On the evening of November 2, 2021, the Centers for Medicare & Medicaid Services released the CY 2022 final Physician Fee Schedule (PFS), which includes final policies for physician services covered under Medicare Part B. The rule also includes policies for telehealth services, the Quality Payment Program, and evaluation and management (E/M) visits.

Provisions of the final rule go into effect on January 1, 2022.

CMS Finalizes Across-the-Board Cut to Physician Payments

Physicians and other health professionals are paid under Medicare Part B for services that include office visits, surgical procedures, and other diagnostic and therapeutic efforts. To determine payment, Medicare uses a physician fee schedule that is based on the relative resources typically used to furnish the service. These relative value units (RVUs) are applied to each service for physician work, practice expense, and malpractice.

CMS multiplies these RVUs by a “conversion factor” to determine the Medicare payment amounts for each physician service. The CY 2022 conversion factor is $33.59, which is a decrease of $1.30 from the CY 2021 PFS conversion factor of $34.89. This factor reflects the statutory update of zero percent and an adjustment to account for RVU changes and expenditures from policies finalized in the final CY 2022 PFS rulemaking.

CMS Adds Additional Rules for Evaluation and Management (E/M) Billing

As part of its ongoing review of payments for E/M visit code sets, CMS is finalizing its proposed refinements and updates to coding and payment for evaluation and management (E/M) visits. Specifically, CMS is clarifying their policies on billing for split (or shared) visits to reflect changes in the recent E/M visit coding and payment, the current practice of medicine, the evolving role of non-physician practitioners (NPPs) as members of the medical team. As background, previously, a split (or shared) visit referred to an E/M visit that is performed (“split” or “shared”) by both a physician and a NPP who are in the same group.

In the CY 2022 PFS final rule, CMS makes the following changes to split (or shared) E/M visits:

• Redefining a split (or shared) E/M visit as a visit in the facility that is performed by both a physician and an NPP who are in the same group;
• For 2023, finalizing the definition of substantive portion of visit as more than half of the total time spent and, for 2022, defining the list of activities included in the substantive portion as 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);
• Clarifying that the practitioner who provides the “substantive portion” of the visit (now defined as more than half of the total time spent performing the visit) would bill for the visit;
• Allowing for split (or shared) visits to be reported for new as well as established patients, and initial and subsequent visits, as well as prolonged services;
• Requiring reporting of a modifier on the claim to describe split (or shared) visits for program integrity and quality considerations; and
• Requiring documentation in the medical record of two individuals who performed the visit and signature and date for the individual providing the substantive portion.

CMS also provided additional clarification on teaching physician visits and determining the office/outpatient E/M visit level. CMS clarified that only the time that the teaching physician in qualifying activities, including time that the teaching physician was present can be included. In addition, under the primary care exception, only medical decision making (MDM), not time, can be used to select office/outpatient E/M visit level. Currently, under the primary care exception, Medicare makes PFS payment in certain teaching hospital primary care centers for certain services of lower and midlevel complexity furnished by a resident without the physical presence of a teaching physician.

CMS Improves Reimbursement for Critical Care Services

CMS also finalized several clarifications and changes to critical care services. CMS adopted the CPT Codebook definition of critical care services and its listing of bundled services. Also, CMS is allowing for critical care services to be furnished as concurrent care to the same patient on the same day by more than one practitioner in more than one specialty and allowing these critical care services to be furnished as split (or shared) visits. In addition, critical care services may be paid when reported with modifier -25 on the same day as other E/M visits by the same practitioner or another practitioner in the same group of the same specialty, if the practitioner documents that the E/M visit was provided prior to the critical care service at a time when the patient did not require critical care, the visit was medically necessary, and the services are separate and distinct, with no duplicative elements from the critical care service provided later in the day. CMS also finalizes its proposal to pay separately for critical care services in addition to a procedure with a global surgical period if the critical care is unrelated to the surgical procedure. CMS will pay for preoperative and/or postoperative critical care in addition to the procedure if the patient is critically ill and requires the full attention of the physician, and the critical care is above and beyond and unrelated to the specific anatomic injury or general surgical procedure performed (e.g., trauma, burn cases). Specific modifiers and medical record documentation are required.

Medicare will Preserve Telehealth Services Added During Public Health Emergency Until End of 2023 & Permanently Expand Telehealth for Mental Health Services

CMS will not yet permanently add any of the services that were temporarily added to the Medicare telehealth services list during the COVID-19 PHE.  However, all services added to Category 3 criteria will remain until the end of CY 2023, which will allow enough time to consider adding these services permanently. Last year, CMS created the new Category 3 to capture Medicare telehealth services that are permitted on a temporary basis during the PHE.

