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CMS Issues CY 2023 Physician Fee Schedule Final Rule

The Centers for Medicare & Medicaid Services (CMS) has released the calendar year (CY) 2023 Medicare Physician Fee Schedule (PFS) final rule.

In the rule, CMS finalized a conversion factor of $33.06 — a decrease of $1.55 compared with CY 2022. The conversion factor is the base payment amount that is used to determine physician payment rates for specific services. The PFS final rule includes other provisions important to essential hospitals, related to Medicare reimbursement for telehealth services, the Quality Payment Program (QPP), the Medicare Shared Savings Program (MSSP), and behavioral health services.


Medicare reimburses practitioners under the PFS for a list of telehealth services updated through annual rulemaking. CMS finalized the permanent addition of five new services to the list of reimbursable telehealth services:

  • G0316: prolonged inpatient or observation services by physician or other qualified healthcare professional (QHP);
  • G0317: prolonged nursing facility services by physician or other QHP;
  • G0318: prolonged home or residence services by physician or other QHP;
  • G3002: chronic pain management and treatment, monthly bundle; and
  • G3003: additional 15 minutes of pain management and treatment

CMS finalized the addition of 54 new services to the list of category 3 telehealth services — certain services that were added during the COVID-19 public health emergency (PHE) and will be reimbursed temporarily by Medicare while the agency examines utilization data. CMS will pay for category 3 telehealth services until the end of CY 2023.

Through previous rulemaking, CMS temporarily added telehealth services that will be reimbursable through the end of the COVID-19 PHE. In accordance with a requirement of the Consolidated Appropriations Act (CAA) of 2022, CMS will reimburse telehealth services from this list that were not added to the category 3 list for a period of 151 days following the end of the PHE declaration. CMS will continue other telehealth flexibilities, such as the waiver of geographic and originating site restrictions, as well as reimbursement of audio-only services, through the end of this 151-day post-PHE period.

Also in accordance with the CAA of 2022, CMS will delay to 152 days after the end of the PHE implementation of the requirement that a patient have an in-person visit prior to a mental health telehealth service.

Payment for Vaccine Administration

In the CY 2022 PFS final rule, CMS finalized payment rates for the costs of administering Part B vaccines: $40 for COVID-19 vaccine administration and $30 for influenza, pneumococcal, and hepatitis B vaccines. After the expiration of the COVID-19 PHE, CMS will align payment rates for COVID-19 vaccine administration with the other three vaccines. CMS finalized its proposals to codify these payment rates, to adjust the rates based on geographic locality using the geographic adjustment factor, and to update payment for vaccine administration annually using the Medicare economic index.

CMS also finalized its proposal to continue in CY 2023 paying an additional $35.50 for administering the COVID-19 vaccine in a beneficiary’s home. Finally, CMS clarified that the policies finalized in the CY 2022 PFS final rule regarding COVID-19 vaccine administration and monoclonal antibody products that are tied to the PHE declaration will continue until the Food and Drug Administration’s emergency use authorization for drugs and biological products is terminated, as opposed to being tied to the end of the COVID-19 PHE declaration under the Public Health Service Act.

Quality Payment Program

Finalized provisions under the Quality Payment Program focus on continuing to develop Merit-based Incentive Payment System (MIPS) Value Pathways (MVPs) and refining the subgroup participation option.

MIPS Value Pathways

The MVP framework compares the performance of similar clinicians who report on the same MVP relevant to a specialty, medical condition, or episode of care. CMS will begin transitioning to MVPs in the 2023 MIPS performance year, with an aim to sunset the traditional MIPS after the end of the 2027 performance and data submission periods.

In addition to the seven MVPs already finalized for the 2023 performance period, CMS finalized five new MVPs in these topic areas:

  • advancing cancer care;
  • optimal care for kidney health;
  • optimal care for patients with episodic neurological conditions;
  • supportive care for neurodegenerative conditions; and
  • promoting wellness.

MVP scoring policies align with those used in the traditional MIPS across all performance categories, with few exceptions.

Traditional MIPS Program

CMS finalized updates across the four MIPS performance categories: quality, cost, improvement activities, and promoting interoperability. For the quality performance category, CMS will add nine quality measures for the CY 2023 performance period, including a screening for social drivers of health measure, for a total of 198 MIPS quality measures. CMS also finalized an expanded definition of high-priority measures to include health equity–related quality measures.

CMS finalized multiple changes to the promoting interoperability performance category, including changing the public health and clinical data exchange objective, requiring the query of prescription drug monitoring program measure, and revising the health information exchange objective.

CMS also finalized that, beginning with the 2023 performance period, facility-based, MIPS-eligible clinicians would be eligible to receive the complex patient bonus, even if they do not submit data for at least one MIPS performance category.

Medicare Shared Savings Program

CMS finalized numerous changes to the MSSP to incent provider participation in accountable care organizations (ACOs), advance equity within the MSSP, and ensure underserved and rural beneficiaries are included in ACOs.

For the first time, CMS will offer upfront shared savings payments, which would be available to eligible, low-revenue ACOs that are new to the MSSP and inexperienced with Medicare ACO initiatives. The advance investment payment will comprise an initial $250,000 payment, plus quarterly payments over the first two years of the five-year agreement period.

The exact amount of the quarterly payments will be determined on the risk factors–based scores of beneficiaries assigned to the ACO. The risk factors–based score of each beneficiary will be based on whether the beneficiary is dually eligible for Medicare and Medicaid or has low-income subsidy (LIS) status. If the patient does not have dual eligibility or LIS status designation, the score will consider the area deprivation index (ADI) value of the census block group in which the beneficiary resides.

CMS also will implement a health equity adjustment that will be worth up to 10 bonus points toward an ACO’s MIPS quality performance category score. An ACO will be eligible for these bonus points if it demonstrates high performance on all-payer electronic clinical quality measures (eCQMs) or MIPS clinical quality measures (CQMs) and provides care for a higher proportion of dually eligible beneficiaries. This policy will only affect ACOs positively and not penalize them.

CMS also finalized changes to encourage new ACOs to participate in the MSSP by:

  • incorporating a sliding scale approach to determine whether an ACO is eligible for shared savings for quality performance;
  • providing additional flexibility to organizations new to ACOs by allowing more time to progress to performance-based risk;
  • changing quality reporting and quality performance requirements;
  • revising the calculation of ACO benchmarks to provide financial incentives for providers to participate in ACOs; and
  • reducing ACO administrative burden related to marketing material requirements, beneficiary notification requirements, and data sharing regulations.

Behavioral Health

CMS finalized its proposal to allow licensed professional counselors (LPCs), licensed marriage and family therapists (LMFTs), and other types of behavioral health practitioners to provide behavioral health services under general (rather than direct) supervision. CMS also finalized new payment codes for bundles of services related to chronic pain management that will improve payment for medically necessary services. Finally, CMS clarified that opioid treatment programs can bill Medicare for medically reasonable and necessary services provided in mobile units to increase access to individuals affected by homelessness and living in rural areas.

America’s Essential Hospitals is analyzing the final rule and will send members a detailed Action Update in the coming days.

Contact Senior Director of Policy Erin O’Malley at or 202.585.0127 with questions.


About the Author

Maryellen Guinan is a principal policy analyst at America's Essential Hospitals.

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