Medicare Reimbursement: The 5 Things Labs Need to Know about the 2022 Physician Fee Schedule

CMS issued the final rule setting out the Physician Fee Schedule (PFS) for 2022 and addressing other matters of Medicare Part B reimbursement on Nov. 2. Here’s a quick briefing on the five PFS changes labs need to be aware of.

Background: Medicare PFS Payment Rules

Unlike most services provided in a physician’s office for which Medicare pays at a single rate based on the full range of resources involved in furnishing the service, PFS rates paid to physicians ambulatory surgery centers (ASCs), hospital outpatient departments and other facility settings reflect only the portion of the resources typically incurred by the practitioner in furnishing the service.

Many of the diagnostic tests covered by the PFS are reimbursed in separate payments covering the services’ professional and technical components. Typically, labs bill for the technical component and physicians bill for the professional component.

The 5 Key PFS Changes

Here’s a look at the five key changes to the 2022 PFS and accompanying Part B rules that are most likely to affect labs.

1. 9% Cut in PFS Payment Rates

PFS payments are based on the relative resources typically used to furnish the service, expressed as relative value units (RVUs) covering the work, practice expense and malpractice expense. RVUs become payment rates via the application of a fixed-dollar conversion factor. CMS also makes geographic practice cost index adjustments to the total RVUs to account for variation in practice costs by geographic area. Payment rates are calculated to include an overall payment update specified by statute.

The bad news is that CMS is reducing Medicare payments to physicians by nearly 9 percent next year. This is based on the expiration of the temporary 3.75 percent increase physicians received in 2021 via the Consolidation Appropriations Act (CAA), and a PFS conversion factor of $33.59 (as opposed the $34.89 conversion factor used in CY 2021).

2. Revisions to Billing Rules for Split (or Shared) E/M Visits 

The 2022 PFS final rule revises CMS’ longstanding policies for split (or shared) E/M visits to reflect the current medical practice, the evolving role of non-physician practitioners (NPPs) as members of the medical team, and to clarify conditions of payment that must be met to bill Medicare for these services. Specifically:

• A new definition of split (or shared) E/M visits as E/M visits provided in the facility setting by a physician and an NPP in the same group, with the visit billed by the physician or practitioner who provides the visit’s substantive portion of the visit;
• For 2022, the substantive portion may include history, physical exam, medical decision-making, or more than half of the total time (except for critical care, which can only be more than half of the total time);
• By 2023, the substantive portion of the visit will be defined as more than half of the total time spent;
• Split (or shared) visits can be reported for new and established patients, as well as for initial and subsequent visits, and prolonged services;
• There must be a modifier on the claim to identify these services to inform policy and help ensure program integrity;
• Documentation in the medical record must identify the two individuals who performed the visit; and
• The individual providing the substantive portion must sign and date the medical record.

3. Changes to Billing & Payment of Critical Care Services

The final rule also makes a number of significant changes to billing and payment of critical care services. Effective January 1, 2022:

• The CPT Codebook listing of bundled services won’t be separately payable;
• Medically necessary, critical care services can be furnished concurrently to the same patient on the same day by more than one practitioner representing more than one specialty, and as split (or shared) visits;
• Critical care services may be paid on the same day as other E/M visits by the same practitioner or another practitioner in the same group of the same specialty, if the practitioner documents that: i. the E/M visit was provided before the critical care service at a point when the patient didn’t require critical care; ii. the visit was medically necessary, and; iii. the services are separate and distinct, with no duplicative elements from the critical care service provided later in the day (Note: Practitioners must report modifier -25 on the claim when reporting these critical care services);
• Critical care services may be paid separately in addition to a procedure with a global surgical period if the critical care is unrelated to the surgical procedure;
• Preoperative and/or postoperative critical care may be paid in addition to the procedure if: i. the patient is critically ill; ii. the patient requires the full attention of the physician; and iii. the critical care is above and beyond and unrelated to the specific anatomic injury or general surgical procedure performed (e.g., trauma, burn cases) (Note: CMS is creating a new modifier for such claims to identify that the critical care is unrelated to the procedure;
• If care is fully transferred from the surgeon to an intensivist (and the critical care is unrelated), the appropriate modifiers must also be reported to indicate the transfer of care; and
• Medical record documentation must support the above claims.

4. Changes to Physician Assistant (PA) Billing Rules

Starting Jan. 1, 2022, Medicare will make direct payments to PAs for professional services furnished under Part B. Previous rules required Medicare to make payment only to the employer or independent contractor of a PA. In addition to billing Medicare directly for their professional services, PAs can now reassign payment for their professional services and incorporate with other PAs and bill Medicare for PA services.

5. Changes to Telehealth Services Rules

Telehealth services that CMS temporarily added to the Medicare telehealth services list during the COVID-19 public health emergency will remain on the list through Dec. 31, 2023, giving the agency time to determine whether to add those services on a permanent basis.

In addition, CMS is eliminating geographic restrictions limiting patients’ access to telehealth services for mental disorders and adding the home of the beneficiary as a permissible originating site for telehealth services furnished for the purposes of diagnosis, evaluation, or treatment of a mental health disorder covered by Medicare. The physician or practitioner will still have to have visited the patient within six months before the initial telehealth service and then visit the patient after the telehealth session at a frequency to be determined by regulations.