convert the building blocks of PFS codes, relative value units, into a dollar amount) than the 4.4 percent reduction the agency proposed. Unfortunately, despite our comments, CMS wound up doing the exact opposite and finalized a slightly higher reduction. In all, the final CY 2023 PFS conversion factor is $33.06, a decrease of 4.5 percent or $1.55 from the CY 2022 PFS conversion factor of $34.60. Emergency medicine reimbursement in 2023 is held flat EXCEPT for an across-the-board reduction of 3 percent that was carried over from last year.

It’s now officially up to Congress to take action to avert this cut, along with 6 percent in additional cuts due to “sequestration.” (Again, read this post for more details on all the Medicare payment cuts). ACEP will continue making this issue one of its top legislative priorities, and we are hopeful that Congress will include some sort of fix in a year-end package.

In all, ACEP truly thinks that a reduction to Medicare reimbursement for physicians is absolutely unacceptable! To that end, we just sent a letter to members of Congress, responding to a request for information, stressing the need to modify the policies established by MACRA and create a more stable and accurate payment system for physicians.

Another policy in the final reg relates to the Medicare Economic Index (MEI). The MEI, determined to be 3.8 percent in CY 2023, is supposed to be a measure of inflation faced by physicians with respect to their practice costs and general wage levels. It Is also traditionally used to adjust the relative weights of the three components in payments under the PFS—work, practice expense, and malpractice. However, much to our delight, CMS has decided not to use the updated MEI cost share weights to set PFS payment rates for CY 2023. If it did, emergency medicine reimbursement would be cut by 7 percent. That is because a higher proportion of the MEI is dedicated to the practice expense component and emergency medicine codes are heavily affected by the work component. Thus, if the PFS payment weights were adjusted more towards practice expense and less towards work—as reflected in the MEI—overall payments for emergency medicine would decrease. 

Evaluation and Management, Observation, and Critical Care Services

Split and Shared Services

As we expected, CMS finalized its proposal to delay the implementation of the full transition to using only time to determine the substantive portion of a split/shared E/M service until 2024. ACEP had supported CMS’ proposal, and we continue to push for the continuation of the current policy to use the history, physical exam, medical decision making (MDM), or more than half of the total time spent with a patient to determine the substantive portion of the split/shared visit.

As a reminder, this is the policy used to determine whether a physician or non-physician practitioner should bill for an E/M service that they both were involved in delivering (called split/shared services). Under Medicare, a service can only be billed by one clinician, and if non-physician practitioners wind up billing for a service, they only receive 85 percent of the total Medicare rate.

Emergency Department (ED) Evaluation and Management (E/M) Codes

CMS finalized its proposals related to billing E/M codes in light of the new documentation guidelines developed by the American Medical Association (AMA) that take effect at the start of the calendar year. For more information on these guidelines, please refer to this previous blog post.

Further, in a victory for emergency medicine, CMS decided to finalize its proposal to reject the AMA Relative Value Scale Update Committee (RUC) recommendation to decrease the work RVUs for ED E/M level 4 (CPT 99284) from the current value of 2.74 RVUs to 2.60 RVUs. As you well know, this is an extremely common code billed by emergency medicine clinicians, and a reduction in work RVUs as the RUC recommended could reduce overall emergency medicine reimbursement by tens of millions of dollars. ACEP had previously argued that the ED E/M codes should retain their relative values as compared to the office and outpatient E/M codes. We appreciate that CMS gave credence to this argument in the final reg!

Critical Care Services

Despite our objections, CMS is finalizing its proposal to change the threshold for reporting CPT 99292 in addition to the base code of CPT 99291 from 75 minutes to 104 minutes. ACEP had strongly opposed this critical care policy as it differs from long-standing CPT policy, and we believe it will increase confusion among clinicians and increase administrative burden. CMS acknowledges that the policy differs from CPT policy but decided to finalize it anyway.

Observation Services

CMS is finalizing its proposal to accept the CPT coding changes that merge the codes previously describing observation services into the inpatient E/M code set. Although some commenters asked for a delay to the implementation of this policy, CMS decided not to delay it, and the policy will become effective as of January 1, 2023. CMS is also finalizing the proposed values for these services.

In ACEP’s comments on the proposed reg we had also expressed significant concerns about the 8-to-24-hour rule. This rule is the policy that applies when observation services transcend a calendar date. While CMS acknowledges some our concerns, CMS ultimately has decided to continue applying this policy.


CMS is finalizing all of its proposals related to telehealth.

As background, in previous PFS regs, 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 added all five ED E/M code levels 1-5 (CPT codes 99281-99285), the critical care codes, and some observation codes to the approved telehealth list through December 31, 2023. The codes were added to the telehealth list on a special “Category 3” basis that CMS added for the PHE. CMS did note 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 does not make any changes to the status of the ED E/M codes but does add more codes to the telehealth list on a Category 3 basis. All codes added on a Category 3 basis will continue to be included on the telehealth list through the end of CY 2023. In the event that the PHE extends well into CY 2023, CMS may consider revising this policy.

