CMS Annual Payment Updates—What You Need to Know

November 08, 2021 By: Quadax

CY 2022 reimbursement rules for physicians, labs, outpatient and home health services.

Last week, the Centers for Medicare and Medicaid Services (CMS) released their annual payment updates for 2022. Here are the highlights from the final rules published November 2.

Physician Fee Schedule (PFS)

Before we dive into the finalized fee schedule, it’s important to understand how Medicare pays for physician services and how the relative values of medical services are translated into fee schedule payment amounts. The Relative Value Unit (RVU) is the fee paid by Medicare for the procedure. Each Current Procedural Terminology (CPT) and Healthcare Common Procedure Coding System (HCPCS) is assigned an RVU for each code which contains geographically adjusted components for physician work, practice expense, and malpractice insurance costs. These RVUs become payment rates through the application of a fixed-dollar conversion factor.

1. A decrease in the conversion factor in 2022

In the 2022 rule, CMS finalized a conversion factor of $33.59 for each RVU. The factor is a decrease of $1.31 compared to the previous year’s conversion factor.

Next year’s rate accounts for statutory changes to RVUs and the expiration of the 3.75% temporary CY 2021 payment increase Congress approved through pandemic-related legislation. The CY 2022 conversion factor also reflects a statutory update of 0% and an adjustment necessary to account for changes in RVUs and expenses that would result from finalized policies, according to the final rule.

2. Refinement of split E/M services, critical care 

The 2022 rule includes new policies regarding split, or shared, evaluation and management (E/M) visits, implementation of new modifiers for physical and occupational therapy services furnished by physical therapist assistants and occupational therapy assistants, and authorization of the direct payment of physician assistants for qualifying services.

For instance, CMS defines a split E/M visit as one that is provided in “the facility setting by a physician and an [non-physician practitioner] in the same group,” states the fact sheet. “The visit is billed by the physician or practitioner who provides the substantive portion of the visit.”

A medical record, though, must identify the two individuals who performed the visit and the individual that provides the substantive portion must sign and date it.

CMS also updated policies surrounding critical care services, stating that such services may be paid on the same day as other E/M visits by the same practitioner or one in the same group.

3. Increases for telehealth benefits

CMS is eliminating geographic barriers and allowing patients to access telehealth services in their homes for mental health diagnoses, evaluation, and treatment. The agency will pay for mental health visits furnished by rural health clinics and federally qualified health centers using telehealth, including audio-only telephone calls, for the first time outside of the COVID-19 public health emergency (PHE).

The rule also extended inclusion of some cardiac and intensive cardiac rehabilitation codes on the telehealth list through the end of CY 2023. 

4. COVID Vaccine Administration

CMS will support another high priority from the COVID-19 PHE: vaccine administration. Effective January 1, 2022, CMS will pay $30 per dose for the administration of the influenza, pneumococcal and hepatitis B virus vaccines. In addition, CMS will maintain the current payment rate of $40 per dose for the administration of the COVID-19 vaccines through the end of the calendar year in which the ongoing PHE ends.

Medicare reimbursement rates for in-home administration will be $35.50 through the end of the COVID-19 PHE and $450 for administration of COVID-19 monoclonal antibody treatments in healthcare settings. The rate for in-home administration will be $750.

5. CLFS Laboratory Specimen Collection Fee and Travel Allowance

The Clinical Laboratory Fee Schedule (CLFS) provides for a nominal fee for specimen collection for laboratory testing and a fee to cover transportation and personnel expenses (generally referred to as the travel allowance) for trained personnel to collect specimens from homebound patients and inpatients (except hospital inpatients). The travel allowance is paid only when the nominal specimen collection fee is also payable.

In an effort to make diagnostic testing available to Medicare beneficiaries during the COVID-19 PHE, CMS changed the Medicare payment rules to provide payment to independent laboratories for specimen collection from beneficiaries who are homebound or inpatients (not in a hospital) for COVID-19 clinical diagnostic laboratory tests (CDLTs) under certain circumstances and increased payments from $3-5 to $23-25. 

CMS is also making permanent the option for laboratories to maintain electronic logs of miles traveled for the purposes of covering the transportation and personnel expenses for trained personnel to travel to the location of an individual to collect a specimen sample.

Healthcare industry groups are coming out against the reduced conversion factor in CY 2022. A 3.75% temporary pay bump given to physicians for 2021 is also expected to expire unless Congress acts. 

