As we discussed in last month’s post, on July 7th, the Centers for Medicare and Medicaid Services (CMS) released their 2023 Medicare Physician Fee Schedule (PFS) Proposed Rule that, if enacted as written, will shift the landscape of the industry. In our first post on the topic, we discussed changes in CPT coding. Today, we shift our focus to another part of the rule: the updated conversation factor.
If enacted as written, starting on the first of January, 2023, the conversion factor will decrease by 1.42% from $34.6062 to $33.0775. As new medical services and procedures come into practice year over year, CMS is tasked with keeping overall Medicare expenses budget neutral. Every year, they reassess the RVU value for each existing and new service, and the reimbursement for each service is a multiple of the RVU based on the conversion factor. Therefore, in order to place value on new services or increase the value of some services, they decrease the conversion factor for all services to keep the cost of services flat.
However, the true change in reimbursement for 2023 will also be affected by other factors.
The first major factor is an additional 3% decrease across the board for all specialties. This is due to the impending expiration of a temporary COVID 3% increase in PFS at the end of 2022. Thus, the true reduction of the conversion factor will be 4.42%.
The loss of this temporary 3% boost is simply due to congressional inaction. Congress acted to pass the original 3% increase, and if the increase is to stay in place, they will need to act again.
The second factor to consider is that some specialties will see specific changes based on revised values for the services and codes that each specialty typically performs. For example, not including the expiring temporary 3% boost, the conversion factor for emergency medicine will actually increase by 1%, while the conversion factor for urgent care and wound care will see an increase of 3%. Therefore, the final adjustment for emergency medicine will end up at -2%, while urgent care and wound care will be net neutral.
While these changes may already seem fairly monumental, there are even more potential reductions that one needs to consider before getting a full view of the current state of the industry. Although many of the changes proposed in the rule are dependent on CMS, it is Congress who has the last word on how funding will actually change in the coming year. We have been following the debate and will keep you updated as the situation on the ground changes.