Federal Policy Update - July 20, 2022
July 20, 2022
Federal Policy Update - July 2022

By: Julius W. Hobson, Jr.

CMS: Proposed 2023 Physician Fee Schedule Rule

On July 7th, the Centers for Medicare and Medicaid Services (CMS) released the proposed calendar year 2023 updates to the Medicare physician fee schedule (pre-publication version). The annual rule revises payment policies under the Medicare physician feel schedule and makes other policy changes. The proposed rule will be published in the July 29thFederal Register and comments will be due September 6, 2022.

Federal law requires budget neutrality adjustments, meaning payment rates for individual services cannot result in changes to overall Medicare spending. With the expiration of the 3% increase in physician fee for service (PFS) payments for CY 2022, the conversion factor for CY 2023 is 0%.  The proposed CY 2023 PFS conversion factor is $33.08, a decrease of $1.53 to the CY 2022 PFS conversion factor of $34.61. 

In general, Endocrinology is looking at a 0% total change. However, non-facility is proposed to be -1% and facility would be +3%.

The CY 2023 proposed rule is seeking to rebase and revise the Medicare Economic Index (MEI) cost share weight based on data from the U.S. Census Bureau North American Industry Classification System (NAICS) 6211 Offices of Physicians. NAICS is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy.

Selected physician pay increases/decreases:

  • Internal medicine in a facility:     +7%
  • Infectious diseases:                    +5%
  • Interventional radiology:             -4%
  • Family practice in a facility:        +5%
  • Geriatrics in a facility:                 +6%
  • Nephrology in a facility:              +6%
  • Nurse practitioners in a facility:   +5%
  • Facility psychiatry:                      +5%

The proposed rule also makes changes and proposals in the following areas:

  • Behavioral health services
  • Chronic pain management services
  • Opioid treatment programs
  • Audiology services
  • Dental and oral health services
  • Skin substitutes
  • Colorectal cancer screening


CMS is proposing a number of policies related to Medicare telehealth services. These include making several services that are temporarily available as telehealth services for the Public Health Emergency (PHE) through CY 2023 on a Category III basis. This will enable the collection of data that could support their eventual inclusion as permanent additions to the Medicare telehealth services list. Recall concerns have been expressed about possible increases in volume and costs by Medicare Payment Advisory Commission (MedPAC), the Congressional Budget Office (CBO), and others. CMS is proposing to extend the duration of time that services list during the PHE, but are not included in a Category I, II, or III basis for a period of 151 days following the end of the PHE.

CMS is proposing to extend certain flexibilities in place during the PHE for 151 days after the PHE ends, such as allowing telehealth services to be furnished in any geographic area and in any originating site setting, including the beneficiary’s home, and allowing certain services to be furnished via audio-only telecommunications systems.

Please note the current PHE is expected to be extended. Given that that extension would expire in mid-October, just weeks before the November elections, there is an expectation of at least one more extension into 2023.

Medicare Shared Savings Program & ACOs

CMS notes the growth of ACOs in the Shared Savings Program in recent years. However, there is an increasingly underrepresentation in the program since the change to regionally-adjusted benchmarks. Access appears to be unequal as illustrated by data indicating that Black (or African America), Hispanic, Asian/Pacific Islander, and American Indian/Alaska Native beneficiaries are less likely to be assigned to a Shared Savings Program ACO than their Non-Hispanic White counterparts.

Hence, CMS is proposing rules changes intended to increase underserved populations. The changes are to the quality reporting and the quality performance requirements that are responsive to interested parties’ feedback, and designed to support transition of ACOs to all payer quality measure reporting.  These changes include:

  • Reinstitution of a sliding scale reflecting on ACO’s quality performance for use in determining shared savings for ACOs, regardless of how they report quality data, and to revise the approach for determining shared losses for ENHANCED tract ACOs.
  • Extending the incentive for reporting eCQMs/MIPS CQMs through performance year 2024 to align with the sunsetting of the CMS Web Interface reporting option.
  • Implementation of a health equity adjustment to an ACO’s quality performance category score to recognize high quality performance by ACOs with high underserved populations

CMS is also seeking comment on an alternative approach to calculating ACO historical benchmarks that would use administratively set benchmarks that are decoupled from ongoing observed FFS spending including the design of a potential approach.

Finally, CMS is proposing changes that are important for improved operations of the Shared Savings Program, including policies to reduce ACO administrative burden as part of its efforts to balance reducing administrative burden on ACOs with its continued focus on program integrity.

CMS: Proposed CY 2023 Hospital Outpatient Payment Rule

On July 15th, CMS released its “CY 2023 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Proposed Rule”. The 60-day comment period ends September 13, 2022 and the final rule is expected to be issued in early November.

CMS proposed to update the OPPS payment rates for hospitals by 2.7%. The update is based on the projected hospital market basket percentage increase of 3.1%, reduced by 0.4 percentage point for the productivity adjustment.


For CY 2023, CMS proposes at this time to continue our current policy of paying ASP minus 22.5 percent for 340B-acquired drugs and biologicals, including when furnished in nonexcepted off-campus PBDs paid under the PFS. This proposal is in accordance with the policy choices and calculations that CMS made in the months leading up to publication of this proposed rule before the Supreme Court issued its decision in American Hospital Association v. Becerra (Docket 20-1114) concerning payment rates for CY 2018 and 2019.

However, in light of the Supreme Court’s recent decision in American Hospital Association v. Becerra, CMS fully anticipates applying a rate of ASP + 6 percent to such drugs and biologicals in the final rule for CY 2023 and making a corresponding decrease to the conversion factor consistent with the OPPS statute and our longstanding policy that this adjustment is made in a budget neutral manner. CMS is still evaluating how to apply the Supreme Court’s recent decision to prior calendar years. In its opinion, the Court remanded the case to the U.S. Court of Appeals for the District of Columbia Circuit for further consideration of a remedy. CMS is requesting public comments on the best way to craft any potential remedies affecting cost years 2018-2022 given that the Court did not resolve past payment recoupment issue.

Rural Emergency Hospitals

CMS noted a growing concern about rural hospital and critical access hospital (CAH) closings leading to a lack of services for people living in rural areas. Section 1215 of the Consolidated Appropriations Act, 2021 (CCA) established a new Medicare provider type called Rural Emergency Hospitals (REHs), effective January 1, 2023. The statute defines REH services to include emergency department services, observation care, and may include other outpatient medical and health services as specified by the HHS Secretary.

CMS is proposing to consider all covered outpatient department services as REH services. REHs would be paid for furnishing REH services at a rate that is equal to the OPPS payment rate for the equivalent covered outpatient department services increased by 5%.

Rural Emergency Hospital Provider Enrollment

Providers and suppliers are required to enroll in Medicare to receive payments for services and items furnished to Medicare beneficiaries. The purpose of the provider enrollment process is to help confirm that providers and supplier seeking to bill Medicare meet all federal and state requirements to do so. This proposed rule would update CMS existing Medicare provider enrollment regulations to address enrollment requirements for REHs.

Rural Emergency Hospitals Physician Self-Referral Law Update

The physician self-referral law, commonly known as the “Stark Law”: (1) prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he/she (or an immediate family member) has a financial relationship, unless the requirements of an applicable exception are satisfied; and (2) prohibits the entity from filing claims with Medicare for any improperly referred designated health services.

In the CY 2023 OPPS/ASC proposed rule, CMS is proposing updates to the physician self-referral law for the new REH provider type.  Specifically, CMS is proposing (1) a new exception for ownership or investment interests in an REH; and (2) revisions to certain existing exceptions to make them applicable to compensation arrangements to which an REH is a party.