Toward the end of each calendar year, CMS announces updates and policy changes to Medicare that will affect providers and patients for the upcoming year. This year’s announcement fell on November 1, 2022, and by and large, it demonstrates an overall effort to increase access to health care in underserved areas and assist in affordability.

The 2023 CMS policy changes are extensive in nature. This article will focus on four primary areas of change: updates to the Physician Fee Schedule, the Medicare Shared Savings Program (MSSP) and its effect on Accountable Care Organizations (ACOs), and CMS’s concentrated efforts to increase access and affordability in rural areas.

Physician Fee Schedule

The Physician Fee Schedule is based on the number of resources used to complete a service, called Relative Value Units (RVU). These RVUs are run through a Medicare Conversion Factor with a geographic adjustment if necessitated (the geographic practice cost index), as there are varying costs associated with having a medical practice dependent on location.

The Medicare Conversion Factor is calculated using a complex formula based on the “overall state of the economy of the United States, the number of Medicare beneficiaries, the amount of money spent in prior years, and changes in the regulations governing covered services.”

The final CY 2023 PFS conversion factor is $33.06, a decrease of $1.55 to last year’s conversion factor of $34.61. A reduction of over 4% could impact patient access to care. This reduced rate could cause (HCP) to drop Medicare. Moreover, it doesn’t incentivize new HCP to opt into accepting Medicare. All this to say, a lower PFS rate could reduce the number of providers. This comes at an already difficult financial time for the health care system due to COVID.

The American Hospital Association (AHA) issued a statement raising similar concerns about the PFS conversion factor reduction:

The AHA is concerned with CMS’ payment update, which reduces CY 2023 payments from their CY 2022 levels by almost 4.5%, and, as a result, may harm patients’ access to certain services. Our concern is heightened by the fact that this cut is coming in the wake of nearly two years of unrelenting financial pressures on the health care system due to the ongoing COVID-19 public health emergency (PHE), increased inflation, rising staffing costs, and increased costs for non-labor supply categories due to national shortages.

Brenmor will follow this closely throughout 2023 to determine if the reduced PFS rate affects access to care.


The MSSP is a payment model that funds groups of HCPs looking to establish an ACO.

CMS defines ACOs as “groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated, high-quality care to their Medicare patients.”

Generally speaking, the modifications in the CY 2023 CMS final rule aim to improve equity and access to health care for underserved populations in the United States. CMS explains:

“We seek to reverse certain recent trends in the Shared Savings Program: in recent years, growth in the number of beneficiaries assigned to ACOs in the Shared Savings Program has plateaued; higher spending populations are increasingly underrepresented in the program since the change to regionally-adjusted benchmarks; and access to ACOs appears inequitable as shown by data indicating that Black (or African American), Hispanic, Asian/Pacific Islander, and American Indian/Alaska Native beneficiaries are less likely to be assigned to a Shared Savings Program ACO than their Non-Hispanic White counterparts.”

Further analysis of the upcoming changes to MSSP and establishing new ACOs are discussed in the following section.

How will ACOs be affected by CMS final rule?

Four important CMS policy changes to the MSSP will affect ACOs.

Payment for Certain ACOs

A new option for 2023 within the MSSP is to make the advanced shared savings payments available to certain ACOs. They must meet one of the two criteria: those that are new to the MSSP or those that are low-revenue and inexperienced with ACO performance-based risk. They are eligible for a one-time payment of $250,000 and quarterly payments during the first two years of the five-year enrollment. These payments must be used to improve infrastructure, staffing, or care for underserved populations. ACOs can apply on the first of the new year, but the payments won’t begin until January 1, 2024.

Reduced Risk for New ACOs

A recent critique of the MSSP is that it is a risky investment for ACOs upfront. In response to this, CMS has proposed to make transitions more gradual. Beginning on January 1, 2024, ACOs will be allowed to participate in the BASIC Track Level A, the lowest risk level, for all five years of the enrollment period. After five years, ACOs will have the option to stay on the BASIC Track for another two years before transitioning to a riskier model.

