Last week, CMS released the Calendar Year (CY) 2023 Physician Fee Schedule (PFS) final rule (the Final Rule). Under the Final Rule, CMS finalized a number of updates, revisions, and changes to Medicare payment policies for claims occurring on or after January 1, 2023. We highlight some of the key changes below.

2023 Rate-Setting and Conversion Factor

In the Final Rule, CMS finalized a series of standard technical proposals pertaining to practice expense. Among other finalized changes, CMS implemented for the second year the clinical labor pricing update, which began in the CY 2022 rule, to update the cost per minute for each category of clinical staff. CMS also updated the geographic practice cost indices (GPCIs) and the malpractice RVUs. After factoring in all budget neutrality adjustments and the sunset of the statutory three-percent increase to payments, the final CY 2023 conversion factor is $33.06—a decrease of $1.55 compared to the CY 2022 conversion factor of $34.61.

Evaluation and Management (E/M) Visits

Similar to prior years, CMS adopted the AMA CPT Editorial Panel’s revisions and updates to evaluation and management (E/M) visit codes and related coding guidelines, particularly around “Other E/M visits,” including hospital inpatient, hospital observation, emergency department, nursing facility, home or residence services, and cognitive impairment assessment. The updates include new descriptor times, revised interpretative guidelines for levels of medical decision-making (MDM), choice of MDM or time to select code level, and the elimination of history and exam to determine the E/M code level.

CMS also finalized three HCPCS G codes (G0316, G0317, G0318) to describe prolonged services associated with certain types of E/M services. These codes will replace existing codes that describe prolonged services, specifically inpatient prolonged services CPT codes 99356 and 99357.

Split (or Shared) E/M Visits

CMS is delaying the implementation of the new definition of a “substantive portion” for another year, or until January 1, 2024, for E/M visits. CMS’s longstanding split (or shared) billing policies allow physicians to bill for an E/M visit when the physician performed a substantive portion of the visit. Beginning in CY 2024, “time” will be the only factor for determining the substantive portion and the practitioner who is entitled to bill for the E/M visit. Thus, assuming CMS adopts the new definition of “substantive portion” in CY 2024, the physician will need to spend more than half of the total time performing the split (or shared) visit in order to bill for the E/M visit.

However, for CY 2023, as in CY 2022, the substantive portion of the E/M visit will still be comprised of any of the following elements:

• History
• Performing a physical exam
• MDM
• Spending time (more than half of the total time spent by the practitioner who bills the visit)

Therefore, practitioners may continue to use these factors when determining the substantive portion of the split (or shared) visit in CY 2023.

Telehealth Services

In the Final Rule, CMS implemented a number of policies pertaining to telehealth services. The agency announced that several telehealth services that it made temporarily during the COVID-19 Public Health Emergency (PHE) will continue to be available throughout the end of CY 2023. This extension will facilitate the collection of extra data the agency will use to consider permanently including some of those services on the Medicare Telehealth Services list. The agency further announced that all telehealth services will remain available for at least 151 days following the end of the PHE.

CMS also finalized a proposal to allow physicians and practitioners to continue using place of service code for telehealth that would have been used had the service been performed in person through CY 2023. These claims will require the modifier “95.”

CMS also implemented rules interpreting the telehealth provisions of the Consolidated Appropriations Act of 2022, including the extension of geographic restrictions, the extension of practitioner types who are eligible to furnish Medicare telehealth, delay of the in-person requirements under Medicare for mental health services furnished through telehealth under the PFS, and the extension of the audio-only flexibilities for certain telehealth services that otherwise are not available via telehealth.

Behavioral Health Services

CMS finalized its proposal to amend the direct supervision requirement at 42 C.F.R. § 410.26 to allow behavioral health services to be provided under the general supervision of a physician or non-physician practitioner, rather than under direct supervision. This provision applies when the services are provided by auxiliary personnel incident to the services of a physician or non-physician practitioner. The Final Rule also clarifies that auxiliary personnel may furnish any service primarily for the diagnosis and treatment of a mental health or substance use disorder as long as a physician or non-physician practitioner (NPP) supervises the auxiliary personnel and the physician or NPP is authorized to furnish and bill for services provided incident to their own professional services.

With this Final Rule, CMS also added a new code to the existing set of codes describing services furnished using the Psychiatric Collaborative Care Model. Specifically, the new code (HCPCS code GBHI1) will account for monthly care integration where the mental health services furnished by a clinical psychologist or clinical social worker serve as the “focal point” of care integration and will be allowed under general supervision.

Chronic Pain Management and Treatment Services

In the Final Rule, CMS implemented new HCPCS codes (G3002 and G3003) and valuation for chronic pain management and treatment services. CMS explained that the purpose of this change is to improve payment accuracy for these services and to encourage practitioners to welcome Medicare beneficiaries with chronic pain into their practices. The new HCPCS codes include a variety of services for holistic chronic pain care, including assessment and monitoring, administration of a validated pain rating scale or tool, and the development, implementation, revision, and/or maintenance of a person-centered care plan that includes strengths, goals, clinical needs, desired outcomes, and overall treatment management.

Finally, the Final Rule addressed other topics, including:

• CMS determined the average sales price (ASP) data for various forms of methadone is unreliable and therefore it indicated that it would update the payment rate for the drug component of the methadone weekly bundle and add-on code for take-home supplies of methadone. CMS will use the payment amount used in CY 2021 and update the amount annually to account for inflation. In addition, Medicare will pay for opioid treatment programs that employ telecommunications to initiate buprenorphine treatment.
• CMS amended 42 C.F.R. § 410.32(a)(4) to remove the physician order requirement under certain circumstances for certain audiology services furnished personally by an audiologist for non-acute hearing conditions. The finalized policy will append a new modifier (modifier AB) rather than a new HCPCS G-code as initially proposed by CMS.
• CMS codified certain 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.
• CMS did not finalize it proposed changes to the policies for skin substitute products to streamline the coding, billing, and payment rules. CMS plans to conduct a Town Hall inviting participation from interested stakeholders in early CY 2023 to address commenters’ concerns to strengthen proposed policies for skin substitutes in a future rulemaking.
• CMS reduced the minimum age payment and coverage limitation from 50 to 45 years old for colorectal cancer screening and expanded the definition of screening tests to include a complete colorectal cancer screening.
• As required by Section 90004 of the Infrastructure Investment and Jobs Act, CMS finalized its regulatory definition of a “refundable single-dose container” or “single-use package drug.” These terms now are defined as “a drug or biological for which payment is made under Part B and that is furnished from a single-dose container or single-use package.”
• CMS refined the payment amount for preventative vaccinations and finalized a proposal to update annually the payment amount based on the increase in the Medicare Economic Index and to adjust for geographic locality using the geographic adjustment factor.
• CMS updated the Medicare Economic Index (MEI) for CY 2023 by 3.8 percent based on the most recent historical data available.

The Final Rule also includes new and/or updated policies for federally qualified health centers (FQHCs) and rural health clinics (RHCs). The Final Rule has not yet been published in the Federal Register, but a display copy of the Final Rule is available here. The CMS fact sheet is available here.