What You Need to Know About the 2023 Medicare Physician Fee Schedule Final Rule

Physician Fee Schedule

Here are the highlights of the Centers for Medicare & Medicaid Services (CMS) updates and policy changes for Medicare payments under the Physician Fee Schedule (PFS) and other Medicare Part B issues.  This final rule becomes effective on or after January 1, 2023.

Background on the Physician Fee Schedule

Physician services paid under the Physician Fee Schedule are provided in various settings, including physician offices, hospitals, ambulatory surgical centers (ASC), skilled nursing facilities (SNF) and other post-acute care settings, hospices, and outpatient dialysis facilities.  Medicare makes payments to physicians and other professionals at a single rate based on the full range of resources involved in providing a service in a physician’s office.  Rates paid to physicians and other billing practitioners in facility settings (e.g., hospital outpatient department, ASC) reflect only the portion of the resources typically incurred in providing the service.

Separate payments may be made for the professional and technical components of diagnostic tests and a limited number of other services.  Suppliers (e.g., independent diagnostic testing facilities, radiation treatment centers) frequently bill the technical component and physicians or practitioners bill the professional component.

Calendar Year 2023 Rate-setting and Conversion Factor

CMS has sought public input to help develop a more consistent, predictable approach to incorporating new data when setting Physician Fee Schedule rates, and it is updating the data used to develop geographic practice cost indices and relative value units.

Evaluation and Management Visits

The Physician Fee Schedule final rule effective January 1, 2023 adopts most of the AMA CPT© (American Medical Association Current Procedural Terminology) changes in coding and documentation for Other Evaluation and Management (E/M) visits (e.g., hospital inpatient, hospital observation, emergency department, nursing facility, home or residence services, cognitive impairment assessment).  This includes code definition changes, such as new descriptor times where relevant, revised interpretive guidelines for levels of medical decision-making, choice of medical decision-making or time to select code level except in certain circumstances for services that are not timed, eliminated use of history and exam to determine code level while requiring a medically appropriate history and exam.

CMS maintained current policies that apply to E/Ms while it considers potential revisions that may be necessary in the future. It also added three separate Medicare-specific G codes for payment of certain prolonged services.

Split or Shared Evaluation and Management Visits

This policy determines which professional should bill for a shared visit by defining the “substantive portion” of the service as more than half the total time.  This portion of a visit includes any of the following elements: history, performing a physical exam, medical decision-making, and spending time (more than half the total time spent by the practitioner who bills the visit).  Clinicians who provide split or shared visits will continue to have a choice of history, physical exam, medical decision-making, or more than half of the total practitioner time spent to define the “substantive portion) instead of using the total time to determine the substantive portion.

Telehealth Services

CMS is finalizing policies related to Medicare telehealth services, including making several services that are temporarily available for the public health emergency (PHE) at least through 2023 to allow the collection of more data that may support their inclusion as permanent additions to the Medicare Telehealth Services List.  CMS also confirmed that certain telehealth provisions (e.g., allowing telehealth services to be furnished in any geographic area and any originating site setting, including the beneficiary’s home), allowing certain services to be provided via audio-only communications systems, and allowing physical therapists, occupational therapists, speech-language pathologists, and audiologists to provide telehealth services) will remain in place until 151 days after the PHE ends.

Physicians and practitioners may continue to bill with the place of service indicator that would have been reported had the service been provided in person.  These claims will require modifier 95 to identify them as having been provided as telehealth services.

The Telehealth Originating Site Facility Fee, which has been updated, is included with the Medicare Telehealth List of Services.

Behavioral Health Services

CMS has added an exception to the direct supervision requirement to allow behavioral health services to be provided under the general supervision of a physician or non-physician provider (NPP) when these services or supplies are furnished by auxiliary personnel (e.g., licensed professional counselors, licensed marriage and family therapists) incident to the services of a physician or NPP.  Any service provided primarily for the diagnosis and treatment of a mental health or substance abuse disorder can be furnished under the general supervision of a physician or NPP authorized to furnish and bill for services provided incident to their own professional services.  The intent is to facilitate access and extend the reach of behavioral health services.

