This newsletter outlines key federal regulatory developments and highlights PAI’s advocacy on matters that impact physicians and patients, including the release of the CY 2022 Medicare Physician Fee Schedule Proposed Rule, part one of the Surprise Billing Interim Final Rule as well as a Government Accountability Office report on graduate medical education caps and physician workforce shortages.

For up-to-date information on COVID-19, please visit PAI’s Resources page and Healthsperien’s Resource Updates page. For additional information on key issues in the health policy landscape and identifying potential reforms under the Biden Administration, the 117th Congress, and in the states, please visit Healthsperien’s resource page here. 

CMS Releases CY 2022 Medicare Physician Fee Schedule Proposed Rule 

On July 13, the Centers for Medicare & Medicaid Services (CMS) released the CY 2022 Medicare Physician Fee Schedule (MPFS) proposed rule (proposed rule and fact sheet). While CMS notes in its press release that the MPFS is one of several proposed rules that reflect a broader Administration-wide strategy to focus on accessibility, quality, affordability, empowerment, and innovation, it does not address how the proposed conversion factor reduction will cause adverse financial consequences for already struggling independent physician practices and the patients they serve. Comments on the proposed rule are due September 13, 2021. For a detailed summary of the rule, please click here.

Key proposals are highlighted below:


Impact of Proposed Rule 
PAI is extremely concerned with the negative impact that changes to the conversion factor will have on physician payments. PAI is particularly concerned with the following rule changes:

• The proposed reduction will result in lower payments which could threaten patient access to vital treatments and procedures. Appropriately valuing and paying for evaluation and management services provided is especially important as the country continues to respond to the risks and challenges of COVID-19.
• While PAI is supportive of the extension of telehealth flexibilities until the end of 2023, the use of audio-only services being limited to only mental health disorders could have a negative impact on patients in need of other audio-only services.
• PAI believes it is vital to permanently extend audio-only services for other clinical services beyond the initial COVID-19 PHE, as many physician practices and the patients they serve will remain reliant on telehealth in the long-term. Extending audio-only services will increase access to physicians and physician services, especially for vulnerable, underserved, urban, and rural patient populations. 

CMS Releases Part One of the Surprise Billing Interim Final Rule 

On July 1, the Department of Health and Human Services, the Department of Labor, and Department of the Treasury, along with the Office of Personnel Management released an interim final rule with comment (IFC) period, entitled Requirements Related to Surprise Billing; Part One (interim final rule and fact sheet). This IFC is related to the No Surprises Act, passed in the Consolidated Appropriations Act of 2021, intended to establish new consumer protections to avoid unanticipated medical expenses for certain out-of-network expenses in certain circumstances. Part one of the IFC implements many of the law’s requirements for group health plans, health insurance issuers, carriers under the Federal Employees Health Benefits Program, physicians, health care facilities, and air ambulance service physicians. This IFC requires emergency services to be covered: (1) without any prior authorization, (2) regardless of whether the physician is an in-network physician or an in-network emergency facility and (3) regardless of any other term or condition of the plan or coverage other than the exclusion or coordination of benefits, or a permitted affiliation or waiting period. 

Notably, arbitration rules are not included in the IFC, which are critical to assessing the full impact of the regulation on physicians’ abilities to challenge unfair out-of-network  payments by payers. The IFC also outlines the methodology used to determine the Qualifying Payment Amount (QPA), which can be used to govern the patient cost-sharing amount and is a factor in the independent dispute resolution process. 



Additionally, plans and issuers are required to send an initial payment or notice of denial of payment no later than 30 calendar days after a non-participating physician or facility submits a bill related to the items and services that fall within the scope of the new surprise billing protections. This 30-calendar-day period generally begins on the date the plan or issuer receives the information necessary to decide a claim for payment for such services, commonly known as a “clean claim” under many existing state laws. 

The HHS-only regulations that apply to health care physicians, facilities, and physicians of air ambulance services are applicable beginning January 1, 2022. Written comments must be received by 5:00 p.m. 60 days after display in the Federal Register. For a full summary of the IFC including the methodology for calculating the median rates, please click here. 

PAI is committed to continued advocacy efforts as this law is implemented and will fight for policies to ensure more rigorous network adequacy oversight, use of independent data to drive payment and the independent dispute resolution process, transparent and accurate plan information for patients, especially regarding in-network and out-of-network payment and cost-sharing policies, and accurate physician directories. PAI will also track unfair practices by insurers that undermine fair payment and contracting for in-network and out-of-network physicians. 

GAO Issues Report to Congress on GME Caps and Physician Workforce Shortages

On June 21, the Government Accountability Office (GAO), publicly released a report to Congress regarding the physician workforce shortage and caps on Medicare-funded graduate medical education (GME) at teaching hospitals. The impetus for this report, authored at the request of Senators Jacky Rosen (D-NV) and Gary Peters (D-MI), were the numerous academic studies illustrating the coming physician shortage in certain geographic areas and medical specialties, particularly in rural areas and of primary care physicians. Existing federal regulations have established a methodology determining payments to hospitals for the costs of approved GME programs as well as limits on the number of allopathic and osteopathic residents that hospitals may count for purposes of calculating direct GME (DGME) and indirect ME (IME) payments, also known as resident caps. DGME partially compensates for residency education costs and IME for higher patient care costs due to the presence of teaching programs. Hospitals and Medicare are currently required to set caps on residency slots five years after the establishment of new GME programs and these caps are generally permanent due to existing statutory constraints. 

GAO’s analysis of 2018 Medicare data show that 70 percent of hospitals were over one or both (direct and indirect) caps on Medicare-funded residents, and 20 percent were under one or both caps. According to GAO, the data indicate that the majority of hospitals have the capacity to take on additional GME slots. GAO asked relevant stakeholders about recent proposals to extend the window beyond five years. Stakeholders generally agreed with these proposals and said that extending the window could result in larger caps and therefore more residents. Modifications to the existing Medicare GME funding structure will require Congressional action. 

COVID-19 has intensified financial pressures that threaten the viability of independent physician practices, notwithstanding federal efforts to provide financial supports to these practices through the Provider Relief Fund for Accelerated and Advance Payment loans and other support programs. PAI advocates for continued support and assistance for independent physician practices.