Impact of 2023 Physician Fee Schedule on Emergency Medicine Groups

 Erika Regulsky Billing & Collections, RCM

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Things You Never Knew About Physician Fee Schedule

The 2023 physician fee schedule brings medicare reimbursement reductions, coding changes, and MIPS adjustments for emergency medicine groups.

CMS updates the Medicare physician fee schedule (MPFS) for 2023, affecting Part B payments for emergency care, diagnostic tests, and other outpatient services,” says Brault Practice Solutions’ President & CEO, Dr. Andrea Brault. “This update includes significant policy changes such as new reimbursement rules, updates to the CMS quality payment program, and another decrease in the Medicare conversion factor.

The 2023 Medicare Physician Fee Schedule reduces the conversion factor to $33.0607, a 4.48% decrease (-$1.55) from the previous year. Dr. Brault warns this is the first of several Medicare reductions unless Congress intervenes,” she says. “Mandated cuts may lower Medicare reimbursement by up to 8.5% in 2023, but there’s hope for a delay as efforts for a permanent policy solution persist.

Advocacy organizations are collaborating with legislators to highlight the disruptive impact of payment reductions on physician practices, particularly emergency medicine (EM) groups, which bear the burden of providing care for two-thirds of uninsured patients and over half of the annual Medicaid/CHIP population.

The Update:

The President signed the FY23 omnibus appropriations bill into law on December 29, 2022, providing partial alleviation of the previously planned Medicare cuts over the next two years. The spending package includes a 2.5% relief in 2023 and 1.25% in 2024, as well as two years of relief from the previously slated PAYGO reductions, which would have resulted in a 4% decrease in Medicare reimbursement in 2023.

Effect on emergency medicine policies surrounding coding:

The 2023 MPFS (Medicare Physician Fee Schedule) includes several new coding policies aimed at simplifying documentation requirements and updating payment guidelines for Evaluation & Management (E/M) services.

 emergency medicine policies

For Non-office and Outpatient E/M codes:

CMS has adopted the same guidelines established by commercial payers in the recent CPT revisions to the E/M code sets. The update shifts the emphasis to Medical Decision Making (MDM) for determining the acuity level of a patient visit, instead of requiring a specific number of elements in the History of Present Illness and Exam sections of the patient record. Additionally, CMS has confirmed the current RVUs of 2.74 for emergency department Level 4 visits, instead of reducing it to 2.60 as proposed by the Relative Value Scale Update Committee.

For emergency medicine providers, the biggest challenge posed by the new coding guidelines is related to services currently billed with CPT code 99285 for high-acuity patients who are not hospitalized. These visits are commonly referred to as “treat-and-release”. Dr. Brault points out that “general documentation guidelines will typically support billing with a 99285 for patients who are admitted to the hospital. However, emergency medicine physicians will need to be more explicit in documenting their Medical Decision Making (MDM) when the patient is discharged.

8 to 24-Hour Inpatient/Observation Rule:

The rule states that a patient must undergo observation care for a minimum of 8 hours to be eligible for same-day observation codes. If a Medicare patient’s observation stay is shorter than 8 hours, providers must use the inpatient codes 99221-99223 instead.

According to Dr. Brault, the recent classification of observation status presents both opportunities and challenges for different healthcare practices. It is crucial for practices to collaborate with their clinical leaders and revenue cycle management partners to assess the impact it may have on their operations.

Divided (or Shared) E/M Visits: 

The CMS has postponed its proposal to only consider the time component when defining the term “substantive portion” used to determine the billing practitioner for a split or shared visit. The new definition was set to take effect on January 1, 2023, however, numerous organizations argued that it contradicts the fundamental idea of collaborative care by creating competition between physicians and advanced practitioners. As a result, the new definition has been delayed until January 1, 2024, or until the CMS releases further guidance.

Dr. Brault suggests that healthcare provider groups should take action to comprehend and prepare for the upcoming changes. He recommends that they examine a representative sample of charts coded using the 2022 regulations and the 2023 regulations and use that information to update their financial projections for the coming year. Additionally, it is wise to identify any documentation shortcomings that could affect reimbursement under the new rules.

Quality Payment Program Update:

The final rule includes modifications to the MIPS quality payment program, which determines the Medicare payment adjustments for clinicians who deliver services under Medicare Part B, including emergency and outpatient services.

Through this program, clinicians can either receive a Medicare payment bonus, incur a penalty, or have no adjustment at the end of each performance year. In 2023, clinicians can gain (or lose) up to 9% of their annual Medicare revenue based on their MIPS score.

“Revised scoring criteria will make it more challenging for some clinicians to attain a high score,” says Dr. Brault. “And the expiration of exemptions will obligate even more practitioners to participate in this increasingly complex program.”

In previous years, a large number of emergency medicine (EM) clinicians were able to opt out of the MIPS program and evade penalties. However, the CMS has indicated that fewer exemptions will be granted and more penalties will be imposed in the upcoming year.

The eligibility criteria for those who have traditionally met the quality reporting requirement through their participation in an accountable care organization (ACO) will also change.

“In 2023, clinicians who do not meet the updated threshold for ACO inclusion will be obligated to report their quality measures to the CMS,” says Dr. Brault. “This implies that a large number of providers will suddenly face the risk of incurring a Medicare penalty.”

Dr. Brault points out that there is some positive news for emergency physicians.

A new MIPS Value Pathway (MVP) will be available for EM providers starting in 2023. This alternative reporting method enables scoring based on four specialized measures instead of the six measures scored through traditional MIPS reporting. The CMS is also adding new quality measures to its emergency medicine set, including a new measure for Social Drivers of Health.

To prepare for these changes, Dr. Brault suggests having a MIPS strategy in place by early next year. “To avoid penalties, it will require a well-thought-out plan and a diligent effort to monitor your group’s progress throughout the year,” he says. “Identify a partner, choose an approach, and start early.”

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I’m a multi-certified revenue cycle management professional and compliance officer with 20+ years of experience. I contribute articles to leading healthcare publications and journals. I am currently working as Senior Transition Manager, in BillingParadise headquartered at Diamond Bar, California. BillingParadise offers Medical Billing Services that intersect perfectly with the EMR/Practice management system you use.BillingParadise has offices in New Jersey, New York, Florida, Georgia, Minnesota, and Texas.

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