On November 1, 2022, the Centers for Medicare & Medicaid Services (CMS) released its finalized 2023 Medicare Physician Fee Schedule (MPFS) final rule. Among other critical updates summarized by CMS, the 2023 MPFS includes a reduction in the conversion factor from $34.6062 to $33.0607, reflecting the expiration of the temporary 3% supplemental increase in fee schedule payments for CY 2022.
The rule also confirmed a one-year delay in the time requirement for split (or shared) visit billing. In short, the time requirement will cause split services to be billed by the provider (i.e., the physician or advanced practice provider [APP]), who spends a “substantive portion” of the total time (>50%) performing the visit. In contrast, currently and until the one-year delay ends on December 31, 2023, providers will continue to have a choice of using either the history, physical exam, medical decision-making (MDM), or more than half of the total practitioner time (>50%) to define the substantive portion of the visit.
While organizations and providers continue to wrangle with these billing changes, the potential unintended impact on workflow, documentation requirements related to the change, and the effect on provider compensation related to WRVU-based compensation models could be significant.
Impact of Time-Based Billing
Health organizations should proactively analyze compensation plans to prepare for the changes in 2024. Below are three key considerations surrounding the impact time-based billing may have on provider compensation structures.
- WRVU attribution between providers should be anticipated and may impact provider compensation as compared to historical compensation levels. Time-based billing may change who “gets credit” for the WRVU between the physician and APP. For providers in a WRVU-based compensation structure, the number of WRVUs attributed to each provider may change, as the APP could spend more of the total substantive time with the patient than the physician. If this occurs, the split visit must be billed under the APP’s provider identification number. Additionally, from a workflow perspective and when clinically appropriate, physicians could choose to yield these split visits to APPs to focus on more acute and/or complex problems. In each case, WRVU-based compensation might unexpectedly increase or decrease accordingly for each provider due to the new split/shared billing requirement.
- Modification in the WRVU values of hospital inpatient Current Procedural Terminology (CPT) codes may compound the impact of split (or shared) visit changes. The 2023 MPFS modified the hospital inpatient CPT code WRVU values, and 2024 could bring additional WRVU changes. Depending on the workflows in a provider’s inpatient setting (e.g., initial hospital care is provided more often by a physician rather than an APP), the number of WRVUs will change not only because of the split billing rule changes, but also because of the WRVU value changes. These changes could impact compensation for those providers in a WRVU-based compensation model. The table on the following page provides a high-level overview of the WRVU valuation changes in 2023.
|CPT Code||Description||Change in Value|
|99221||Initial hospital care||-15%|
|99222||Initial hospital care||0%|
|99223||Initial hospital care||-9%|
|99231||Subsequent hospital care||32%|
|99232||Subsequent hospital care||12%|
|99233||Subsequent hospital care||20%|
- Application of current benchmark data could have fundamental differences for a period while the split (or shared) visit transition occurs. Any assessment of provider compensation plans and comparison to benchmark survey data will need to consider that compensation benchmark surveys are at least one year behind, and adjustments might need to be made in their application for the new split/shared billing regulations. Specifically, these adjustments might need to be made until 2025, when benchmark surveys based on 2024 reported data are released. At that time, the impact of these changes to provider WRVUs will be more apparent.
Due to differences among organizations in the provider staffing complement, patient workflows, payer mix, and patient acuity, it is difficult to estimate a “rule of thumb” impact on provider compensation related to these split (or shared) billing changes. Any compensation plan design modifications will require planful communication with affected providers as well as compensation plan adjustments and/or employment agreement amendments and time to address questions or issues that may arise.
Update: On July 13, 2023, CMS announced the proposed rule to further delay the use of the time-based methodology for billing split/shared visits until “at least” January 1, 2025. Given that only 6% of organizations have made changes to physician compensation plans to prepare for the upcoming split/shared changes, the delay allows organizations time to identify the areas most impacted by the future changes and find opportunities for improved access and throughput by optimizing their care team.