How will the MPFS proposed rule valuation changes impact radiology?

The calculation of reimbursement under the Medicare Physician Fee Schedule (MPFS) is made up of three components, each of which can be adjusted during the annual rulemaking process. The one most discussed is the conversion factor (CF), which is the dollar amount applied to the table of relative value units (RVU) to arrive at the reimbursement rate for each procedure; this is known as the National Medicare Fee.

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However, there is another factor, the Geographic Practice Cost Index (GPCI), that is applied individually to each payment locality across the country. This resulting fee is what is paid to the practice based on the location where the services are performed. The 2023 MPFS Proposed Rule proposes changes to all three components.

Conversion factor

As we wrote in our initial review of the rule, the CF is proposed to be adjusted downward by 4.4% according to the formula provided in the law. This reduction would apply across the board to every procedure in every payment locality. In recent years Congress has intervened at the last minute to avert significant fee schedule cuts, but at this point we don't know whether that will happen again or not.

Geographic Practice Cost Index

The proposed adjustment of the GPCI factors could be significant to many practices next year. The U.S. Centers for Medicare and Medicaid Services (CMS) reports that it makes these periodic adjustments to payments "geographically to reflect relative differences among costs in the 112 established PFS localities."

While 47 localities will receive an adjustment of only +/- 1% or less, there are seven localities in Texas that will be adjusted upward from 5% (Galveston) to 7.8% (Houston). At the other end of the spectrum, areas in and around New York City will be adjusted downward from 4.7% (Manhattan) to 12.4% (Queens). Louisiana, Alabama, and Nevada will also be adjusted downward from 5% to 7.7%. The full table of GPCI adjustments can be found here.

Relative value units

The final component of fee schedule valuation is the RVU table. There are 3,153 category I current procedural terminology (CPT) codes in the CMS database, 980 of which also contain Modifier-26 indicating separate professional component (PC) billing.

In all, 236 of the global codes and 234 of the PC codes received no proposed change for 2023. Of the remainder, 1,283 of the global codes were decreased while 1,634 were increased. In addition, 679 of the PC codes were decreased while only 67 were increased.

Within the radiology section of procedure codes, the RVU values for ultrasound could be significantly impacted. The code for complete extremity ultrasound (76881) sees the largest RVU cut to both global (-40.8%) and professional component radiology codes (-15.7%).

The code for limited extremity ultrasound (76882) global value will be cut 34.7% while the PC will be increased 19.1%. The chest ultrasound code (76604) is also among the largest global decreases at -4% and the PC at -3.7%. Overall, the PC for duplex Doppler ultrasound will be cut 5% and global cut 0.7%.

Among the highest volume global procedures are the following RVU value adjustments.

A sample of the RVU changes to high-volume professional component procedures includes those in the following table.

The best way to evaluate the potential impact to your practice is to perform a volume-weighted analysis. Obtain the number of times each CPT/Healthcare Common Procedure Coding System code was billed to Medicare in the preceding year. This volume of procedures is then multiplied by the RVU values for the current year (2022) in one column, and then by the proposed RVU values for 2023 in another column. Add the two columns of figures and calculate the difference between the two totals. Divide the difference by the 2022 total to obtain the expected increase or decrease percentage.

Using a composite of typical practice volumes, we calculate that RVU changes to professional component services (those billed with a Modifier-26) will experience a weighted average decrease of 2.4% and fees for services billed globally in an office practice will decrease 0.8%. The following table shows the range of RVU changes by modality.

Putting it all together

Combining all these factors, practices should brace for a significant decrease in Medicare revenue. Those commercial payer contracts that are tied to Medicare rates could be similarly impacted as well. The final answer depends on your individual practice's modality mix and geographic location, but the table below shows one way to put it all together.

The total reimbursement cut could therefore be around 7% for the professional component and around 5% for global services. On top of these proposed rule changes, the Medicare payment sequester will continue at the full 2% that has been in effect since July 1, 2022 (it was zero for the first quarter of 2022, then increased to 1% in the second quarter of 2022) and the 4% PAYGO reduction to Medicare payments is scheduled to take effect beginning January 1, 2023, unless it is deferred once again by congressional action.

As reported by AuntMinnie.com and others, eight groups representing medical imaging have jointly sent a letter to ranking members of key congressional committees expressing their concern over what could be a double-digit payment cut before even considering any change to the GPCI or RVU factors.

Conclusion

Keep in mind that we are discussing the proposed Medicare rule for 2023 and some provisions could change when the final rule is issued. As noted, Congress has intervened to moderate physician fee schedule decreases, specifically by adjusting the conversion factor, but it is unlikely that the GPCI and RVU valuations will change much, if at all, from the proposed rule.

The 2% sequester rate will likely remain in place, but many believe that the PAYGO adjustment will be deferred as it has been for several years and there is hope that the appeal to Congress will mitigate some of the CF adjustment.

We will continue to monitor and report on all federal activity that could affect your practice's reimbursement.

Sandy Coffta is the vice president of client services at Healthcare Administrative Partners.

The comments and observations expressed are those of the author and do not necessarily reflect the opinions of AuntMinnie.com.