One of the many changes included in the 2022 version of the Medicare Physician Fee Schedule (MPFS) published by the Centers for Medicare and Medicaid Services (CMS) will have substantial impacts to the future financial and operational performance of hospital-based provider groups. These groups commonly bill for split (or shared) visits by physicians working with non-physician practitioners (NPPs). In the 2022 MPFS, CMS outlined its intent to overhaul evaluation and management visit requirements by revising its policies regarding the billing of split (or shared) evaluation and management (E&M) visits beginning January 1, 2023. According to Today’s Hospitalist, CMS “set off a bombshell” with the new rules. This article seeks to bring clarity around the new rules, their potential impact to hospital-based medical groups, and steps practices can take to adapt to the changes.
Background on Split (or Shared) Evaluation & Management Visits
The table below presents a brief primer on split / shared visits prior to the new rules published in the 2022 MPFS.
Description of Changes to Split/Shared Visits in the 2022 MPFS
In an earlier article, we detailed how CMS modified its policies regarding split (or shared) E&M visits to “better reflect the current practice of medicine, the evolving role of non-physician practitioners (NPPs) as members of the medical team, and to clarify conditions of payment that must be met to bill Medicare for these services.” In summary:
During 2022, the substantive portion of the visit may still be determined based upon the provider who performs the patient history, the physical exam, the medical decision-making, or more than half of the total time. Beginning January 1, 2023, the substantive portion of the visit must be based solely upon which provider spends more total time with the patient.
As is typically the case, if the substantive portion of the visit is performed by an NPP, current MPFS reimbursement policies include a reduction in the payment amount for the services (e.g., 15 percent reduction for services performed by nurse practitioners and physician assistants). This change could result in a significant impact to the revenue generated by facility-based providers.
Impact of Changes to Split/Shared Visits
The shift in billing guidance for split/shared visits will have a material impact on a number of financial and operational elements in the practice of hospital-based medicine.
Revenue Impacts
Hospital-based groups have increasingly leveraged NPP staff to provide direct patient care. For example, from 2012 to 2018, the number of physician assistants and nurse practitioners practicing in emergency departments increased by over 66%. Often, NPPs spend the majority of face-to-face time with patients, while the physician provides the ultimate medical decision making based on the information obtained by the NPP. Under the 2023 “substantive portion” definition, practices utilizing this model of care will no longer be able to bill such visits under the physician’s provider number, resulting in a 15% reduction to Medicare reimbursement for the encounter. It will remain to be seen if other payors will adopt Medicare’s rules around billing for such visits.
To assist hospital-based practices in evaluating the financial impact of the changes to Medicare’s billing policy, InHealth has developed an interactive calculator that will estimate the decrease in Medicare reimbursement given the staffing mix and productivity expectations of NPPs in the practice. View the interactive calculator below:
Service Attribution Impacts
Historically, medical groups have generally utilized two means of attributing the productivity associated with split (or shared) visits between the physician and NPP: either the physician received full credit for the service as the billing provider or the production was split between the two providers (often equally) to represent the work done by each. Moving forward, if the NPP is performing the substantive portion of the encounter, the attribution of the service fully to the physician seems inequitable. Furthermore, if production measures are used to drive compensation, such a practice may potentially pose risk from the standpoint of compliance with fraud and abuse regulations. A more reasoned approach in 2023 will likely award most, if not all, of the production from a split (or shared) visit billed under the NPP’s provider number to the NPP. As a result, the expected productivity of physicians may decline while that of NPPs increases, and such changes are likely to be material.
Compensation Model Impacts
Many hospital-based practices compensate physicians based on their work relative value unit (wRVU) production generated from split/shared visits. Hospital-based practices with physician compensation models based on a pure production formula and others where production forms the basis for a material bonus to physicians will need to consider the impact of the changes to their compensation plans.
Furthermore, practices that utilize compensation formulas that rely on survey data reporting compensation on a per wRVU basis will need to carefully weigh their selection of appropriate conversion rates for contracts to be paid in 2023 and 2024 while these changes proliferate into physician compensation surveys. We anticipate that survey respondents in 2023 are likely to report fewer wRVUs for 2024 surveys, which may eventually impact compensation per wRVU benchmarks.
Billing/Documentation Impacts
Given a definition of “substantive portion” based on the time spent by practitioners, practices will need to ensure that they have developed an infrastructure that allows for accurate capture of time spent with patients. While not novel, time-based reimbursement represents a departure from the typical focus of hospital-based groups, where historically attention was primarily directed to outlining the patient history, components of the physician exam, and complexity associated with medical decision making. While this concern was raised by commenters to the 2022 MFPS proposed rule, CMS “…believed that practitioners are likely to increasingly time their visits for purposes of visit level selection independent of our split (or shared) visit policies, given recent changes to the [Current Procedural Terminology] E/M Guidelines.”
Misalignment Risks
Given the impacts detailed above, the split/shared billing changes have the potential to create misalignment with value-based initiatives among healthcare organizations. Below we have highlighted the main misalignment risks that we foresee based upon these changes.
New billing attribution rules are likely to lead to reduced Medicare revenue to hospital-based providers. As a result, hospitals may be requested to increase the amount of financial support provided to independent hospital-based practices.
Medical groups that leverage a substantial proportion of NPPs may need to revise their compensation plans for physicians and NPPs. These changes will be especially pertinent to practices that compensate providers based on wRVU production.
Beyond issues associated with work attribution, an increasing emphasis on time for the purpose of establishing E/M reimbursement will require hospitals and providers to develop protocols for accurate tracking of face-to-face time with the patient and consider alternative quality initiatives that provide incentives for effective time management.
InHealth's Insights
While these changes may lead to misalignment, InHealth Advisors has identified proven strategies that will assist hospitals and medical practices in adapting.
Misalignment Risk | Targeted Solutions |
Increased requests for financial support due to decreased Medicare revenue | 1. Evaluation of hospital program staffing efficiency to align costs with operational needs. 2. Non-Medicare revenue benchmarking of hospital-based professional services to ensure market-normal reimbursement rates from other payors. 3. Review of third-party contract terms to ensure alignment between department clinical/operational objectives and practice financial support. |
Compensation plans tied to wRVUs | 1. Development of equitable process for allocating wRVUs attributable to NPP work effort. 2. Revisions to compensation plans to shift production targets from wRVUs to throughput-based metrics or reduce reliance on production-based compensation models. |
Billing/documentation requirements for time tracking | 1. Standardization of throughput benchmarking throughout hospital departments, with particular focus on adjusting benchmarks for departmental acuity. 2. Identification of meaningful quality metrics and initiatives to ensure accurate time tracking and provider efficiency. Incorporation of proper incentives to effectuate these changes. |
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