There were some other codes that CMS had previously added to telehealth list that were set to be removed once the PHE ended. CMS is keeping those codes on the list for an additional 151 days after the PHE. This 151-day extension aligns with the Consolidated Appropriations Act, 2022 (CAA, 2022), which extended the Medicare originating site and geographic restriction waivers for a 151-day period once the PHE ends. CMS is also implementing the CAA, 2022 provision that delayed the in-person visit requirements for mental health services furnished via telehealth until 152 days after the end of the PHE. It is important to note that ACEP is continuing to push Congress for a full two-year continuation of the telehealth waivers that would start once the PHE ends.

Electronic Prescribing of Controlled Substances

CMS is finalizing its proposal to delay compliance of the electronic prescribing for controlled substances (EPCS) requirement by another year, through the end of 2024. ACEP has strongly supported this delay.

As a reminder, the SUPPORT Act—the major law passed in 2018 that addressed the opioid crisis—required there to be EPCS in the Medicare Part D Prescription Drug Program. This requirement was supposed to take effect in 2021 but has been delayed multiple times.

CMS is still considering what penalties to impose starting in 2025, besides simply sending out non-compliance letters to prescribers who are not following the requirements.

Dental and Oral Health Services

The traditional Medicare program (also known as Medicare Fee-for-Service or FFS) currently covers a limited set of dental services. In the reg, CMS clarifies and codifies certain aspects of the current Medicare FFS payment policies for dental services. CMS is also finalizing its proposals related to payment for other dental services that are substantially related and integral to the clinical success of an otherwise covered medical service. Furthermore, CMS is finalizing payment for dental exams and necessary treatments prior to the treatment for head and neck cancers starting in CY 2024 and finalizing a process in CY 2023 to review and consider public recommendations for Medicare payment for dental service in other potentially analogous clinical scenarios.

The Medicare Shared Savings Program

The Medicare Shared Savings Program is the national accountable care organization (ACO) program, which serves over 11 million Medicare beneficiaries. In the reg, CMS is finalizing numerous changes to the program that CMS had proposed in the proposed reg, including:

  • Allowing for upfront advanced payments to be made to certain new Medicare Shared Savings Program ACOs that could be used to address Medicare beneficiaries’ social needs;
  • Giving smaller ACOs more time to transition to downsize financial risk;
  • Creating a health equity adjustment to an ACO’s quality performance category score to reward excellent care delivered to underserved populations; and
  • Adjusting the benchmark methodology to encourage more ACOs to participate.

Most of these modifications are supported by the ACO community and may help encourage even more participation in the program.

Behavioral Health and Chronic Pain Management Service

To help improve access to behavioral health services, CMS is finalizing its proposal to allow licensed professional counselors, marriage and family therapists, and other types of behavioral health practitioners to provide behavioral health services under general (rather than direct) supervision. In addition, CMS is finalizing its proposal to create a new behavioral health integration service category, allowing payment for clinical psychologists and licensed clinical social workers who provide integrated behavioral health services as part of a patient’s primary care team.

With respect to chronic pain management, CMS is finalizing its proposal to create new codes to better account for the time needed to manage patients with chronic pain.

Opioid Treatment Programs (OTPs)

CMS is allowing OTPs to initiate treatment of buprenorphine via two-way audio-video communications technology, as long as that method of providing care is authorized by the Drug Enforcement Administration (DEA) and Substance Abuse and Mental Health Services Administration (SAMHSA). The DEA and SAMHSA currently have temporary telehealth policies in place. CMS will also allow the service to be performed via audio-only communication technology if two-way audio-video communications technology is not available. CMS is also clarifying that OTPs can bill Medicare for medically reasonable and necessary services furnished via mobile units.

Quality Payment Program Policies

As a reminder, the Quality Payment Program (QPP) includes two tracks: the Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs). MIPS includes four performance categories: Quality, Cost, Improvement Activities, and Promoting Interoperability (formerly Meaningful Use). Performance on these four categories (which are weighted) roll up into an overall score that translates to an upward, downward, or neutral payment adjustment that providers receive two years after the performance period (for example, performance in 2023 will impact Medicare payments in 2025). Those who successfully participate in Advanced APMs can receive a five percent bonus and are exempt from MIPS. However, the last year a clinician can receive a bonus under current law is 2024, based on the clinician’s participation in the Advanced APM in 2022. Most emergency physicians do not participate in Advanced APMs, and therefore must meet the MIPS requirements.

As with the PFS sections of the reg, CMS finalizes most of the proposed QPP policies, so these should all look familiar!

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 2022. 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 2024—meaning that they will not be eligible for a bonus or potentially face a penalty based on their MIPS performance in 2021. CMS has also granted hardship exemptions for Florida and Puerto Rico, which were hit by natural disasters.

