CMS physician fee schedule rule cuts payments, expands telehealth reimbursement past 2023

A sticky note says Medicare on top of a pile of money
CMS has proposed cuts to physician payments in 2022 as a bump to payments made by Congress expires. (Getty/Steve Dunning)

The Biden administration will extend Medicare reimbursement to physicians for certain telehealth services through the end of 2023.

The Centers for Medicare & Medicaid Services released on Tuesday the final physician fee schedule rule that sets out payment rates for 2022. The rule also includes several provisions that aim to expand flexibility for telehealth reimbursement for mental health.

CMS had expanded flexibility for providers to get Medicare reimbursement for telehealth at the onset of the COVID-19 pandemic. But the flexibility only lasts through the public health emergency, which was extended through early 2022.

CMS previously added certain services to the list of services that would get Medicare reimbursement for telehealth, but those services such as cardiac and cardiac rehabilitation would only remain in place through the public health emergency.

The final rule, similar to the proposed version released this summer, enables those services to remain on the list through 2023 to give stakeholders more time to evaluate if they should be permanently added.

CMS also removed geographic restrictions for providers to offer mental health services via telehealth.

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Originally federal regulations said that there must be an in-person physician visit six months prior to the initial telehealth service for mental health. But the final rule waives that requirement under certain circumstances and said that an in-person visit must be made at least every 12 months for these services.

The agency also is allowing reimbursement for audio-only telehealth services for the treatment of mental health disorders. But audio-only telehealth can only be used if the patient is not capable of making a video call, according to a fact sheet on the rule.

In addition, rural health clinics and health centers can also now furnish mental health services via “interactive real-time telecommunications technology.”

CMS also detailed changes in physician payments for 2022. The fee schedule is required to be budget neutral under law.

The agency finalized a conversion factor of $33.59 for each relative value unit that determines what Medicare payments are based on. The factor is a decline of $1.31 from the 2021 rate of $34.89. The rate is roughly the same as the $33.58 that was proposed.

A 3.75% temporary pay bump given to physicians for 2021 is also expected to expire unless Congress acts. Physician groups have been imploring lawmakers to step in and continue the pay bump past this year.

Physician groups 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.

CMS also refined its longstanding policy on split evaluation and management (E/M) visits to better reflect evolving physician practices.

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,” the fact sheet said. “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.

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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.

The final rule included several reforms to Medicare Part B drug payments that were mandated under a spending law passed by Congress late last year. Part B drugs are administered in a physician office.

Manufacturers are required to give an average sales price for Part B products, which Medicaid will reimburse them for. Providers also get a 4% add-on of that sales price for storage and handling costs.

Previously manufacturers that didn’t agree to such agreements had the option to submit their average sales price data. But starting in January, per a new federal law, manufacturers of drugs and biologics payable under Part B without a Medicaid rebate agreement must report the data.