What Is the Impact of the 2023 Medicare Fee Schedule on Your Radiology Practice?
Date Posted: Monday,
May 01, 2023
The Medicare Physician Fee Schedule (MPFS) was lowered for 2023 due to a cut of 2.08% in the Conversion Factor (CF) used to determine payment rates. We reported that the CF could have been reduced as much as 4.47% had Congress not intervened at the last minute to adjust it, along with waiving the 4% PAYGO reduction that was supposed to occur in 2023. The pricing of various procedure codes is also revised annually due to changes in practice expense assumptions, which generally affects the Technical Component (TC) more than the Professional Component (PC). Radiologists will therefore see a different overall result for services in a private office or imaging center than they will for hospital services.
The Range of Changes
Not many of the high-volume professional component procedures varied much from the negative 2.08% change to the overall fee schedule. One exception is the limited extremity ultrasound (76882) that increased 41.1%, while the global fee for the same code will decrease by 26.1%. Overall, global fees billed in an imaging center are also generally in the negative category. One exception is the high-volume DEXA code (77080) which increased 1.5%.
Our Volume-Weighted Analysis
We performed a volume-weighted analysis using a composite from our database. Overall, the professional component reimbursement is estimated to decrease 1.6% while global reimbursement will decrease 1.8% from 2022 levels, based on the same volume of services. The global fees are more negatively impacted because they include the technical component practice expense revaluation mentioned above.
Note: The process used to perform a volume-weighted analysis involves gathering data from the previous year that shows the number of times each procedure code was billed for Medicare patients. The procedure volumes are multiplied by the 2022 Medicare fee schedule rates in one column, and again by the 2023 Medicare fee schedule rates in another column. Totaling each column will reveal the total practice revenue for the previous year and the reimbursement that the practice could expect in the current year assuming the volume of each procedure is unchanged. The percentage increase or decrease can then be calculated.
This is what a typical full-service practice might find after performing its volume-weighted analysis:
Note: A national fee schedule for PET global billing is not available since the pricing of those procedures is a local carrier determination. We calculated an estimated amount using one regional fee schedule (NJ-99). The pricing and resulting variance in other states will be different from this presentation.
Our composite includes all modalities, but the mix of modalities performed by a particular practice will affect its overall result. For example, an imaging center with all the listed modalities except for PET would see a decrease of 2.14% rather than 1.76% because it would not benefit from the projected increase in PET reimbursement.
Sequestration for the Full Year in 2023
The 2% payment sequester that was in place since 2011 was suspended in 2020 and 2021 due to the COVID-19 public health emergency. It was partially reinstated during 2022 at the rate of 1% for April to June, and then increasing to 2% for July to December. For 2023, it is fully restored to 2% for the entire year. The net effect is a reimbursement reduction of 0.75% for 2023 due to the sequester. The effect of the sequester is not included in the volume-weighted calculations shown in the table above.
Understanding the annual changes in Medicare's fee schedules is useful when analyzing areas where the practice's revenue might be increasing or decreasing. Many commercial payers base their fees on the Medicare table, although not all of them make the same changes, or at the same time, as Medicare does. The same volume-weighted analysis technique can be applied to commercial fee schedules, as well.
Sandy Coffta is the Vice President of Client Services at Healthcare Administrative Partners.
Healthcare Administrative Partners (HAP) provides revenue cycle management, clinical analytics, and comprehensive practice management solutions for radiology practices. We also provide coding services for multispecialty practices.
HAP produces results, not promises. Our key to optimizing your success is to aggressively improve all areas of your practice's financial health - maximizing reimbursements and accelerating cash flow while reducing cost and compliance risk.