“While the American Medical Association (AMA) will thoroughly analyze the 2,400+ page rule, it is a reminder of the financial peril facing physician practices at the end of the year,” Gerald E. Harmon, MD, president of the AMA, said in a statement.

AMA reported that the reduction in the conversion factor is about 3.85 percent. But that cut is on top of other looming Medicare physician reimbursement reductions, which could reach close to 10 percent of physician payments next year.

Physician groups also decried the looming cuts, especially as providers continue to deal with the COVID-19 pandemic.

"These Medicare cuts will further exacerbate our pandemic-strained healthcare system and cause further delay in care to the patients who need it most," said David Hoyt, executive director of the American College of Surgeons, in a statement.

To view the complete final rule, click here. There is also a CMS fact sheet available. 

Outpatient Prospective Payment System rule

CMS finalized Medicare payment rates for hospital outpatient and Ambulatory Surgical Center (ASC) services. In addition to updating the payment rates, the Calendar Year (CY) 2022 Hospital Outpatient Prospective Payment System (OPPS) and ASC Payment System Final Rule includes policies that align with several key goals of the Administration, including addressing the health equity gap, fighting the COVID-19 Public Health Emergency (PHE), encouraging transparency in the health system, and  promoting safe, effective, and patient-centered care. View the CMS fact sheet here

1. OPSS and ASC payment rates

CMS is updating the CY 2022 OPPS payment rates for hospitals that meet applicable quality reporting requirements by 2.0 percent. For the OPPS and ASC rate setting process, the best available data is used so that the payment rates can accurately reflect estimates of the costs associated with furnishing outpatient services. Due to a number of COVID-19 PHE-related factors, CMS believes CY 2020 data are not the best overall approximation of expected outpatient hospital services in CY 2022. As a result, CMS is generally using CY 2019 claims data to set the CY 2022 OPPS and ASC payment system rates.

2. Elimination of Inpatient Only List

The final rule halts elimination of the inpatient only list and adds back most of the services that were removed from the list in 2021. In addition, CMS established a policy in which procedures removed from the IPO list beginning January 1, 2021 would be indefinitely exempted from certain medical review  activities related to the two-midnight policy. 

3. Changes to the ASC Covered Procedures List

CMS is reinstating the criteria for adding procedures to the ASC Covered Procedures List (ASC CPL) that were in place in CY 2020. In the CY 2022 OPPS/ASC proposed rule, CMS requested comment on whether any of the 258 procedures proposed for removal from the ASC CPL met the proposed reinstated criteria. Based upon review of these procedure recommendations, CMS is keeping six procedures, three that were already on the ASC CPL and three that were proposed for removal, and removing of 255 of the 258 procedures proposed for removal. The three codes that were proposed for removal and are being retained are CPT codes 0499T, 54650, and 60512.

4. Price Transparency of Hospital Standard Charges

CMS is modifying the hospital price transparency regulation beginning January 1, 2022. Hospitals with 30 or fewer beds that aren't in compliance with the regulation will face a minimum penalty of $300 per day. Hospitals with more than 30 beds will face a minimum penalty of $10 per bed per day. The maximum penalty will be capped at $5,500 per day. A full year of noncompliance with the price transparency regulation would result in a maximum penalty of about $2 million per hospital. 

The rule is also requiring the machine-readable file that includes hospital prices be accessible to automated searches and direct downloads. 

Home Health Prospective Payment System rule 

CMS has also acted to improve home health care for older adults and people with disabilities through a final rule that would accelerate the shift from paying for Medicare home health services based on volume to a system that pays for value. 

Medicare home health reimbursement rates will increase by 2.6 percent, or $465 million, in 2022. The final rule expands the home health value-based purchasing model nationally, with the first performance year beginning January 1, 2023. Starting in 2025, CMS will adjust fee-for-service payments to Medicare-certified home health agencies based on the quality of care provided to beneficiaries during the 2023 performance year. 

View the CMS fact sheet here

Quadax is committed to staying on top of payer changes.

Our comprehensive, up-to-date library of claim processing rules and edits are updated bi-weekly by our Edits & Documentation Group (EDG). The Quadax EDG team of experts, who are knowledgeable in both billing and ANSI claim requirements, reference nationally recognized sources, including AMA, CPT guidelines, Medicare Physician Fee, and more. 

Need help navigating the payer landscape to maximize your reimbursement? Schedule a strategy call and let’s take on the revenue cycle together!

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