Here’s What the 2022 Medicare Fee Schedule Final Ruling Means for your Group or System

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On November 2, 2021, the Centers for Medicare & Medicaid Services (CMS) issued a final rule on the Physician Fee Schedule (PFS) for 2022.  The final rule provides updates on the policy changes for Medicare payments, as well as other Medicare Part B issues, taking place as of January 1, 2022. The goal of the final rule for 2022 reflects a broader Administration-wide strategy to create a health care system that will result in better quality, innovation, empowerment, accessibility, and affordability.

Below, we break down the 2022 final rule and how it may impact your group or health system.

Conversion Factor

The conversion factor for Medicare payments in 2021 was $34.89. The final rule states that the updated conversion factor will be $33.59 in 2022, which results in a decrease of 3.75% ($1.30). Since the final rule was published on November 2, 2021, there has been  legislation passed in Congress that affected the final rulings. On  December 9, 2021, Congress passed legislation which will prevent a portion of the Medicare physician cuts that were scheduled to go into effect January 1, 2022. The legislation includes the following updates to the final rule:

  1. 3% of the original 3.75% decrease to the Medicare PFS conversion factor has been mitigated through the end of 2022
  2. Imposition of the 4% statutory pay-as-you-go sequester resulting from the American Rescue Plan Act has been nullified through 2022
  3. The reinstatement of the existing 2% Medicare sequester has been delayed through March of 2022, which then phases into a 1% sequester through June 2022
  4. Overall decreased cuts relating to physician office laboratories have been delayed

As a result of these changes, per the Medical Group Management Association (MGMA), the latest legislation that was passed has prevented 9% of the total 9.75% planned payment reductions to physician practices scheduled for January 1, 2022 in the final rule.

Potential Reimbursement Effect

As demonstrated by provider feedback, the Medicare Physician Fee Schedule has a wide reach and will impact physician reimbursement. Since most commercial payors’ fee schedules follow Medicare, these changes could likely impact a group’s total reimbursement in a material fashion.

The team at Medic Management Group conducted an analysis to see what the overall impact could be on our clients who have multiple subspecialties (Table A below). This analysis incorporates the 0.75% decrease in the conversion factor (as opposed to the original 3.75% decrease), according to the latest legislation on the CMS 2022 Physician Fee Schedule.

Table A

The data from Table A shows that, if the projected revenue impact is based on this group’s 2021 volumes, 2022 reimbursement will have an overall decrease of 0.50% compared to 2021 reimbursement. We believe this analysis is a good indication of what could be expected, assuming no material changes are made by CMS as of the date of this article.

As groups and health systems complete their 2022 budgeting, we recommend they take a deeper look at the possible impact that this new fee schedule may have on their reimbursement and revenue.

Telehealth

There have been many policy changes regarding telehealth over the past two years, and in the final rule for 2022, telehealth continues to be reviewed closely. Certain services that were added to Medicare’s telehealth services list due to the COVID-19 PHE (Public Health Emergency) and would have otherwise been removed from the list have been extended through the end of 2023. The plan is to allow more time to better evaluate which services should be permanently included on the Medicare telehealth services list.

Physical/Occupational Therapy

In terms of physical therapy, there is a significant rule change forthcoming. Physical Therapy Assistants and Occupational Therapy Assistants will have the ability to bill for their services with the use of modifiers CO or CQ and receive 85% of the physician fee schedule payment. The key factor to this ruling relates to the time spent per session, as CMS is revising the policy for the “de minimis” standard. This specifically would allow 15-minute timed services to be billed without the CO or CQ modifier in cases where the Physical Therapist or Occupational Therapist spent eight or more minutes of the session themselves.

Physician Assistants (PAs)

Another change in the final rule that affects non-physician providers is the implementation of direct payments to Physician Assistants (PA) for professional services that they render under Part B, beginning January 1, 2022. Currently, CMS can only make direct payments to the employer or independent contractor of a PA. As of January 1, 2022, PAs may bill Medicare directly for their professional services, reassign payment for their professional services, and incorporate with other PAs and bill Medicare for PA services.

COVID-19 Vaccine Administration

CMS is extending COVID-19 vaccine payments through the end of 2022. CMS will pay $40 per dose of the COVID-19 vaccine administration through the end of 2022, while the additional payment will continue to be $35.50 for the vaccine administrations that take place in an “in-home” place of service. Following the end of year in which the Public Health Emergency concludes, the payment rate for COVID-19 vaccine administration will be set at a rate to align with the payment rate for the administration of other Part B preventative vaccines.

Medicare Shared Savings Program

In the 2022 final rule, CMS extended the time for Accountable Care Organizations (ACOs) to prepare for reporting electronic clinical quality measures/Merit-based Incentive Payment System clinical quality measures (eCQM/MIPS CQM) for an additional three years through 2024. ACOs must maintain the 30th percentile of the MIPS quality performance category score for performance year 2023. ACOs that are accepting performance-based risk must establish a repayment mechanism to assure Medicare they can repay any losses for which they may be liable upon reconciliation. With this, CMS is reducing the percentage used in the existing methodology for determining the repayment mechanism amount by 50%. In the final rule, CMS also finalized a one-time opportunity for ACOs that have already established their repayment mechanism to support their participation in a two-sided model to elect to decrease the amount of their existing repayment mechanisms.

This article and the information within it are for educational purposes only. If you have any specific questions or concerns about collection analysis as it relates to your group or system’s reimbursement, please reach out to Anthony Morino at amorino@medicmgmt.com.

Anthony Morino is a Senior Consultant – Analytics with Medic Management Group, LLC. In that capacity, he supports both health system and independent practice clients in the generation of actionable data, execution of initiatives based on business analysis, compliance, and reporting. Anthony’s background includes extensive work in areas including data analytics, revenue cycle assessment and execution, information technology solutions, compensation and business asset valuations, patient satisfaction and quality, and business improvement initiatives.

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