ACO Benchmarks

CMS is hoping that the recalculation of ACO benchmarks will encourage more participation.

CMS “adopted its proposal to use a prospectively projected administrative growth factor, a variant of the United States Per Capita Cost (USPCC) referred to as the Accountable Care Prospective Trend (ACPT), in addition to national and regional growth rates when updating benchmarks. The agency believes that this three-way blended growth factor will help insulate the benchmarks from savings achieved under the MSSP. Additionally, the ACPT growth factors will be set for the ACO’s entire agreement period, providing some level of stability.”

The agency also adopted specific benchmarking policies to mitigate the impact of regional adjustments and support participation by organizations serving medically complex high-cost beneficiaries.

To incentivize high-performing ACOs to remain in the program, CMS will incorporate a prior-savings adjustment to avoid ACOs needing to beat their own performance.

Quality Performance Standard

ACOs are required to meet a minimum quality performance standard for eligibility into the MSSP. In 2023, it must be the 30th percentile of the MIPS quality score, and in 2024 it will be the 40th percentile.

“Beginning with the 2023 performance year, ACOs scoring below the minimum quality performance standard will be eligible for shared savings (or owe shared losses) at a lower rate if they score at the 10th percentile or above on at least one of the four APM Performance Pathway (APP) outcomes measures used in the MSSP.”

This lower rate will be determined via a sliding scale based on the ACO quality performance score.


Toward Better Health Equity

Though CMS changes to health equity have been extensively covered in our last blog, it is worth highlighting one specific health equity adjustment being added in 2023. High-quality performing ACOs will be eligible for up to 10 bonus points to add to their quality performance score based on caring for underserved populations. This is a concerted effort towards achieving health equity, a primary goal for CMS for the next decade.



Rural Emergency Hospitals: A New Medicare Provider

Rural hospitals and Critical Access Hospitals (CAHs) can now convert to the designation Rural Emergency Hospital (REH) to avoid closure and continue to provide healthcare for their communities. This new provider type will be effective January 1, 2023, allowing these businesses to provide continued access to emergency services, observation care, and if elected by the REH, outpatient services.

With this designation comes additional details, payment policies, conditions of participation, provider enrollment, and quality reporting. More information can be found in the full report.


Rural Sole Community Hospital Exemption from the Clinic Visit Payment Policy

To maintain health care access in rural areas, CMS is seeking to exempt Rural Sole Community Hospitals (SCHs) from an existing policy called the PFS-equivalent payment rate. CMS is seeking to pay for clinic visits at the full OPPS (outpatient prospective payment system) rate instead of the 40% PFS-equivalent payment rate. This will help ensure that rural providers are paid fairly. Prior CMS policies have provided rural SCHs with add-on payments for OPPS services to offset the higher costs associated with care in these geographic locations.


Changes to Rural Health Clinics (RHC) and Federally Qualified Health Centers (FQHC)

CMS is adding chronic pain management and behavioral health services to the RHC and FQHC general care management coding. The payment rate will be the average of the national non-facility PFS payment rate. These two services are critical components of health care in rural areas and are a welcome addition.


Telehealth Services

To continue telehealth services that became popular during the pandemic, CMS is looking to extend this service. More specifically, services deemed as temporarily available will be extended at least through 2023. This is an effort to collect necessary data that could help support validation for this as a permanent service for inclusion in the Medicare Telehealth Services List. This includes physical therapists, occupational therapists, speech-language pathologists, and audiologists who perform their services via telecommunication.


Track Changes with a Custom Brenmor Survey

With all of the policy updates that CMS will implement in 2023, the end of the calendar year is an excellent time to make sure your patient surveys are updated too. It is imperative to ensure they reflect the right line of questioning to reach your business goals.

Want to learn more about Brenmor’s custom surveys?  Speak with an expert today.