MIPS Value Pathways

The 2023 performance year is first year of a new reporting option in MIPS called MIPS Value Pathways (MVPs). MVPs represent an approach that will allow clinicians to report on a uniform set of measures on a particular episode or condition in order to receive MIPS credit. ACEP developed an emergency medicine-focused MVP that CMS will be including in the first batch of MVPs starting in 2023. There were six other MVPs that CMS previously finalized in last year’s reg (for a total of seven).

In this year’s reg, CMS is finalizing small adjustments to the emergency medicine-focused MVP: removing two improvement activities based on updates to the improvement activities inventory and adding one improvement activity. CMS is also creating five new MVPs that would start in 2023 in addition to the seven that the agency had already finalized.

CMS is also expanding the opportunities for the public to provide feedback on potential MVPs and to recommend changes to existing MVPs. With respect to existing MVPs, CMS will host an annual public webinar to discuss potential MVP revisions that have been identified.

Performance Category Weighting in Final Score

CMS is maintaining the same performance category weights as in 2022. The weights are required by law.

General Performance Category Weights Finalized for 2023:

  • Quality: 30%
  • Cost: 30%
  • 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 set the threshold at 75 points in 2022 (the mean score during the 2017 performance period.)

In this final reg, CMS is finalizing its proposal keep the threshold at 75 points in 2023. ACEP supports CMS’ decision not to raise the threshold in 2023, as 75 points is already an extremely high bar to meet. There is also no exceptional bonus threshold starting in the 2023 performance period. The 2022 performance period (which impacts payments in 2024) was the last year the additional funding for exceptional performance was available.

The maximum negative payment adjustment in 2025 (based on performance in 2023) is -9 percent, and the positive payment adjustment can be up to 9%. 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 percent). 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 2020, the clinician only receives a positive adjustment of 2.3 percent in 2022 (much less than the 9 percent permissible under law). However, since the performance threshold is increasing so much in 2023, CMS expects that many more clinicians will receive a downward payment adjustment (a third of all clinicians!). Therefore, the maximum bonus for achieving a perfect score is projected to be 6.09 percent.

Qualified Clinical Data Registries (QCDRs)

ACEP owns and operates its own QCDR, the Clinical Emergency Data Registry (CEDR). In the reg, CMS is finalizing its proposal to delay the QCDR measure testing requirement for traditional MIPS by an additional year, until the CY 2024 performance period/2026 MIPS payment year. However, CMS is not changing the requirements that QCDR measures be fully tested prior to inclusion in an MVP.

Other MIPS Proposals

CMS is also finalizing the following proposals:

  • Maintain the data completeness threshold at 70 points in CY 2023 and increase the data completeness criteria threshold from 70 percent to 75 percent for the CY 2024 and 2025 performance periods/2026 and 2027 MIPS payment years.
  • Expand the definition of “high priority measure” to include health equity-related quality measures.
  • Score administrative claims measures exclusively against performance period benchmarks.
  • Reduce the inventory of quality measures from 200 to 198 through the removal of 11 and the addition of 9 MIPS quality measures (a net decrease of 2 quality measures).
  • Add 4 new improvement activities, modify 5 existing improvement activities, and remove 6 existing improvement activities.
  • Establish a maximum cost improvement score of 1 percentage point out of 100 percentage points available for the cost performance category starting with the CY 2022 performance period/2024 MIPS payment year.
  • Allow those who use the facility-based scoring option (including emergency physicians) to be eligible to receive the complex patient bonus, even if they do not submit data for at least one MIPS performance category.
  • Make the following adjustments to the Promoting Interoperability Category: (1) Requiring and modifying the Electronic Prescribing Objective’s Query of Prescription Drug Monitoring Program (PDMP) measure while maintaining the associated points at 10 points; (2) Expanding the Query of PDMP measure to include not only Schedule II opioids, but also Schedule III, and IV drugs; (3) Adding a new Health Information Exchange (HIE) Objective option, the Enabling Exchange under the Trusted Exchange Framework and Common Agreement (TEFCA) measure, as an optional alternative to fulfill the objective; (4) Consolidating the current options from three to two levels of active engagement for the Public Health and Clinical Data Exchange Objective; (5) Modifying the overall scoring methodology; and (6) Continuing to reweight the Promoting Interoperability performance category for certain types of non-physician practitioner MIPS eligible clinicians.
  • Allowing a facility-based MIPS eligible clinician to receive the complex patient bonus, even if they don’t submit data for at least one MIPS performance category.

APM Policies

CMS is creating several policies to reduce burden and facilitate participation in Advanced APMs. CMS is removing the 2024 expiration of the 8 percent minimum on the Nominal Risk standard for Advanced APMs and making the 8 percent minimum permanent. CMS is also applying the 50 eligible clinician limit to the APM Entity participating in the Medical Home Model.

Those are the main highlights! If you have any questions about these policies or any others in the final reg, feel free to email me.

Finally, there is other regulatory news! Check out our new regulatory webpage for other important updates!

Until next week, this is Jeffrey saying, enjoy reading regs with your eggs.

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