Medicare Compliance & Reimbursement

But: Some specialties may end up on the plus side for CY 2024.

Complex calculations and federal requirements aside, the latest round of Medicare payment proposals brings disheartening news for most — but not all — providers. And industry organizations are already calling on Congress to fix this perennial dilemma.

Context: On July 13, the Centers for Medicare & Medicaid Services (CMS) issued its calendar year (CY) 2024 Medicare Physician Fee Schedule (MPFS) proposed rule — and per usual, the 2,033-page opus delivers some stand-out policies. Ensuring that all people receive the same level of healthcare remains a central theme post-pandemic, which isn’t surprising as the public health emergency (PHE) revealed longstanding, systemic problems.

“CMS continues to demonstrate commitment to advancing health equity and building a stronger Medicare program,” explains Meena Seshamani, MD, CMS Deputy Administrator and Director of the Center for Medicare, in a release. “If finalized, the proposals in this rule ensure the people we serve experience coordinated care focused on treating the whole person, considering each person’s unique story and individualized needs — physical health, behavioral health, oral health, social determinants of health, and are inclusive of caregivers, which are all so important to providing the care that people with Medicare deserve.”

The feds also propose to further solidify beneficiaries’ access to telehealth services, beef up primary care offerings, and improve community health (see story, p. 5). The proposed rule is scheduled for publication in the Federal Register on Aug. 7.

While CMS aims to fix systemic equity issues with its proposals, there are some negatives in the CY 2024 MPFS — including a substantial decrease to the conversion factor (CF), which was expected but is nonetheless going to hurt many providers’ bottom lines.

Understand These CF Change Particulars

With inflation raging and providers attempting to climb out of the financial hole created by COVID, many hoped CMS would leave the CF, at the very least, status quo for CY 2024. In the latest proposed rule, the agency opts to reduce the overall payment rate by 1.25 percent and the CF by 3.34 percent or $1.14, decreasing the amount from the $33.89 (CY 2023) to $32.75 (CY 2024). But, “CMS is also proposing significant increases in payment for primary care and other kinds of direct patient care,” the agency says in a fact sheet.

“While Congress has provided temporary partial fixes to physician payment in the last several years, its latest fix in the Consolidated Appropriations Act, 2023 (CAA, 2023), enacted at the end of 2022, does not offset all the proposed cuts in this rule,” cautions McDermott+Consulting, an affiliate of law firm McDermott Will & Emery, in a rule summary. “In all, the budget neutrality constraints of the fee schedule continue to result in a negative proposed conversion factor (CF) update," the firm says.

Refresher: In the CAA, 2023, legislators decided instead of completely overhauling the 4.5 percent CF cut for CY 2023 that they’d offer a two-part solution that also impacted CY 2024. Under that legislation, Congress provided a 2.5 percent statutory payment increase for CY 2023 and the 1.25 positive payment adjustment for CY 2024 (see Medicare Compliance & Reimbursement, Vol. 49, No. 1).

CMS’ proposal “reflects the expiration of the 2.5 percent statutory payment increase for CY 2023; a 1.25 percent statutory payment increase for 2024; a 0.00 percent conversion factor update under the Medicare Access and CHIP Reauthorization Act [MACRA]; and a -2.17 percent budget-neutrality adjustment,” an American Hospital Association (AHA) fact sheet on the rule clarifies.

Industry Organization Weigh In

Physician payments have been on a downward spiral for years — and that’s a problem, warns the American Medical Association (AMA). “When adjusted for inflation, Medicare physician payment already has effectively declined 26 percent from 2001 to 2023 before additional inflation and these cuts are factored in. Physicians are one of the only providers without an automatic inflationary increase,” explains AMA President Jesse M. Ehrenfeld, MD, MPH, in a release.

“This is almost biblical in its impact,” he argues. “Seven lean years that include a pandemic and rampaging inflation. Physicians need relief from this unsustainable journey.”

Know this: Congress may not stave off all the proposed rule’s effects like industry insiders hope, but they do have some legislation in the works, McDermott+Consulting points out. “Lawmakers have introduced H.R. 2474, the Strengthening Medicare for Patients and Providers Act, which would provide a permanent annual update to the CF equal to the increase in the Medicare Economic Index; however, the cost of this legislation may be prohibitive to finding sufficient support to pass this bill,” McDermott notes. “Accordingly, other reforms may be introduced or considered by Congress later this year.”

Timeline: CMS is accepting public comments on the proposals through Sept. 11.

Resource: Find the CY 2024 MPFS proposed rule and comment at https://public-inspection.federalregister.gov/2023-14624.pdf.