A variety of regulatory changes impact hospital-based billing in 2023. Some are welcome and others are challenging, in an already difficult financial environment. As any hospital leader knows, 2022 was a tough financial year. According to the American Hospital Association (AHA), more than 50% of hospitals were projected to end 2022 with negative margins. That is due, in large part, to rising costs and declining reimbursement. McKinsey found labor costs per adjusted hospital discharge grew by 25 percent between 2019 and 2022 and clinical labor costs are expected to grow 6-10 percent over the next two years (about 3 to 7 percentage points above the prevailing rate of inflation). Meanwhile, the rise in high deductible health plans, Medicare changes, the No Surprises Act, a reduction in out-of-network reimbursement, and a rise in denials drive an overall declining reimbursement trend. These factors make it more crucial than ever for hospitals to dial-in revenue cycle management (RCM) processes to ensure financial vitality. One way to do so is to ensure regulatory compliance and to be aware of the latest changes impacting revenue cycle. In this post, we share the top 5 regulatory changes impacting hospital-based billing to be aware of this year.
One: Medicare Fee Schedule Changes
As of January 1, 2023, clinicians saw a decrease to the conversion factor from $34.6062 to $33.0607 per the 2023 Medicare Physician Fee Schedule (MPFS).
Originally, physicians were up against a 4.5 percent reduction to MPFS payments in 2023. Healthcare industry groups worked together to ask Congress to stop the cuts, considering the ongoing financial challenges providers face because of the pandemic. Their goal was to avert about half of the expected reductions to Medicare reimbursement for physician services over the next two years.
As a result, Congress’ year-end spending package lowered the 4.5% reduction to a 2% cut in 2023 and a 3.5% cut in 2024. This 2% cut follows two decades of flat payment rates. Though this is a short term “win,” in the long term, further reductions in the conversion factor have the potential to lower practice bottom lines and reduce healthcare access for older Americans. Due to the decreased reimbursements, some practices may be forced to stop taking new Medicare patients.
In addition to the fee schedule changes, physicians also face two reductions in the MACRA program: the end of a 5 percent value-based incentive payment for participating in Advanced Alternative Payment Models and the elimination of the exceptional performance bonus for MIPS. In the past, many hospitals have been reluctant to participate in such alternative models when they judged the down-side risks too great; some are uncertain how the loss of these incentives will impact participation in the programs.
Two: Delayed Split-Shared Visit Policy Rules
Another impactful regulatory change in hospital-based billing is the delay in implementation of the proposed CMS split (or shared) visits policy finalized in 2022 until 2024. More than 20 physicians organizations wrote to CMS in March 2022 requesting the delay, citing concerns that the rule would negatively impact collaborative care delivery models and patient experience. This push successfully convinced CMS to delay the rule change until 2024.
In 2022, visits shared by an APP and a physician could be billed under the National Provider Identifier (NPI) of the physician or the non-physician practitioner (NPP) who either:
- documented the support for the history, exam, or medical decision-making for the visit
- provided more than 50% of the service time
In 2024,the proposed CMS split (or shared) rule requires split/shared visits must be billed under the NPI of the individual who provides more than 50% of total visit time.
This is especially impactful as more states grant Nurse Practitioners (NPs) full practice authority and growing evidence that APPs functioning in the hospital setting improve care outcomes, quality, and readmissions.
Under the new rule, for example, if a NPP and physician both care for a patient and the physician assistant spends the substantive portion of time caring for the patient, the visit would be billed under the NPPs NPI (which means the practice would receive only 85% of the Physician Fee Schedule Rate.)
This change will significantly impact Medicare reimbursement for hospitals that use NPPs. However, until the rule takes full effect in 2024, it is important to note that hospitals offering evaluation and management (E/M) visits jointly furnished by a physician and a NPP in the same group practice and facility setting can be billed under the physician’s NPI if the physician performs some portion of the E/M visit.