CMS is finalizing a proposal to create a new general Behavioral Health Integration (BHI) code describing a service primarily performed by clinical psychologists or clinical social workers to account for monthly care integration when the services they provide are the focal point of care integration.  It is also finalizing a proposal to allow a psychiatric diagnostic evaluation to serve as the initiating visit for the new general BHI service.

Chronic Pain Management and Treatment Services

New HCPCS (Healthcare Common Procedure Coding System) codes G3002 and G3003 are intended to improve payment accuracy for chronic pain management and treatment services (CPM) and encourage practitioners already treating Medicare beneficiaries who have chronic pain to spend time to help them manage their condition within a trusting, supportive, and ongoing care partnership.

The finalized codes include a bundle of services furnished during a month that will be the starting point for holistic chronic pain care, similar to other bundled care services (e.g., suspected dementia, substance abuse disorders). Code descriptors will include the following elements: diagnosis; assessment and monitoring; administration of a validated pain rating scale or tool; the development, implementation, revision, and/or maintenance of a person-centered care plan that includes strengths, goals, clinical needs, and desired outcomes; overall treatment management, facilitation and coordination of any necessary behavioral health treatment; medication management; pain and health literacy counseling; any necessary chronic pain related crisis care; and ongoing communication and coordination between relevant practitioners furnishing care (e.g., physical and occupational therapy, complementary and integrative care approaches, community-based care).

Opioid Treatment Programs

CMS will base the 2023 payment amount for pricing the drug component of the methadone weekly bundle and the add-on code for take-home supplies of methadone on the payment amount during 2021.  It will update this amount annually to account for inflation.  It also will modify the payment rate for the non-drug component of the bundled payments for episodes of care to base the rate for individual therapy on a crosswalk to a code describing a 45-minute session rather than the current 35 minutes.

CMS also will allow the use of the intake add-on code for two-way audio-video communications technology when billed for the treatment with buprenorphine to the extent that the Drug Enforcement Administration (DEA) and the Substance Abuse and Mental Health Services Administration SAMHSA) permit the use of this technology to initiate treatment.

Opioid treatment programs may bill Medicare for medically reasonable and necessary services furnished via mobile units in accordance with SAMHSA and DEA guidance.

Audiology Services

Beneficiaries will have direct access to an audiologist without an order from a physician or an NPP for non-acute hearing conditions. Audiologists will use a new modifier rather than a new HCPCS G code because this will facilitate more accurate reporting and be less burdensome.  Audiologists may use modifier AB along with the list of 36 CPT©codes for dates of service beginning January 1, 2023.  They may bill for direct service access (without a physician or practitioner order) once every 12 months per beneficiary.  Medically reasonable and necessary tests ordered by a physician or other practitioner and personally provided by audiologists will not be affected by the direct access policy, including modifier and frequency limitations.

Dental and Oral Health Services

Medicare coverage for dental services is generally precluded by statute, but Medicare does pay for dental services under limited circumstances.  CMS has finalized its proposal to clarify and codify certain aspects of current payment policies for dental services when that service is an integral part of specific treatment of a beneficiary’s primary medical condition and other clinical scenarios under which Medicare Part A and Part B payment can be made for dental services (e.g., dental exams and necessary treatments prior to or contemporaneous with organ transplants, cardiac valve replacements, and valvuloplasty procedures).

Skin Substitutes

CMS has proposed revising its terminology by replacing “skin substitutes” with “wound care management products” and treating and paying for these products as incident to supplies under the Physician Fee Schedule beginning January 1, 2024.  Comments indicate that it would be beneficial to provide interested parties with more opportunities to comment on the specific details of coding and payment mechanism changes.  CMS will conduct a Town Hall in early 2023 to address commenters’ concerns and to discuss potential approaches to the methodology for payment of skin substitute products under the Physician Fee Schedule.

Colorectal Cancer Screening

CMS is expanding coverage for certain colorectal cancer screening tests by reducing the minimum age payment and coverage limitation from 50 to 45 years.  It is also expanding the regulatory definition of colorectal cancer screening tests to include a complete colorectal cancer screening, where a follow-on screening after a Medicare-covered non-invasive stool-based colorectal cancer screening test returns a positive result.  For most beneficiaries, cost sharing will not apply for either the initial stool-based test or the follow-on colonoscopy.  These policies reflect CMS’ desire to expand access to quality care and to improve health outcomes for patients through prevention and early detection services as well as through effective treatments.