The lack of permanently added telehealth flexibilities is certainly disappointing to stakeholders who have been advocating for the waivers adapted during the PHE to remain. However, Congress must first pass a law to remove geographical and originating site limitations for telehealth services used by all Medicare beneficiaries.

CMS Expands Telehealth for Mental Health Services, Finalizes In-Person Visit Prerequisite

CMS finalizes the requirement that an in-person, non-telehealth service to be provided by a physician or practitioner furnishing mental health services within six months prior as a prerequisite to the initial telehealth service and every 12 months thereafter. The CAA removed the geographic restriction on Medicare covered telehealth mental health services so that beneficiaries in rural and urban locations can access mental health services via telehealth. The CAA also added the home of a beneficiary as a permissible originating site for telehealth services for purposes of mental health services.

While mental health advocates applauded the expanded access to telehealth for these services, the in-person visit requirement was identified as hinderance to this policy. CMS originally proposed to require in-person, non-telehealth visits every six months but after backlash from stakeholders, CMS is finalizing an in-person visit requirement for once every 12 months instead. CMS will also allow exceptions to the in-person visit requirement on a case-by-case basis based on a beneficiary’s circumstances.

Audio-Only Telehealth for Mental Health Services to be Allowed on Limited Basis

During the PHE, CMS allowed payment for audio-only telehealth services for certain behavioral health and counseling services using its waiver authority. CMS will permanently allow audio-only communication for mental health services to established patients, with the limitation that the beneficiary home is the originating site, including for mental health telehealth visits furnished by Rural Health Clinics and FQHCs. CMS limits use of audio-only services to only when a beneficiary does not have access to or does not wish to use video technology. Regardless, the practitioner offering the services must still have capacity to furnish two-way, audio/video telehealth services. Mental health services include treatment of substance use disorders.

In its analysis of Medicare Part B claims data, CMS found that most services furnished via telehealth during the PHE spiked around April 2020 and reduced in the following months, except for mental health services. Audio-only services have continued to be highly utilized by beneficiaries with mental health conditions.

CMS Permanently Adopts Code for Longer Audio-Only Check-Ins

CMS finalizes the coding and payment for HCPCS code G2252, which describes a virtual visit for 11-20 minutes and can be used for audio-only services. G2252 allows for a longer virtual check-in beyond the 5-10 minutes accounted for by the HCPCS code G2012. CMS states that it is making this code permanent to accommodate beneficiaries who may still be reluctant to return to in-person services post PHE.

Physician Assistants Will Be Able to Bill Medicare Directly

A provision of the Consolidated Appropriations Act 2021 will allow physician assistants (PAs) to bill Medicare for professional services provided under Medicare Part B beginning on January 1, 2022. Currently, Medicare pays the employer of independent contractor of a PA and does not pay the PA directly. With the CY 2022, CMS is formally implementing the statutory requirement.

CMS Expands Drug Manufacturer Price Reporting Requirements

The CAA 2021 expanded Average Sales Price (ASP) reporting requirements to require manufacturers that do not have a Medicaid drug rebate agreement in place to comply with ASP reporting requirements for any items, services, supplies, and products that are payable as a drug or biological under Medicare Part B. These changes become effective for calendar quarters beginning on or after Jan. 1, 2022. There are penalties for manufacturers that do not comply with these requirements. CMS finalizes their proposal to modify the definition of drugs for which reporting is applicable as well as the regulations describing civil money penalties to reflect the statute.

CMS Acknowledges Stakeholder Feedback on Coding Framework for 505(b)(2) Products

In the CY 2022 proposed PFS, CMS put forward a framework for determining coding for products approved under the 505(b)(2) pathway. 505(b)(2) refers to a section of the Federal Food, Drug and Cosmetic Act that permits an expedited pathway to FDA approval based on an application that contains full reports of investigations of safety and effectiveness, but where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference.[1] Because of this, these pharmaceutical products have some characteristics of branded products, but other characteristics of generic products. Prior CMS policy only addressed brands and generics. CMS did not propose implementing the framework or a timeline for possible implementation and but did seek feedback.

This framework came after CMS proposed to codify an agency policy to assign certain 505(b)(2) products to existing multiple source HCPCS codes if the product is described on such a code as based on the product description in CY 2021 proposed rulemaking. However, CMS opted not to finalize the proposal to codify the policy in response to stakeholder feedback.

