CMS Releases the Proposed 2023 MPFS—What It Means for Physician Compensation

On July 7, the Centers for Medicare & Medicaid Services (CMS) released the proposed annual Medicare Physician Fee Schedule (MPFS) for 2023. CMS is taking public commentary on the proposed changes, and the final MPFS will be released in late 2022 and go into effect on January 1, 2023.

The greatest impact of the 2023 MPFS on provider reimbursement is that CMS has proposed a further reduction of the conversion factor to $33.08 as compared to $34.61 to get closer to a budget-neutral amount. The 2022 MPFS included a temporary 3% increase to the conversion factor following the Protecting Medicare and American Farmers from Sequester Cuts Act. The conversion factor increase was intended to lessen the projected decrease in reimbursement for many providers and specialties as a result of the COVID-19 pandemic.

Based on the 2023 MPFS, procedural and cognitive specialties will likely see a decline in reimbursement without any substantial increase in WRVUs. However, hospital-based specialties may see an increase compared to prior years as a result of the proposed inpatient E&M code changes.

What Does This Mean for Physician Compensation?

The updates to the hospital E&M codes will continue to affect benchmarks and compensation planning, much like the impact of the outpatient E&M code updates in 2021. As described in table 1, initial and observation hospital care CPT codes will decline in WRVU value while subsequent hospital care codes will see a material increase in WRVU value. This means that inpatient-driven specialties will see some of the most substantial increases in WRVU production amounts based on the proposed MPFS for 2023, as detailed in table 2.

While many inpatient specialties are expected to see a net increase in WRVUs, nocturnists are projected to see a decline in WRVUs.

Many organizations have moved away from or deemphasized productivity pay for hospital-based specialties, with greater emphasis of coverage and quality-based pay; the impact to compensation could be minimal for them. However, organizations with productivity-based models need to review their compensation models and structures in order to plan for the projected impact to WRVUs in 2023.

What Now?

Your strategy for transitioning to the 2023 MPFS will depend on the compensation model(s) your organization is using. Here’s how you can prepare:

• Evaluate your current compensation methodologies at the service line or specialty level for employed and integrated providers to assess the impact of the changes.
• Assess the impact on PSAs and other arrangements that are funded and/or distributed on a compensation per WRVU factor, and review subsidy arrangements for hospital-based arrangements.
• If your organization is still referencing the 2020 MPFS for purposes of compensation, develop a transition plan for the future.

_{Editor: Matt Maslin}

Published August 11, 2022