Biden Administration Proposes Physician Medicare Policies for 2022

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Biden Administration Proposes Physician Medicare Policies for 2022

The potential changes could affect ASCs

On July 13, the Centers for Medicare & Medicaid Services (CMS) released CY 2022 proposed updates to the Medicare Physician Fee Schedule (MPFS) and other related Part B payment policies. ASCA generally focuses on Medicare’s technical component of payments, updated annually via the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System proposed rule, which reimburses the ASC facility for services provided to Medicare beneficiaries. However, the professional component, the clinician reimbursement, also can impact the kind and volume of care being provided in ASCs. This year’s MPFS proposed rule was the first under the new Biden administration. Three notable policies in the proposed rule might affect clinicians working in ASCs.

Conversion Factor

The most notable and controversial provision in the 2022 MPFS proposed rule is the result of multiple years of complicated policy maneuvers. In November 2019, CMS finalized updates to certain evaluation and management (E/M) procedures, increasing their overall reimbursement. Due to the MPFS being a budget neutral payment system, the increased spending for these E/M codes needed to be offset by reductions in other payments. The extent of those reductions was not known until 2020, when CMS finalized a steep 10.2 percent reduction to the MPFS conversion factor. This drastic cut to reimbursement caused considerable alarm in the provider community, a community especially strained amid the ongoing COVID-19 pandemic. To provide some level of relief, Congress included $3 billion for an across-the-board 3.75 percent pay increase to Medicare physician payments in the Consolidated Appropriations Act (CAA), 2021.

However, this payment increase was funded for one year only and is set to expire at the end of 2021. Due to this, the proposed 2022 Medicare physician rates are 3.89 percent lower than 2021 rates. Combined with other cuts, some specialties could be seeing as much as a 9 percent decrease in reimbursement compared to last year. Unfortunately, due to the complicated process outlined above, CMS has almost no power to mitigate these cuts themselves. The underlying updates to the E/M codes have already taken effect and CMS has a mandate to keep the MPFS in a budget neutral state. Thus, Congress will again need to step in before the end of the year if providers are to avoid potentially steep reductions to their Medicare payment rates.

Clinical Labor Pricing Update

In 2019, CMS started to update some of the underlying supply and equipment prices that form the basis for Medicare reimbursement to physicians. As part of that process, CMS has proposed an update to prices for clinical labor in 2022 based on wage data from the Bureau of Labor Statistics (BLS). The last update to clinical labor in the MPFS was made in 2002.

Almost all types of clinical labor will see significantly increased wage rates, as could be expected for data that has not been updated since 2002. However, the indirect effect of this is that procedures that do not have substantial clinical labor components could see drastic decreases in their reimbursement. Diagnostic testing and interventional radiology for example, equipment-heavy specialties, are expected to see payment reductions of 5 percent or greater.


The Merit-based Incentive Payment System (MIPS) is Medicare’s value-based physician payment system that has been in place since 2017. MIPS organizes several previous programs—the Physician Quality Reporting System (PQRS), the Physician Value-Based Payment Modifier and the Medicare EHR Incentive Program (Meaningful Use)—into a single performance scoring scheme. Under this scheme, physicians report measures in four performance categories: Quality, Cost, Promoting Interoperability and Improvement Activities. Their performance is coalesced into a single “performance score”; scoring above a certain “performance threshold” can translate to a positive payment update and vice versa. As of 2023, the possible payment adjustment was plus or minus 9 percent.

MIPS has been a contentious payment system from the beginning. While most agree in the basic philosophy of tying quality measurement to payment, the system is complicated and involves tracking numerous, ever-changing reporting requirements and scoring methodologies. In the 2020 MPFS, CMS finalized moving forward with a new value-based payment mechanism, MIPS Value Pathways (MVPs). MVPs would keep the same core elements of traditional MIPS, the four performance categories, and add a population health component. However, rather than allowing clinicians to choose from a massive library of measures within each category, MVPs will unite measures around clinical specialties for ease of reporting. For example, participants in the heart disease MVP will have to worry about only a small subset of measures that are most applicable to their specialty. At this point, CMS has proposed seven MVPs that can begin voluntary reporting in 2023: rheumatology, stroke care and prevention, heart disease, chronic disease management, emergency medicine, lower extremity joint repair, and anesthesia. More MVPs will be added in consultation with providers so that every clinician can participate in an MVP applicable to their practice area. Under the policies proposed in the CY 2022 MPFS proposed rule, traditional MIPS would continue until 2027, after which MVPs would become mandatory and the predominant physician payment system.

For more information on the MPFS or ASCA’s position on policies related to physician payment, write Alex Taira.