Physician fee schedule proposal sees cuts, sparks outrage

Doctors would receive a 1.25% pay cut next year under the Medicare physician fee schedule proposed rule, fueling requests to tie the reimbursement rate to inflation.

The Centers for Medicare and Medicaid Services proposed Thursday to decrease overall payment rates in 2024, but boost reimbursement for primary care, among other services. Under the proposed rule, CMS would reduce the Medicare conversion factor by 3.34%, the benchmark used in conjunction with relative value units. Relative value units factor in the industry-determined value of a procedure, practice costs and malpractice expenses—each weighted and adjusted by geography.

The physician fee schedule has not kept up with inflation, unlike other payment mechanisms like the inpatient and outpatient reimbursement models. As a result, physician associations have lobbied Congress to overhaul the payment system.

“Momentum is building for reform,” Dr. Jesse Ehrenfeld, president of the American Medical Association, said in a statement. According to AMA’s calculations, he said that Medicare physician payment has effectively declined 26% from 2001 to 2023. “Physicians are one of the only providers without an automatic inflationary increase,” Ehrenfeld said.

Dr. Tochi Iroku-Malize, president of the American Academy of Family Physicians, asked Congress in a statement to “enact an annual inflationary update to help ensure physician payment rates keep pace with rising practice costs.”

In April, House lawmakers introduced a bipartisan bill that would link the physician fee schedule to the Medicare Economic Index, the government measure of inflation in medical practice costs. The House Committee on Energy and Commerce health subcommittee is reviewing the bill. The Medicare Payment Advisory Commission made a similar recommendation in January.

Although physician associations described the proposed cuts as untenable, they praised the proposed boost to primary care and the proposed changes to accountable care organizations.

Under the proposal, CMS would revise the quality reporting and financial benchmarking requirements under the Medicare Shared Savings Program. The agency estimates the proposed rule would increase Medicare Shared Savings Program participation by up to 20% next year, in part by accounting for beneficiaries who seek primary care through nurse practitioners, physician assistants and clinical nurse specialists.

“[The proposed rule] addresses several issues that [the National Association of ACOs] has been advocating for, including improvements in quality reporting, more fair benchmarking policies, a smooth transition to a new risk-adjustment model and keeping advanced payments for new ACOs who transition to risk, helping ACOs who serve high-cost beneficiaries and others,” said Clif Gaus, president and CEO of the National Association of ACOs.

CMS also proposed several provisions designed to increase access to behavioral healthcare and boost reimbursement for patients with chronic conditions. The agency would allow marriage and family therapists and mental health counselors to enroll in Medicare. The proposed rule would also increase payment for crisis care, substance use disorder treatment and psychotherapy.

CMS proposed expanding a model designed to bolster care for treating Medicare patients with diabetes in underserved communities. The agency would offer an add-on payment that it said better recognizes the resources associated with clinic visits for complex patients.

In addition, the agency would pay for caregiver training to support patients with certain diseases and offer new reimbursement mechanisms for community health workers and team-based care, along with paying for navigation services for cancer patients.

Comments are due by Sept. 11. The final rule is expected later this fall.

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