Three: New Documentation Guidelines Across Care Settings
2021’s landmark reforms for documentation of E/M services performed in outpatient and office settings officially carried over across all healthcare settings as of January 1, 2023. The new American Medical Association Guidelines reduce administrative burdens by revising, consolidating, and deleting unnecessarily complicated documentation guidelines. The reforms were intended to:
- Make documentation simple, practical, and clinically relevant
- Decrease the need for audits and fear of audits
- Decrease unnecessary documentation related to coding and not related to clinical care
The changes empower healthcare providers to select a level of service based on the complexity of medical decision making (MDM) or, where time is a component of the E/M code, total time spent on the day of services, including work completed when the patient wasn’t present.
Reduction in administrative complexity may benefit hospitals by reducing workforce burnout and expanding provider capacity to focus on patient care. However, documentation of the MDM component presents its own set of challenges, contributing to some lower E/M assignments. It will likely take clinicians some time to master the new guidelines, and your RCM partner may be able to help with analysis and provider education. In addition, slight differences between the AMA and CMS versions for some items could complicate the use of the new Guidelines.
Four: Amendment to No Surprises Act Independent Dispute Resolution Fee Guidance
Since the well-intentioned Federal No Surprises Act took effect in January 2022, it has presented many surprises to clinicians. One of the particularly tedious impacts has been the independent dispute resolution (IDR) process. Through this process, groups must dedicate resources to negotiate rates when an out-of-network rate is not set, and the payer and provider have not previously agreed on a rate (some regulations related to IDR are different on a state-by-state basis.) This process has been costly, challenging to operationalize, and has eliminated provider group negotiation leverage with payers.
In December 2022, CMS amended its 2023 fee guidance for the federal independent dispute resolution (IDR) process, raising administrative fees for each party participating to $350 per party and updated entity fees. This change makes—in some cases—and already difficult and costly process prohibitively expensive to pursue.
Add to that, under the No Surprises Act, many groups see as many as 60% of disputed claims thrown out as ineligible due to technical errors, significantly reducing reimbursement in an already challenging time. In addition, the IDR process has been impacted by a second court decision (February 6, 2023) requiring CMS to revise its guidance to IDR entities to comply with Congressional intent. The IDR process is a long way from being settled and efficient.
Five: Time Extension of Good Faith Estimate Requirements
Another change impacting hospital-based billing in 2023 is The Department of Health and Human Services (HHS) extension of enforcement discretion for the delivery of some components of the good faith estimates (GFEs) under the No Surprises Act. Originally, CMS planned to enforce in 2023 the requirement that the original provider’s GFE include all services and costs from other clinicians and facilities reasonably expected to provide services related to the original clinician’s service(s). This represents a significant burden to practices and hospitals in terms of coordination and tight timelines. Now, HHS will hold off on enforcement until future rulemaking.
HHS’ goal in extending enforcement discretion is to:
- promote further interoperability across the healthcare industry
- encourage providers, facilities, and other industry members to focus resources towards adopting interoperable processes for exchanging information
With the extension, practices already drowning in administrative burden will have time to build infrastructure and processes to provide GFEs. The No Surprises Act GFE rule required that providers provided GFEs to patients within three days after an individual requests a price estimate or after the service is scheduled (in some cases, within one business day). That presented both administrative and data exchange challenges.
This extension is welcome as a 2022 WEDI survey found that 92% of providers thought that it would be at least difficult, if not very difficult, to collect GFE information from co-providers and/or co-facilities for a specific medical service.
Many hospitals have begun providing GFEs on request; however, many other hospitals and practices are unaware of the broad requirements associated with the GFEs and patient notification. This is another area that your RCM partner can provide some background and guidance on the changing requirements of the regulation to ensure your practice remains compliant with changing requirements.
About the Author
Richard Kleehammer, CHBME
Rick Kleehammer currently serves as Director of Operations and Provider Advocacy for Innovative Healthcare Systems, a Resolv Healthcare company. Educated as a teacher and scientist, Rick has directed healthcare RCM operations since 2004. His experience includes leading medical coding teams, providing consulting and analytical services and leading practice and account management services. Rick is a Certified Healthcare
Business Management Executive through HBMA and is the current chair of the Healthcare Business Management Association (HBMA) Government Relations Committee. In addition, Rick is a subject matter expert in CMS Quality Initiatives and the evolving No Surprises Act.