CMS on Tuesday released its proposed rule to update the Medicare Physician Fee Schedule (MPFS) for calendar year (CY) 2022 which, among other things, would boost payments for some physicians, reduce payments for others, and expand the list of telehealth services that Medicare covers.

This proposed rule offers some initial answers to some of the most pressing questions facing the industry:

1. Will the Biden administration continue MPFS on the path to redistribute physician payments?
2. How will the Biden administration approach telehealth as the public health emergency ends?
3. Would CMS double down on quality performance and nudge providers toward value-based care?

Read on for Advisory Board's initial takeaways from the CY 2022 MPFS proposed rule. But first, register for our upcoming webinar, where we will explore both the physician payment and the looming hospital outpatient proposed rules in more detail.

CMS proposes cuts to conversion factor

CMS has proposed a CY 2022 Physician Conversion Factor of $33.58, down $1.31, or 3.75%, from the 2021 Physician Conversion Factor. The conversion factor reflects a budget neutrality adjustment that accounts for changes in relative value units (RVUs) that are converted into PFS payments rates, as required by federal law.

Webinar series: 2021 State of the Union

The conversion factor reduction is largely a result of the expiration of a 3.75% payment bump for CY 2021 included in the Consolidated Appropriations Act (CAA) of 2021 to help physicians impacted by the Covid-19 pandemic. Taking that change into account, the conversion factor decline is not as steep as it could have been given the changes finalized in the CY 2021 rule.

The result is primary care providers and medical groups will continue to see increases, while surgeons and proceduralists will see decreases—but not as steep as originally expected under the FY 2021 final rule. (Some surgical specialties were facing a cut of almost 10% of their Medicare reimbursement under that final rule, while other medical specialties—such as endocrinology—were slated to see an increase of 15% or more.)

CMS continues redistribution of physician payment

CMS in the proposed rule said it is "engaged in an ongoing review of payment for E/M visit code sets," suggesting the administration is taking more time to consider the impacts of—and possible adjustments to—the Trump-era changes.

However, the overall effect of this proposed rule suggests the Biden administration is continuing the previous administration's path of rewarding upstream services and decreasing reimbursement for more costly procedures.

CMS proposed changes to clinical labor pricing creates physician 'winners' and 'losers'

CMS in the proposed rule noted that it has not updated clinical labor pricing since CY 2002, and that stakeholders in the past have raised concerns about the "long delay." CMS also noted that CY 2022 marks the final year of the supply and equipment pricing update. Therefore, the agency proposed updating the clinical labor pricing to ensure it remains relevant and up to date. The agency relied on the same methodology used in CY 2002. The updates varied across labor description, ranging from 0% for Behavioral Health Care Manager to 130% for Orthoptist.

CMS said that, as a result of the updates, some specialties—such as portable x-ray, family practice, hand surgery, general practice, and endocrinology—will see payment increases, while others—including interventional radiology, vascular surgery, radiation oncology, and oral/maxillofacial surgery—will see payment decreases.

Advanced Practice Providers continue to grow in stature

CMS' proposed rule included a number of proposals that would benefit Advanced Practice Providers (APPs). For example, CMS proposed adjusting the definition of split (or shared) E/M visits to include services provided by non-physician practitioners in the same group. In addition, CMS for the first time proposed authorizing physician assistants to bill Medicare directly for services they provide under Part B.

If these proposals are finalized, it will be a positive change for APPs. The proposed rule represents a continued sense and reflection of APPs and PAs as autonomous providers that have only been helped by the role they played during the pandemic and the loosening of state scope-of-practice laws.

CMS expands telehealth options for behavioral and mental health care

CMS in the rule proposed several changes that would allow certain telehealth services to be added to Medicare's approved list, allowing Medicare to reimburse those services beyond the end of the public health emergency as it determines whether these services should be permanently added.

For example, CMS proposed to add audio-only communication technology to the approved list of interactive telecommunications systems when used for diagnosing, evaluating, or treating mental health disorder patients at home. CMS also proposed allowing audio-only counseling and therapy services. However, for both proposals, CMS said providers must have the capability to conduct two-way audio-video communication. CMS said it would allow audio-only if the patient does not have a video option.

CMS also proposed allowing rural health centers and federally qualified health centers to qualify for telehealth reimbursement for mental health visits furnished via real-time telecommunication technology.

As required under CAA, CMS is proposing to require any mental health telehealth service to be preceded by an in-person, non-telehealth service at least six months before the initial telehealth service, and at least once every six months thereafter.

