CMS on Tuesday released two final rules updating the Medicare Physician Fee Schedule (MPFS) and the Outpatient Prospective Payment System (OPPS)—and while experts praised some of the changes made, many argued they didn't go far enough.

Details on MPFS changes

In the final rule, CMS will provide advanced shared savings to low-revenue Accountable Care Organizations (ACOs) and will allow more flexibility for ACOs taking on performance-based risk. The agency also finalized health equity as a quality metric and adjustments to ACO benchmarks, adopting a prospective, external factor into the benchmark, to incentivize long-term participation.

CMS will provide ACOs with a one-time $250,000 payment as well as quarterly payments for the first two years of a five-year agreement. The amount of the quarterly payments will be determined by the neediness of the beneficiaries.

Providers will be required to spend all of their advanced payment on improving their infrastructure, increasing headcount, or delivering care to underserved patients. ACOs will also be required to disclose the advanced payments they have received and spent publicly.

Once an ACO starts earning shared savings, CMS will start recouping its money. However, CMS will not recoup any money if an ACO doesn't achieve savings, unless the agreement is ended early by the ACO.

CMS will start accepting applications for advanced payments next year and will begin sending them out in 2024. Regulators expect the changes will lead to $650 million in higher shared savings payments to ACOs.

The final rule also reduced the cap on negative regional adjustments of national per capita spending in Medicare Parts A and B services for assignable beneficiaries down from -1.5% to -5%.

The new MPFS rule will also end the temporary 3% supplemental increase provided in 2022, dropping the conversion factor from $34.61 to $33.06.

The rule also reduces the minimum age for colorectal cancer screening from 50 to 45, and codifies current policies requiring Medicare Parts A and B to pay for dental services when that service is integral to the medical condition of a beneficiary.

Reaction to MPFS rule

Clif Gaus, president and CEO of the National Association of ACOs, said the new MPFS rule brings "a win to patients and will absolutely help providers deliver accountable care to more patients."

However, the organization criticized CMS' lack of action on addressing the "rural glitch" in which ACOs don't benefit from regional adjustments when reducing spending on assigned patients. It also criticized CMS' use of a prospective projected external factor in ACO benchmarks for financial spending targets, arguing that over a third of ACOs will be harmed by the change.

Some physicians argued that the new rule, combined with a 4% Medicare cut coming from the Statutory Pay-As-You-Go Act, will lead to a nearly 8.5% Medicare cut at the start of 2023.

"The Medicare payment schedule released today puts Congress on notice that a nearly 4.5% across-the-board reduction in payment rates is an ominous reality unless lawmakers act before January 1," said American Medical Association President Jack Resneck Jr. "The rate cuts would create immediate financial instability in the Medicare physician payment system and threaten patient access to Medicare-participating physicians."

Patricia Turner, CEO and executive director of the American College of Surgeons, argued that Congress must act to prevent cuts made by CMS, "whose effects would be to harm Americans most in need of care."

"Without congressional action, vulnerable seniors' nationwide access to timely, high quality and essential surgical care will be negatively impacted," Turner said. "If allowed to go into effect, these reductions will be yet another blow to an already stressed healthcare system."

Anders Gilberg, SVP of government affairs for the Medical Group Management Association, noted that 90% of medical practices "reported that the projected reduction to 2023 Medicare payment would reduce access to care. This cannot wait until next Congress—there are claims processing implications for retroactively applying these policies."

Details on OPPS changes

Under the OPPS final rule, CMS will increase payment rates for hospitals and ambulatory surgical centers by 3.8% for those meeting applicable quality reporting requirements.

Hospitals not publicly reporting quality data will continue to receive a statutory two percentage point reduction in additional payment, leading to a 1.8% OPPS update.

In 2023, CMS estimates that total payments in hospitals will increase by $3 billion when compared to 2022 payments.

CMS will also finalize a general payment rate through the 340B drug pricing program of average sales price plus 6% for drugs and biologicals as opposed to the average sales price minus 22.5% that had been in place since Jan. 1, 2018.

Reaction to OPPS changes

The American Hospital Association said that, while they are "pleased that CMS will provide hospitals and health systems with an improved update to outpatients payments next year compared to the agency's proposal in July," the adjustment is "insufficient given the extraordinary cost pressures hospitals face from labor, supplies, equipment, drugs, and other expenses."

A spokesperson for Premier, a group purchasing and consulting organization, said it appreciated the increase of hospital outpatient provider rates but said the increase wasn't enough to cover providers' expense increases.

"The truth remains that a 3.8% payment update falls woefully short of reflecting the rising labor costs that hospitals have experienced since the pandemic's onset," said Soumi Saha, SVP of government affairs for Premier.

Meanwhile, Maureen Testoni, CEO of 340B Health, said she is "very pleased to see that CMS has restored equity to the Medicare outpatient prospective payment system. We look forward to working with CMS on compensation for the hospitals that were financially harmed by the unlawful OPPS payment cuts in 2018 to 2022." (Goldman, Axios, 11/2; Tepper, Modern Healthcare, 11/1; Morse, Healthcare Finance, 11/2 [1]; Condon, Becker's Hospital CFO Report, 11/3; Kacik, Modern Healthcare, 11/1; Morse, Healthcare Finance, 11/2 [2])