Four Fundamentals of the New Medicare Physician Fee Schedule (MPFS) Final Rule You Should Know

Editor’s note: This article is informed by the webinar entitled “2024 Medicare Physician Fee Schedule (MFPS) Final Rule Updates,” presented by Ardith Campbell, COC, CPC, Health Catalyst’s Director of Content Product, Vitalware.

The Centers for Medicare & Medicaid Services (CMS) announced its final Medicare Physician Fee Schedule (MPFS) rule, bringing about significant policy changes that will be effective January 1, 2024. 

This rule is part of CMS’s efforts to promote health equity and enhance access to affordable healthcare under the CY 2024 MPFS. It also aligns with a broader administration-wide strategy to create a more equitable healthcare system that improves access to care, quality, affordability, and innovation. 

The final rule for MPFS in CY 2024 incorporates feedback from industry stakeholders and ensures alignment with federal goals and legislative requirements. The updated policies, unveiled on November 2, 2023, encompasses:

1. Modifications to the CY 2024 conversion factor for relative value units (RVUs), 
2. Initiatives supporting primary care and health equity, plus aid for family caregivers, 
3. Expansion of telehealth access, and 
4. Provision of payment for principal illness navigation services to assist patients and their families during cancer treatment and other serious illnesses.

Background on the MPFS and Updated MPFS Rates

Since 1992, the MPFS was established to determine Medicare payments for medical services provided by physicians and other billing professionals to Medicare beneficiaries. These services can occur in various settings such as hospitals, physician offices, ambulatory surgical centers (ASCs), post-acute care settings, hospices, outpatient dialysis facilities, clinical laboratories, and even beneficiaries’ homes.

A procedure’s relative value unit (RVU) standardizes the amount that Medicare reimburses for each service by considering the required effort, practice expenses, and malpractice insurance costs. These RVUs are then translated into payment rates using a conversion factor. Additionally, geographic adjusters are applied to account for cost discrepancies across regions. Finally, the payment rate calculations incorporate an overall payment update specified by the statute.

In CY 2024, the overall payment rates under the MPFS will be reduced by 1.25 percent compared to CY 2023 as per specified factors in law. CMS is also implementing significant payment increases for primary and direct patient care. The final conversion factor for CY 2024 is $32.74, marking a decrease of $1.15 (or 3.4 percent) from the current CY 2023 conversion factor of $33.89.

1. Health Equity and Caregiver Support

CMS is taking measures to enhance healthcare access for underserved populations by introducing separate coding and payment for new services in the final rule and including community health workers in the MPFS. These initiatives can potentially improve outcomes for Medicare beneficiaries by addressing unmet health-related social needs and ensuring individuals receive necessary care for diagnosing and treating medical conditions.

To that end, the final rule policies include the following:

• Payment for caregiver training services under specific circumstances,
• separate coding and payment for community health integration services (such as person-centered planning, health system coordination, patient self-advocacy promotion, access to community-based resources to address unmet social needs),
• coding and payment for principal illness navigation services for individuals with high-risk conditions (including cancer) and
• a subset of principal illness navigation services to support individuals with behavioral health conditions using auxiliary personnel like peer support specialists.

Additionally, the rule has finalized coding and payment for social determinants of health (SDOH) risk assessment, which can be provided as an additional service during an annual wellness visit, evaluation, management, or behavioral health visit.

2. Whole-Person Care 

The CMS Behavioral Health Strategy emphasizes addressing emotional and mental well-being through behavioral healthcare. Recent rule changes were made to improve access to these services within the Medicare program, which is a positive development. Starting in 2024, marriage and family therapists, mental health counselors, and eligible addiction, alcohol, or drug counselors who meet the necessary qualifications can enroll in Medicare and bill for their services.

These changes aim to increase Medicare providers’ enrollment and boost payment for crucial services such as crisis care, substance use disorder treatment, and psychotherapy. Furthermore, CMS has finalized increased payment for psychotherapy conducted alongside an office visit, health behavior assessment, and intervention services in response to public feedback.

3. Social Determinants of Health 

The CMS has implemented changes to improve patient-centered care by approving coding and payment updates considering the resources required when diverse clinical staff and other support personnel are involved. In addition, the federal government has established a target for ensuring that all Americans with cancer covered by Medicare can access patient navigation services.

The CMS addresses this objective by updating final rules, including distinct payments for community health integration, social determinants of health (SDOH) risk assessment, and principal illness navigation services. This will enable healthcare professionals to engage specific support staff, such as community health workers, care navigators, and peer support specialists, in delivering essential care to this patient population and addressing social determinants of health.

4. Telehealth Services

Finally, the final rule from CMS has brought about several updates to telehealth services. One of the changes involves temporarily adding health and well-being coaching services to the Medicare Telehealth Services List for CY 2024 and permanently including them in the social determinants of health risk assessments.

Additionally, CMS has broadened the range of telehealth originating sites to encompass any location within the United States where the beneficiary is residing during the telehealth service, including their home. This expansion also identifies qualified occupational therapists, physical therapists, speech-language pathologists, and audiologists as telehealth practitioners. Furthermore, the final rule ensures continued payment for telehealth services provided by Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) using the methodology established during the COVID-19 pandemic.

Disclaimer This presentation was current when it was published or provided via the web and is designed to provide accurate and authoritative information regarding the subject matter covered. The information provided is only intended to be a general overview with the understanding that neither the presenter nor the event sponsor is engaged in rendering specific coding advice. It is not intended to take the place of either the written policies or regulations. We encourage participants and readers to review the specific rules and other interpretive materials as necessary. 

Additional Reading

Interested in learning more about this topic? Here are three articles we suggest:

Hospital Price Transparency: Five Changes You Should Know

Don’t Negotiate Your Next Payer Contract Without These Three Phrases

How to Align Your Organization’s Data: Implementing a Healthcare Data Integration Strategy