CMS also included requests for comments on different intervals for audio-only mental health services and how to handle instances where a patient’s regular practitioner is unavailable and a different physician or practitioner may need to furnish a mental health service.

CMS doubles down on MIPS overhaul… but gives ACOs some breathing room

Recognizing the immense strain placed on providers by the Covid-19 pandemic, a big question on our minds ahead of this year's proposed rule was whether CMS would take a softer approach to Quality Payment Program (QPP) updates and offer providers flexibility under the program, or double down on the agency's pre-2021 push to up the ante on quality performance and nudge providers toward value-based care. With this proposal, we see that CMS is doing a bit of both.

Where CMS is doubling down: MIPS

CMS proposed significant changes to MIPS that aim to both expand the program and make it more difficult for MIPS participants to earn incentives. Specifically, CMS proposed that starting with the 2022 performance year, certified nurse mid-wives and clinical social workers would be included as MIPS-eligible clinicians. In addition, CMS proposed to increase the MIPS performance thresholds for 2022. Under the proposed rule, the minimum performance threshold to avoid a penalty would rise from 60 points in 2021 to 75 points in 2022, and the exceptional performance threshold would rise from 85 points in 2021 to 89 points in 2022.

Unsurprisingly, CMS also is looking to place greater emphasis on public health reporting in MIPS. For example, CMS proposed making electronic case reporting to a public health agency one of the two measures required in the MIPS Promoting Interoperability (PI) performance category starting in 2022—which is similar to what we saw in CMS' 2022 proposal for the Medicare hospital PI program. However, CMS also proposed some notable MIPS updates that might catch providers off-guard, such as removing bonus points available in the Quality category.

But the biggest proposed change for MIPS will come in performance year 2023, when CMS intends to launch MIPS Value Pathways (MVPs)—the agency's anticipated overhaul of the MIPS track. CMS originally had intended to launch MVPs for the 2021 performance year, but the agency delayed the launch in light of the pandemic and, thus far, had offered few details on the new pathway. In this year’s proposed rule, however, CMS details proposed reporting requirements, scoring, and a transition timeline for MVPs. CMS proposed kicking off the new pathway in the 2023 performance year with seven specialty-focused MVPs and making it required down the road—with an aim to sunset traditional MIPS starting with the 2027 performance year.

Where CMS is giving flexibility: MSSP ACOs

CMS is slowing down its pace when it comes to implementing the QPP's new APM Performance Pathway (APP). Although CMS has launched the APP for the 2021 performance year, as planned, the proposal would give Shared Savings Program (MSSP) ACOs more flexibility in how they report quality measures for the APP. Instead of sunsetting after this year the CMS Web Interface (which ACOs historically have used to report quality measures under both their ACO contract and for MIPS)—, CMS has proposed allowing ACOs to use Web Interface to report for the APP for an additional two years, though 2023.

And in more welcome news for ACOs, CMS proposed freezing the quality performance standard for MSSP ACOs at the 30th percentile of MIPS quality performance category scores for performance year 2023, rather than increasing it to the 40th percentile. Under the proposal, CMS would increase the quality performance standard to the 40th percentile for 2024.

A push for greater alignment

Overall, CMS’ QPP updates in this year’s proposal highlight the agency’s ongoing push to align efforts across the QPP and other federal quality-reporting programs. CMS’ proposal to implement MVPs will further align MIPS with the APP. Ultimately, everyone in MIPS eventually will have a fixed set of measures for each performance category, reducing participants’ reporting burden.

Other proposed changes

• CMS included a comment solicitation on Medicare payment rates to administer vaccines, noting that the Covid-19 pandemic has shined new light on the topic and that payments for such services have declined by 30% in recent years.
• CMS proposed several changes that aim to increase provider participation in MDPP. For instance, CMS proposed to remove the provider enrollment application fee for MDPP suppliers beyond the public health emergency and shorten the services period from two years to one year.
• CMS also included several proposals that aim to support rural facilities and federally qualified health centers, including implementing the CAA's increase in payment limits for rural health clinics.
• As we've seen in other proposed rules this year, CMS included a request for feedback on proposals that aim to improve health equity data collection, including one to create confidential reports that allow providers to look at patient impact data for specific populations, including LGBTQ+, race and ethnicity, dual-eligible beneficiaries, disability, and rural populations.

Remember, this is the proposed rule

It's worth remembering that these are all proposals, and there can be variability between the proposed rule and the final rule, which should be out in November. Physician leaders should break out their compensation models and run the numbers on how these proposals would affect their organizations, and raise any questions or concerns to CMS before the comment period ends on September 13th.