November 4, 2021

The 2022 Physician Fee Schedule Final Reg: Some Highlights and Perspective

Earlier this week, the Centers for Medicare & Medicaid Services (CMS) released the calendar year (CY) 2022 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 2,400+ page final reg, but we have posted a high-level overview of the major policies. Overall, CMS finalized many of the proposals that the agency initially proposed in the CY 2022 PFS proposed reg.

Physician Fee Schedule (PFS) Policies

PFS Conversion Factor

As noted in a recent Regs & Eggs post, we were expecting CMS to finalize a 3.75 percent cut to PFS conversion factor (a factor used to convert the building blocks of PFS codes, relative value units, into a dollar amount). And CMS did just that. The final CY 2022 PFS conversion factor reflects the 3.75 percent cut (and a few other adjustments)—and is $33.60, a decrease of $1.29 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.

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.

Evaluation and Management Visits

CMS is finalizing a number of refinements to current policies for split or shared evaluation and management (E/M) visits, critical care services, and services furnished by teaching physicians. Specifically, CMS will continue its current policy of 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.

To determine 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. In the reg, CMS phases in a new policy for determining the substantive portion of a visit in all settings (including the ED), except for critical care. In 2022, the history, physical exam, medical decision making (MDM), or more than half of the total time can be used to determine the substantive portion of the visit. However, starting in 2023, time (as defined by the list of “qualifying” activities that comprise a service) will be used for the purposes of determining the substantive portion of a visit.

With respect to critical care services, CMS recognizes that physicians, including emergency physicians, may at times deliver distinct E/M services prior to a critical care service taking place. Therefore, CMS is allowing a physician to bill separately for the E/M service delivered prior to the critical care service, as long as “the physician documents that the E/M service was provided prior to the critical care service at a time when the patient did not require critical care, that the service is medically necessary, and that the service is separate and distinct, with no duplicative elements from the critical care service provided later in the day...” Physicians must use modifier -25 on the claim when reporting these critical care services. In addition, critical care services may be paid separately in addition to a procedure with a global surgical period if the critical care is unrelated to the surgical procedure.


CMS is finalizing its proposal to extend the amount of time certain codes will remain on the approved list of telehealth services through the end of 2023.

As background, 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 divided the temporarily 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 rule, CMS is extending the amount of time the codes in Bucket 2 will 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.

Appropriate Use Criteria Program

CMS is finalizing its proposal to delay the Appropriate Use Criteria (AUC) program date to January 1, 2023. Created in the Protecting Access to Medicare Act (PAMA), the 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.

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 59,699), 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.

While ACEP strongly supports the implementation delay to 2023, as well as the emergency medical exception, we believe that the program is unnecessary and have previously requested that CMS work with Congress to repeal the program.

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 rule, CMS is:

  • Delaying the start date for compliance actions to January 1, 2023 in response to stakeholder feedback.
  • Instituting certain exemptions to the electronic prescribing of controlled substances requirement.
  • Allowing 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.

Merit-based Incentive Payment System (MIPS) Policies

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.

Further, like last year, due to concerns around treating patients during the COVID-19 PHE, CMS is doubling the complex patient bonus for the 2021 MIPS performance year. These bonus points, which will be capped at 10-points, will be added to the final score.

NOTE FOR 2022: CMS is extending the COVID-19 hardship exemption policy into 2022 as well. Thus, physicians and groups can continue to apply for an exception to one of more of the four categories of MIPS.

MIPS Value Pathways (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 that CMS is including it in the first batch of MVPs, which 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 finalizing additional MVP requirements, including a process for registering for an MVP. Participation in an MVP will initially be voluntary.

Performance Category Weighting

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 reducing the Quality category weight from 40 to 30 percent and increasing the Cost category from 20 to 30 percent. These new weights are required by law.

General Performance Category Weights Finalized 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 setting 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 setting that exceptional bonus threshold at 89 points. NOTE: 2022 is the last performance year the exceptional performance threshold will be available.

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 clinicians, so the more clinicians 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 only receives 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 14.4 percent.

Other MIPS Policies

CMS is also finalizing the following policies:

  • Making the quality measure scoring requirements more difficult by removing the end-to-end electronic reporting and high-priority measure bonus points as well as the 3-point floor for scoring measures without a benchmark (with some exceptions for small practices and new measures)
  • Establishing a new policy for scoring new measures that do not have a benchmark, which includes setting a 7-point floor in the first performance period that the measure is used and a 5-point floor in the second performance period.
  • Updating the quality measure inventory (a total of 200 for the 2022 performance period).
  • For the Cost performance category, adding 5 new episode-based cost measures in 2022 and creating a new process of cost measure development by stakeholders, including a call for cost measures.
  • Making updates to the Improvement Activities and the Promoting Interoperability categories of MIPS.
  • Adding new requirements for qualified clinical data registries, like ACEP’s Clinical Emergency Data Registry (CEDR), including that they must support MVPs and “subgroup reporting,”

The overall take way on MIPS is that CMS is significantly increasing the requirements with its removal of bonus points and scoring floors and its decision to increase the performance threshold to 75 points and the exceptional performance threshold to 89. CMS expects that many more clinicians will not meet the threshold and will receive a penalty. While you may be able to claim a COVID-19 hardship exception again in 2022, eventually you will be required to fully participate in this difficult program. Our hope is that the emergency medicine MVP option in 2023 will make it easier for many of you to be successful by enabling you to report on more meaningful measures. And of course, you can also use CEDR to help maximize your performance scores. 

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.

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

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