Refunds for Discarded Amounts of Certain Single-Dose Containers or Single-Use Package Drugs

CMS is requiring manufacturers to provide a refund for certain discarded amounts from a refundable single-dose container or single-use package drug.  The refund is the amount of discarded drug that exceeds an applicable percentage, which is required to be at least 10%, of the total allowed charges for the drug in a given calendar quarter.  The JW modifier will be used to report discarded amounts of drugs and the JZ modifier will be used to report no discarded amounts.

Preventive Vaccine Administration Services

CMS will annually update the payment amount for Medicare Part B vaccine administration services (e.g., influenza, pneumococcal, hepatitis B, COVID-19) based upon the increase in the Medicare Economic Index (MEI) and to adjust for the geographic locality based upon the geographic adjustment factor where the vaccine is administered

Updated Medicare Economic Index

CMS finalized the proposed rebasing and revising of the 2017-based MEI with some technical revisions to the proposed method based on public comments.  The final 2023 MEI is 3.8% based on the most recent historical data available.

Rural Health Clinics and Federally Qualified Health Centers

Chronic Pain Management and Behavioral Health Services—The addition of chronic pain management and behavioral health services to the Rural Health Clinics (RHC) and Federally Qualified Health Centers (FQHC) specific general care management HCPCS code G0511 aligns with changes made under the Physician Fee Schedule for 2023.  Requirements for chronic pain management and behavioral health integration services are similar to the requirements for the general care management services furnished by RHCs and FQHCs.  Payment will be updated annually based on Physician Fee Schedule amounts for the relevant CPT© codes.

Telehealth Services—Mental health visits may be furnished virtually on a permanent basis.

Conforming Technical Changes to the In-Person Requirement for Mental Health Visits—CMS has delayed the in-person requirements for mental health visits furnished by RHCs and FQHCs through telecommunications technology under Medicare until 152 days after the COVID-19 PHE ends.

Specified Provider-BASED Rural Health Center Payment Limit per Visit—A 12-consecutive month cost report should be used to establish a specified provider-based RHC payment limit per visit.  This accurately reflects the costs of providing RHC services and will establish a more accurate base from which payment limits will be updated going forward.

Clinical Laboratory Fee Schedule

The data reporting period for the data collection period beginning January 1, 2019 and ending June 30, 2019 is January 1, 2023 through March 31, 2023.  Initially, data reporting begins January 1, 2017 and is required every three years beginning January 2023.

Payment may not be reduced by more than 0% as compared to the amount established for 2021, and payment may not be reduced by more than 15% for years 2023 through 2025 as compared to the amount established the preceding year.

The nominal fee increase for specimen collection is based on the Consumer Price Index.

Medicare Ground Ambulance Data Collection System

Updated regulations will provide the necessary flexibility to specify how ground ambulance organizations should submit hardship exemption requests and informal review requests. Medicare Ground Ambulance Data Collection Instrument clarifications and changes include editorial changes for clarity and consistency, updates to reflect the web-based system, clarifications responding to feedback from interested parties and testing, and typographical and technical corrections.

Origin and Destination Requirements Under the Ambulance Fee Schedule

The expanded list of covered destinations for ground ambulance transports was for the duration of the COVID-19 PHE only.  These destinations include but are not limited to, any location that is an alternative site determined to be part of a hospital, critical access hospital, skilled nursing facility; community health centers; federally qualified health centers; rural health clinics; physician offices urgent care facilities; ambulatory surgical centers; any location furnishing dialysis services outside of an end-stage renal disease (ESRD) facility when an ESRD facility is not available, and the beneficiary’s home.

When the COVID-19 PHE ends, regulations will reflect the longstanding ambulance services coverage for the following destinations: hospital, critical access hospital, beneficiary’s home, and ESRD dialysis facility for a patient who requires dialysis.  Rural emergency hospitals will also be an allowed destination.

Fact Sheets

A fact sheet on the 2023 Quality Payment Program changes is available here.

A fact sheet on the Medicare Shared Savings Program changes is available here.