Medicare Payment Rules
Medicare Payment Rules
November 2021

By: Julius W. Hobson, Jr.

On November 2, 2021, the U. S. Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) released several final Calendar Year (CY) 2022 payment rules. These rules covered the following areas:

  • Physician Fee Schedule Fee for Service (PFS)
  • Hospital Outpatient and Ambulatory Surgical Centers
  • Home Health
  • End Stage Renal Disease

2022 Physician Fee Schedule

The CY 2022 PPS conversion factor will be $33.59, a decrease of $1.30 from the CY 2021 $34.89 conversion factor. This is the result of the budget neutrality adjustment to account for changes in the RVUs (required by law), and expiration of the 3.7% temporary CY 2021 payment increase provided by the Consolidated Appropriations Act (CCA), 2021.

The CY 2022 PFS final rule, CMS is establishing, among other things, the following:

  • Definition of split (or shared) E/M visits as E/M visits providing in the facility setting by a physician and an 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 cab 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).

Critical care services will not be bundled in a global surgical period if unrelated to the surgical procedure. The rule clarifies that when a resident participates in providing a service, only the time the teaching physician was present can be included in determining the E/M visit level. Under the primary care exception, only medical decision making would be used to select the visit level.


CMS continues to evaluate the inclusion of telehealth services that were temporarily added to the Medicare telehealth services list during the COVID-19 Public Health Emergency (PHE). Thus, the the rule finalizes certain services added to the Medicare telehealth services list will remain on the list through December 31, 2023. This will allow additional time for CMS to evaluate whether the services should be permanently added to the Medicare telehealth services list.

Note: The Bipartisan Infrastructure Investment and Jobs Act (H.R. 3684) passed the House of Representatives on November 5th by a vote of 228-206, sending it to the President for his signature. This legislation authorizes $65 billion for high-speed internet investment to ensure that every household can access reliable broadband services.

Billing for Physician Assistant (PA) Services

The final rule implements Section 403 of the CAA, which authorizes Medicare to make direct payment to PAs for professional services that they furnish under Part B beginning January 1, 2022. PAs will be able to bill Medicare directly for their professional services, reassign payment for their professional services, and incorporate with other PAs and bill Medicare for PA services.

Medicare Diabetes Prevention Program

The final rule seeks to improve CMS’ Medicare Diabetes Prevention Program (MDPP) expanded model, which was developed to help people with Medicare with prediabetes from developing type 2 diabetes.

Under the expanded model, local suppliers provide structured, coach-led sessions in community and health care setting using a Centers for Disease Control and Prevention-approved curriculum to provide training in dietary change, increased physical activity, and weight loss strategies. In the rule, CMS is waiving the Medicare enrollment fee for all organizations that apply to enroll as an MDJPP supplier on or after January 1, 2022. CMS has been waiving this fee during the COVID-19 PHE for new MDPP suppliers and has witnessed increased supplier enrollment. In addition, CMS is shortening the MDPP services period to one year instead of two years. The change is expected to make delivery of MDPP services more sustainable, reduce the administrative burden and costs to suppliers, and improve patient access by making it easier for local suppliers to participate and reach their communities.

Finally, CMS is restructuring payments so MDPP suppliers receive larger payments for participants who reach milestones for attendance.  CMS expects these changes will result in more MDPP suppliers, increased access to MDPP services for people with Medicare in rural areas, and a decrease in the number of individuals with diabetes in both urban and rural communities.

Future Physician Payment Reductions

In addition to the conversion factor reduction, there are several other across-the-board payment cuts for physicians that will go into effect January 1, 2022, unless Congress acts. These include a 2% cut due to the expiration of the moratorium on sequestration and a 4 percent cut due to pay-as-you-go legislation that was triggered by the American Rescue Plan. Taken together, these cuts in payment could total 9.75%. CMS also updated critical labor rates used to calculate practice expense for CY 2022 over a four-year transition period.

CY 2022 Medicare Hospital Outpatient Payment System & Ambulatory Surgical Center Payment

The CY 2022 OPPS rule updates payment rates for hospitals that meet the applicable quality reporting requirements by 2.0%. The update is based on the projected hospital market basket increase of 2.7% reduced by 0.7 percentage point for the productivity adjustment.

CMS is setting a minimum Civil Monetary Penalties (CMP) of $300 per day that will apply to smaller hospitals with a bed count of 30 or fewer, and a penalty of $10 per bed per day for hospitals with a bed count greater than 30, not to exceed a maximum daily dollar amount of $5,500. Under this approach, for a full calendar year of noncompliance, the minimum total penalty amount would be $109,500 per hospital, and the maximum total penalty amount would be $2,007,500 per hospital.

The payment update for Ambulatory Surgical Centers (ASC) for CY 2020 will be 2.0% for those ASCs that meet applicable quality reporting requirements.

CY 2022 Home Health Payment System

CMS estimates that Medicare payments to Home Health Agencies (HHAs), in CY 2022 would increase in the aggregate by $570 million (3.2%). This increase reflect the effects of the CY 2022 home health payment update percentage of 2.6% ($465 million increase), an estimated 0.7% increase that reflects the effects of the updated fixed-dollar loss ratio ($125 million increase) and an estimated 0.1% decrease in payments due to the changes in the rural add-on percentages for CY 2022 ($20 million decrease).

CY 2022 End Stage Renal Disease Payment System

The CY 2022 ESRD PPS rule expects Medicare to pay an estimated $8.8 billion to approximately 7,700 ESRD facilities for furnishing renal dialysis services. The final base rate is $257.90, which is an increase of the $253.13 rate. CMS projects the updates will increase the total payments to all ESRD facilities by 2.5% compared with CY 2021. For hospital-based ESRD facilities, CMS projects an increase in total payments of 3.3%, and, for freestanding facilities, CMS projects an increase in total payments of 2.5%. The ESRD Treatment Choices (ETC) Model is a mandatory payment model tested under the authority of Section 1115A. Under this Model, participating ESRD facilities and clinicians who manage dialysis patients will receive positive or negative adjustments on certain claims for dialysis and dialysis-related services based on the home dialysis rate and transplant rate among their attributed beneficiaries. The Model, which began January 1, 2021, will end June 30, 2027.