In this evening’s CY 2022 final PFS rule, CMS acknowledges the feedback, saying 27 comments were received about the framework. The majority of these comments were from pharmaceutical manufacturers who would be affected by the regulation and other commenters included the Medicare Payment Advisory Commission (MedPAC) and professional associations. Some commenters expressed concern about the impact of the framework on use of the 505(b)(2) pathway. Another concern included among the comments was that payment for 505(b)(2) products as multiple source drugs could result in “inadequate reimbursement” and thus, limit patient access. Some of the comments received did support the framework. CMS acknowledges the comments but did not provide additional feedback, saying only that the agency will consider the comments in future rulemaking.

CMS Updates Quality Payment Program, Targets 2023 for MIPS Value Pathway Implementation

CMS finalized proposals for the Quality Payment Program (QPP), which includes two tracks: the Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs). MIPS-eligible clinicians receive a payment adjustment based on their performance in four categories: quality, cost, improvement activities, and promoting interoperability. The upcoming 2022 performance year will impact payment in 2024. For MIPS, statute specifies the weight of each category in CY 2022 as follows:

• Quality: 30 percent
• Cost: 30 percent
• Improvement activities: 15 percent
• Promoting interoperability: 25 percent

These category weights mean an increase in 10 percent for the cost quality and a decrease of 10 percent for the quality category. Five new cost measures are now included in this category. Clinicians participating in an eligible Advanced APM are excluded from MIPS reporting requirements and payment adjustment.

In CY 2020 rulemaking, CMS finalized creation of the MIPS Value Pathways (MVPs), a reporting option for MIPS that the agency believes will provide a more cohesive participation experience by aligning activities from the four MIPS performance categories around a certain specialty, medical condition, or patient population. CMS originally intended to begin the transition to the MVPs in 2021 but delayed the transition due to the COVID-19 pandemic. Now, CMS has finalized moving forward with a gradual transition beginning with the 2023 MIPS performance year/CY 2025 payment year; participation will be voluntary in this initial year. Seven MVPs will be available in the 2023 performance year.

MVP participants will be able to select and report on four quality measures, including one outcome measure and one high priority measure. For improvement activities, participants must report one of the following: two medium-weighted activities, one high-weighted activity, or participate in a patient-centered medical home (PCMH) or comparable specialty practice. Cost measures are also be included in the MVP. CMS plans to gradually implement MVPs for all specialties and subspecialties.

CMS will allow MIPS eligible clinicians to report the APM Performance Pathway (APP) beginning in the 2023 performance year. To address Accountable Care Organizations’ (ACOs’) concerns regarding the transition to eCQMs /MIPS CQMs, which require the submission of all-payer quality data, CMS finalized a longer transition for Shared Savings Programs ACOs by extending the CMS Web Interface as a reporting option for three years through PY2024. ACOs will be required to report the three eCQMs/MIPS CQMs beginning in PY2025. These finalized policies will provide four years for ACOs to transition to reporting the three eCQMs/MIPS CQMs under APP and to meet the increased Shared Savings Program quality performance standard.

Physician Self-Referral Regulation Continues to Garner CMS Attention

Indirect Compensation Arrangements to Include Revision of “Unbroken Chain of Financial Relationships”

Under this final regulation, CMS will consider any payment to the physician, or the physician’s family, for anything other than the services the physician personally performs, an indirect compensation arrangement. Further, CMS will consider the fair market value of a service; variables related to quantity or value of a referral; and other business the physician may generate for an entity when evaluating the indirect compensation arrangement.

CMS Defines ‘Unit’ for Determination of Indirect Compensation Arrangements

Since finalizing the Modernizing and Clarifying the Physician Self-Referral Regulations (MCR rule) in late 2020, CMS has received inquiries on the definition of “unit”. To facilitate compliance with the physician self-referral law, with this regulation, CMS finalizes its definition of an individual unit as:

1. Time, where the compensation paid to the physician is based solely on the period of time during which the services are provided;
2. Service, where the compensation paid to the physician is based solely on the service provided; and/or
3. Time, where the compensation paid to the physician is a hybrid of the time period of the service and the service itself.

COVID-19 Vaccines Granted an Exception from Self-Referral

The U.S. government has funded COVID vaccines so far during the pandemic but once Medicare begins to pay for COVID vaccines, CMS will permit an exception for COVID–19 vaccines until they are subject to frequency limits and without regard to the current PHE.

