On Dec. 16, the Centers for Medicare and Medicaid Services (CMS) announced an updated 2022 physician fee schedule conversion factor of $34.6062, according to McDermott+Consulting. This represents a 0.82% cut from the 2021 conversion factor of $34.8931. However, it also reflects an increase from the initial 2022 conversion factor of $33.5983 announced in the 2022 Medicare physician fee schedule final rule.

The impact of the revised conversion factor can be seen in the following updated national payment and reimbursement tables:

Congressional Response to Medicare Payment Crisis

CMS implemented this change in response to the Protecting Medicare and American Farmers from Sequester Cuts Act, which was signed into law by President Biden on Dec. 10, 2021. In addition to mitigating the cut to the Medicare conversion factor, this legislation staved off other Medicare cuts, including a phased-in delay of the Medicare and “pay as you go” sequestration cuts that impact all Medicare payments. Without legislative action, providers could have faced a 4% across-the-board PAYGO reduction, a 2% sequestration cut and a 3.75% cut to Part B services under the physician fee schedule.

These fixes are only in effect for 2022 and, in the case of Medicare sequestration, will be phased out starting April 1, 2022. Further congressional action for 2022 is possible, setting up a potential end-of-year Medicare bill in which 2023 cuts could be addressed in late 2022 after the midterm elections. Many other unaddressed Medicare priorities also could be on the table at that time.

Scheduled Payment Reductions to 2022 Medicare Physician Fee Schedule

Absent congressional action, a 9.75% cut was scheduled to take effect Jan. 1, 2022.

Cuts Phase 1

Jan. – March 2022

Phase 2

April – June 2022

Phase 3

July – Dec. 2022

Medicare Physician CF* Reduction 0.82% 0.82% 0.82%
Medicare Sequestration 0% 1% 2%
PAYGO Sequestration 0% 0% 0%
TOTAL Cuts Across the Board** 0.82% 1.82% 2.82%

*Congress has reduced 3% of the scheduled 3.75% cut to the Medicare Physician fee schedule conversion factor.

**Merit-based Incentive Payment System eligible clinicians also may be subject to a positive, negative or neutral adjustment to their conversion factor.

Visit the Medicare resources page on the AASM website for more information. Members may send questions regarding the 2022 payment adjustments to coding@aasm.org.