CMS PFS and HOPPS Final Rules



On November 1, 2022, the Centers for Medicare & Medicaid Services (CMS) released the CY 2023 Revisions to Payment Policies Under the Physician Fee Schedule (PFS) and Other Revisions to Medicare Part B [CMS-1770] Final Rule, which includes final policies related to Medicare physician payment and the Quality Payment Program (QPP).  In addition, CMS released the calendar year (CY) 2023 Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems Final Rule [CMS-1772-FC], finalizing payment rates and policy changes affecting Medicare services furnished in hospital outpatient and ambulatory surgical center (ASC) settings for CY 2023.

PFS Overview

Conversion Factor

The final 2023 Medicare conversion factor (CF) is $33.06, reduced from the 2022 final conversion factor of $34.61. The final rule establishes a 4.47% cut to physician payments under the 2023 fee schedule unless Congress can pass legislation that would offset or mitigate this reduction in payment.

Stakeholders, including ASE, have advocated for an improvement over the proposed rule’s 4.47% reduction to the CF, but the final rule’s methodology resulted in a slight decrease. The update is based on several factors: a statutory 0% update scheduled for the PFS in CY 20231 and a funding patch passed by Congress at the end of CY 2021 through the Protecting Medicare and American Farmers from Sequester Cuts Act. This bipartisan legislation partially mitigated a 3.75% cut to the CY 2022 CF and staved off other Medicare cuts, including a phased-in delay of the Medicare sequestration and pay-as-you-go cuts. The 3% payment patch was only in effect for 2023 and the Medicare sequestration relief was phased out starting April 1, 2022. The overall negative adjustment to the CF for 2023 is driven by the expiration of the 3% payment patch and a statutorily required budget neutrality adjustment due to other spending increases. Additionally, unless Congress acts to further delay additional anticipated cuts arising from pay-as-you-go federal budget requirements, Medicare payments could be cut by an additional 4%.

Physicians are concerned that full relief may not be possible given the significant cost of trying to offset an almost 4.5% cut and numerous competing interests facing Congress in an end-of-year legislative package. ASE will continue to work with a coalition of national and state medical societies in urging Congress to prevent these cuts before January 1, 2023. 

Practice Expense

Last year, CMS finalized a proposal to update prices for clinical labor through a four-year transition period that will be completed in 2025. Physician specialties with substantially higher average shares of direct costs attributable to clinical labor are anticipated to see increases in payment from the clinical labor pricing update, while those with lower average shares of direct costs attributable to labor are anticipated to see decreases in payment. During the four-year transition period, clinical labor rates will remain open for public comment.  Unfortunately, echocardiography related services did see an increase in the clinical labor RVUs based on the revised calculations.

Although CMS did not propose a methodology for updating future PEs, CMS believes “it is necessary to establish a roadmap toward more routine PE updates.” CMS also opined that indirect PEs would benefit from a data refresh, and signals “[its] intent to move to a standardized and routine approach” to valuing indirect PEs. Unfortunately, CMS notes that it received few direct responses to many of the specific prompts included in its recent request for information and feedback. Most commenters, including ASE, recommended CMS delay any changes to update the indirect PE survey inputs and urged CMS to wait for the American Medical Association (AMA) data collection effort prior to implementing any changes. The AMA indicated it has continued to work on updates and would likely be ready by early CY 2024 with refreshed data. CMS, however, acknowledges comments that refreshed survey data alone would not address all the competing concerns that CMS must account for when allocating indirect expenses, and that the agency may look to supplement or augment survey data with other verifiable, objective data sets in the future, including data sets that are already in the public domain.

Split / Shared Visits

CMS will delay until CY 2024 the split (or shared) E/M visits policy originally scheduled for implementation in CY 2023. For CY 2023 (as in CY 2022) the substantive portion of a visit may be met by any of the following elements:

  • history
  • performing a physical exam
  • making a medical decision
  • spending time (more than half of the total time spent by the practitioner who bills the visit).

