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CMS Issues CY 2023 Medicare Physician Fee Schedule Final Rule

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Final Rule Highlights and Potential Implications

  • On November 1, 2022, CMS released the final rule for Medicare Physician Fee Schedule (PFS) rates in CY 2023. This final rule reflects minor changes from the proposed rule published in July 2022.
  • In this rule, CMS finalized a CY 2023 PFS conversion factor of $33.06, representing a decrease of $1.55 from the CY 2022 PFS conversion factor of $34.61. This represents a slight modification to CMS’s proposed PFS conversion factor of $33.08.
  • CMS finalized a one-year delay of the split or shared visits policy for evaluation and management (E&M) visits. This policy determines which professional should bill for a shared visit by defining the “substantive portion” as more than half the total time of the service.

Additional Details

Payment Updates

  • Background: Each year, CMS revalues relative value units (RVUs), and in most years, has performed the revaluation with a zero-sum approach in order to avoid changes to the conversion factor. However, CMS departed from that practice in 2021, when the revaluation of RVUs necessitated a 10.4% reduction in the conversion factor to maintain budget neutrality. Subsequently, Congress authorized a temporary 3% rate increase as part of relief spending during the COVID-19 pandemic. That feature expires at the end of 2022, thus resulting in an overall reduction to payment levels.
  • Conversion Factor Reduction: For CY 2023, CMS has again revalued the RVUs, predominantly by increasing the value of inpatient E&M codes, which requires a further decrease to the conversion factor. As such, CMS finalized a 4.5% reduction to the conversion factor, from $34.61 in 2022 to $33.06 in 2023.The impact of these changes will vary significantly by specialty. Hospitalists and other specialties that provide a large number of inpatient E&M codes may experience an increase, whereas other specialties can expect to feel the full 4.5% reduction in the conversion factor.
    • In addition, CMS is considering, but will not implement for 2023, changes to the Medicare Economic Index (MEI) used in determining the practice expense component of professional reimbursement, as well as the geographic adjustments. This could represent a significant change, as it may result in a redistribution of funding for certain specialties and geographies in future years.

Extension of Telehealth Provisions

  • For CY 2023, CMS has finalized several proposals that extend telehealth flexibilities granted during the COVID-19 public health emergency (PHE). For example, CMS finalized its proposal to extend the temporarily included telehealth services list for a period of at least 151 days following the end of the PHE.
  • CMS is also allowing clinicians to continue billing place of service (POS) codes that would be used if the telehealth service had been furnished in person, so long as they are billed with modifier “95” to indicate their telehealth delivery. These flexibilities are set to remain in effect through either the end of CY 2023 or the end of the year in which the PHE ends, whichever is later.

Enhanced Role of Nonphysician Practitioners

  • Split/Shared E&M Visits: It is apparent from the final rule that CMS recognizes and supports the expanded use of nonphysician practitioners (NPPs). For example, CMS is revising its policy regarding split/shared E&M services in the hospital setting such that more services will be billed by advance practice professionals instead of the physician. CMS finalized a one-year delay of this transition, but still appears committed to moving in that direction.
  • Supervision in Behavioral Health: Additionally, CMS finalized its proposal to add an exception to the direct supervision requirement under the “incident to” regulations to allow behavioral health services to be provided under general supervision of a physician or NPP rather than under direct supervision. CMS further clarified that any services furnished primarily for the diagnosis and treatment of a mental health or substance use disorder can be provided by auxiliary personal under general supervision of an authorized physician or NPP.
  • Direct Access to Audiologists: Finally, CMS finalized a policy to allow beneficiaries direct access to an audiologist without a physician or NPP order for non-acute hearing conditions. CMS also finalized the proposal to allow audiologists to bill for these direct access services once every 12 months per beneficiary. Audiologists will bill services with a new modifier, AB.

Expansion of Covered Services

  • Lastly, there are a number of clarifications and expansions of services for which CMS is allowing reimbursement under the PFS, including:
    • Creation of new HCPCS codes (G3002 and G3033) for chronic pain management and treatment services.
    • Revisions to the methodology for pricing the drug component of methadone treatment, as well as enhancing reimbursement for counseling services related to opioid use disorder.
    • Clarifications of policies for dental services that are an integral part of specific treatment for a beneficiary’s primary medical condition.
    • Expansion of coverage policies for colorectal cancer screening.
    • Permanent coverage and payment for monoclonal antibody products as pre-exposure prophylaxis for prevention of COVID-19.


Contact our Managed Care Services team if you want to discuss how this rule will affect your planning for the coming year.

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Editor: Matt Maslin