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Changes to Medicare’s Physician Fee Schedule and Outpatient Prospective Payment System

Client Alert

Come the beginning of 2022, both the Medicare Physician Fee Schedule (“MPFS”) and Outpatient Prospective Payment System (“OPPS”) will look a little different. As a refresher, the MPFS lists the fees associated with reimbursement of services to providers at certain facilities, taking into account geography and costs. By contrast, OPPS sets reimbursement rates for hospitals and community mental health centers for outpatient services, which are determined in advance. A summary of some of the more pertinent changes to each rule will be outlined below.

MPFS:

The Final Rule for the 2022 MPFS was published on November 2, 2021 by the Centers for Medicare and Medicaid Services (“CMS”) and includes a handful of changes. Most notably, some telehealth services that were added to the list of Medicare covered services during the pandemic will remain on the list through the end of 2022. Additionally, the definition of “interactive telecommunications system for telehealth services” was changed to include two-way, audio-only, devices for treatment, diagnosis, and evaluation of patients with mental health disorders. However, note that this change has not been extended for other patients.[1]

Quite a few provisions for non-physician services were also amended, including changing reimbursement rates for services provided by physical therapy assistants and occupational therapy assistants to be set at 85%, provided they are being supervised by a physical therapist or occupational therapist. Physician assistants will also now be able to bill and receive payment directly for services rendered under Medicare Part B.[2]

The new MPFS conversion factor decreased by $1.30 from 2021, which is now set at $33.59. Updates to clinical labor pricing will also be taken into account when determining practice expenses, standard rate-setting, and equipment pricing. For this change, however, CMS has discussed a four-year transition period.[3]

Additionally, changes came to evaluation and management (“E/M”) visits, specifically split (or shared) visits, which will eventually be incorporated under 42 C.F.R. §415.140. The changes are summarized below:

  • Definition of split (or shared) E/M visits as E/M visits provided in the facility setting by a physician and a NPP in the same group. The visit is billed by the physician or practitioner who provides the substantive portion of the visit.
  • By 2023, the substantive portion of the visit will be defined as more than half of the total time spent. For 2022, the substantive portion can be history, physical exam, medical decision-making, or more than half of the total time (except for critical care, which can only be more than half of the total time).
  • Split (or shared) visits can be reported for new as well as established patients, and initial and subsequent visits, as well as prolonged services.
  • A modifier is required on the claim to identify these services to inform policy and help ensure program integrity. 
  • Documentation in the medical record must identify the two individuals who performed the visit. The individual providing the substantive portion must sign and date the medical record.[4]

A full copy of the new rule can be accessed here.

OPPS:

Also published on November 2, 2021, CMS issued a number of changes to the OPPS. First, in an attempt to encourage price transparency for hospital costs, CMS is increasing civil monetary penalties to $300 per day for hospitals with 30 or fewer beds, and $10 per bed, per day, at hospitals with more than 30 beds. However, the penalty cannot exceed $5,500 per day.[5]

Next, outpatient payment rates have been increased by 2% to take into account the 2.7% increase in the hospital market, and the 0.7% decrease in productivity.[6]

Additionally, beginning in 2021, CMS had planned to eliminate the Inpatient Only (“IPO”) list, which encompassed services that would only be reimbursed if they were rendered in an inpatient setting. However, because of opposition, CMS is no longer going to eliminate the IPO out of safety concerns, with some exceptions.[7]

Partial Hospitalization Program (“PHP”) per diem rates were also updated for hospital outpatient departments and Community Mental Health Centers. Essentially, the rate structure from 2021 will continue to be used in 2022 to take into account the anticipated decline in costs for 2022.[8]  

Lastly, under Section 340B of the Public Health Service Act, which permits manufacturers to sell drugs at a discounted rate to providers and hospitals, CMS will reimburse for these drugs at the average sale price, minus 22.5%, for certain drugs, which has not changed from 2018.[9]

The final rule for OPPS can be accessed here.

Conclusion:

As evidenced above, there have been numerous changes to both the Medicare Physician Fee Schedule and Outpatient Prospective Fee Schedule, which will affect various different entities and providers. Therefore, being proactive in recognizing changes in reimbursement rates and other requirements will be essential. If you have any general questions about either rule, or would like to explore a certain issue in more depth, please contact Healthcare & Hospital Law Member Amanda Waesch at alwaesch@bmdllc.com. Special thanks to Rachel Stermer for her assistance writing this client alert.

[1] CMS, Calendar Year (CY) 2022 Medicare Physician Fee Schedule Final Rule, (Nov. 2, 2021) https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2022-medicare-physician-fee-schedule-final-rule.

[2] Id.

[3] Id.

[4] Id.

[5] CMS, CY 2022 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Final Rule (CMS-1753FC), (Nov. 2, 2021) https://www.cms.gov/newsroom/fact-sheets/cy-2022-medicare-hospital-outpatient-prospective-payment-system-and-ambulatory-surgical-center-0.

[6] Id.

[7] Id.

[8] Id.

[9] Id.


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