Under this change, echocardiographers furnishing split/shared E/M 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 total time to determine the substantive portion, until CY 2024. The ASE and many other specialties pushed CMS not to implement its new definition of “substantive portion” as more than half of the total visit time and we will continue to advocate against implementation of this policy change.

Merit-based Incentive Payment System (MIPS)

CMS will maintain the CY 2023 MIPS performance threshold at 75 points (same as CY 2022). This impacts the CY 2025 payment year. Please note, CY 2022 is the final year for the “exceptional bonus” for high MIPS scores. While most cardiologists continue to meet the minimum MIPS reporting thresholds, failing to satisfactorily participate in MIPS for the CY 2023 performance year will result in a 9% payment cut in CY 2025.

MIPS Value Pathways (MVPs) are intended to connect activities and measures from the four MIPS performance categories that are relevant to a specialty, medical condition, or a particular population. For the CY 2023 performance period, CMS will add 5 new MVPs to the previously announced 7 MVPs in the program. CMS will also add measures to the existing 7 MVPs.

HOPPS Overview

For CY 2023, CMS applied a productivity-adjusted market basket increase of 3.8% under the Hospital Outpatient Prospective Payment System (HOPPS) and the Ambulatory Surgical Centers (ASC) Payment System. However, CMS applied several budget neutrality and other adjustments, including a significant 3.09 percentage point reduction to account for changes to its 340B drug purchasing policy. After accounting for these adjustments, the CY 2023 HOPPS conversion factor increases by 1.67% over the 2022 value. The ASC conversion factor will increase by 3.88%, a different and more favorable adjustment largely because it is not directly impacted by the 340B-specific budget neutrality adjustment. In continuation of its existing policy, hospitals and ASCs that fail to meet their respective quality reporting program requirements will be subject to a 2% reduction.

Based on the finalized policies, CMS estimates that total payments to HOPPS and ASC providers (including beneficiary cost-sharing and estimated changes in enrollment, utilization, and case-mix) for CY 2023 will be approximately $86.5 billion and $5.3 billion, respectively, for an increase of approximately $6.5 billion and $230 million, respectively, from CY 2022 program payments.

Supervision by Non-Physician Practitioners

CMS further extends supervision authority to non-physician practitioners for select diagnostic services.  In 2020, in response to the COVID-19 pandemic, CMS liberalized its regulations to allow certain non-physician practitioners (nurse practitioners, physician assistants, clinical nurse specialists and certified nurse midwives) to supervise the performance of diagnostic x-ray tests, diagnostic laboratory tests and other diagnostic tests paid under the PFS for the duration of the PHE to the extent they were authorized to do so under their scope of practice and applicable state law. In the CY 2021 PFS final rule, CMS further revised its regulations to make the previous revisions permanent and to add certified registered nurse anesthetists to the list of non-physician practitioners permitted to provide supervision of diagnostic tests to the extent authorized to do so under their scope of practice and applicable state law.

CMS has finalized its policy to further revise existing supervision requirements to make clear that nurse practitioners, clinical nurse specialists, physician assistants, certified registered nurse anesthetists and certified nurse midwives may provide general, direct, and personal supervision of outpatient diagnostic services to the extent that they are authorized to do so under their scope of practice and applicable state law.

To view the Final CY 2022 Payment Rates – MPFS and HOPD, please log in to the ASE Member Portal and visit the Advocacy Portal page.

For further information please see:

CMS Final Rules and Fact Sheets  

CY 2023 Physician Fee Schedule Final Rule
CY 2023 Physician Fee Schedule Final Rule Fact Sheet

CMS HOPPS/ASC Final Rules and Fact Sheets    

CY 2023 HOPPS/ASC Payment System Final Rule
CY 2023 HOPPS/ASC Payment System Final Rule Fact Sheet

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