Medicare Provider and Supplier Enrollment Changes Finalized

CMS finalizes its proposed regulatory revisions to the provider enrollment process, in an effort to strengthen program integrity. These changes include:

• The expansion of CMS’ authority to deny or revoke a provider or supplier’s enrollment based on Office of Inspector General (OIG) exclusion. CMS proposes expanded categories of parties within the purview of the denial/revocation provisions to include administrative or management services personnel, such as human resources specialists or accountants, who are currently excluded;
• The expansion of CMS’ existing authority to deny a physician’s or other eligible professional’s enrollment if his or her DEA certificate of registration to dispense a controlled substance is currently suspended or revoked by allowing denial in cases where the physician or eligible professional surrenders their DEA certificate in response to an order to show cause;
• Allowing a provider or supplier to reverse a revocation against an individual such as an owner or managing employee due to adverse activity if it terminates its relationship with that individual within 30 days;
• Include specific rebuttal rights for deactivations in regulation to reflect subregulatory guidance and streamline and clarify the deactivation rebuttal process;
• The exemption of certain types of independent diagnostic testing facilities (IDTF) from several IDTF supplier standards; and
• Revisions to increase flexibility for revocation of providers and suppliers engaging in non-compliant billing.

CMS Seeks to Increase Supplier Participation in Medicare Diabetes Prevention Program with New Payment Structure

The Medicare Diabetes Prevention Program (MDPP) expanded model is an intervention that was developed to help beneficiaries diagnosed with pre-diabetes prevent or delay onset of type 2 diabetes. Despite pressure from lawmakers and advocates, CMS will not allow virtual or telehealth services in MDPP following the end of the PHE. CMS states that the MDPP is meant to be an in-person service.

CMS will continue its policy that was implemented during the PHE to waive the Medicare enrollment fee of $599 for new MDPP suppliers, for all organizations that apply to be supplier on or after January 1, 2022. CMS states that MDPP has experienced challenges in recruiting suppliers to participate and those existing suppliers have reported administrative burdens such as payment timing and length of required services period.

To address issues faced by MDPP suppliers, CMS slightly decreases the program period from two years to one year and slightly increases payments to MDPP suppliers with beneficiaries who reach specific milestones.

Currently, MDPP suppliers are required to offer up to 2 years of MDPP services to participating beneficiaries and are paid maximum of $704.00 per beneficiary over a two-year service period. Under the new one-year program, CMS proposed to pay suppliers maximum amount of $661 per beneficiary. Instead, CMS is finalizing a maximum payment amount of $705 per beneficiary when a beneficiary meets all program requirements within the year.

Medical Nutritional Therapy Services Regulation Established

Medicare Part B may cover medical nutrition therapy (MNT) services furnished by a registered dietitian or nutrition professional with the referral of a physician, typically for patients with diabetes or renal disease. Registered dietitians and nutrition professionals are included in the list of non-physician practitioners (NPPs) that can bill Medicare and be paid directly for their services and may reassign their benefits to a hospital or physician group as appropriate.

Recently, stakeholders have been concerned about the low utilization rate for these services and parity of registered dietitians and nutrition professionals with other non-physician practitioners (NPP). CMS is updating its regulations to reflect registered dietitians and nutrition professionals as a type of practitioner and specifying payment for their services. Diabetes self-management training (DSMT) is another service that registered dietitians and nutrition professionals can provide when certified appropriately.

Additionally, there have been two significant changes to MNT services since first recognized in regulation. First, CMS added MNT services to the Medicare telehealth service list and recognized that registered dieticians and nutrition professionals can furnish and bill for these services as distant site practitioners. Secondly, the Affordable Care Act removed the application of the Medicare Part B deductible and coinsurance for MNT services as a preventive service, which was never updated in regulation. CMS clarifies in regulations that MNT services are paid at 100 percent of the PFS amount without any cost-sharing, instead of 80 percent. DSMT services have a 20 percent coinsurance amount like most Medicare Part B services.

CMS Acknowledges Stakeholder Feedback on COVID-19 Specimen Collection

During the PHE, CMS changed Medicare payment rules to allow payment to independent laboratories for specimen collection from beneficiaries who are homebound or inpatients not in a hospital for COVID-19 testing. CMS also increased specimen collection fees from $3-5 to $23-25 for COVID-19 testing. The increased fees are due to expire at the end of the COVID-19 PHE, which CMS believes will be appropriate as the PHE is expected to end when there is a reduced risk of COVID-19 and the advanced safety precautions, specialized training for specimen collection, and extensive PPE will not longer be required to the same extent as during the PHE. In the proposed CY 2022 PFS rule, CMS sought feedback on specimen collection fee policies.

In the final rule, CMS acknowledges the feedback from stakeholders, noting that several commenters said CMS should expand and permanently authorize the specimen collection. CMS says they will use the feedback to inform future rulemaking. No new policies for specimen collection were adopted in this rulemaking.

[1] For more information, see: https://www.fda.gov/regulatory-information/search-fda-guidance-documents/applications-covered-section-505b2