Why can mercury oxide be decomposed into mercury and oxygen upon heating?
In simple terms, heating is indeed a physical method. You might have heard of heat being, in fact, molecules/ions moving faster. There’s nothing in there per se that would make it a chemical method.

But. The atomic particles that are moving quicker can bump into each other with more energy (because they are faster — think of a car crash which is worse at high speeds); this can be understood as activation energy, i.e. energy that allows reactions to proceed.

So by adding enough heat energy, you are inducing a chemical change which leads to the (thermal) decomposition of mercury oxide into its elements.