Proposed Medicare Physician Fee Schedule Triggers Provider Concerns

July 11, 2024
CMS’s release of its proposed 2025 Medicare Physician Fee Schedule has prompted expressions of concern from national associations

The release on July 10 of the proposed Calendar Year 2025 Medicare Physician Fee Schedule from the Centers for Medicare & Medicaid Services (CMS) is causing consternation among national healthcare associations, who are criticizing both the 2.93-percent decrease to physician reimbursement contained in the proposed schedule, and some elements around benchmarks in the Medicare Shared Savings Program (MSSP) that are contained in the proposed schedule.

The announcement was posted late on Wednesday afternoon on the CMS website, in the form of a press release. The press release began thus: “Today, the U.S. Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), proposed new policies in the calendar year (CY) 2025 Medicare Physician Fee Schedule (PFS) proposed rule to advance health equity and support whole-person care. The proposed rule would also strengthen primary care, expand access to behavioral health, oral health, and caregiver training services, maintain telehealth flexibilities, and expand access to screening for colorectal cancer and vaccinations for hepatitis B. The proposed rule reflects the Biden-Harris Administration’s vision for affordable, high-quality care for all Americans while driving innovation in the Medicare program.

“This proposed rule strengthens the care people with Medicare receive, advancing HHS’s goal of a health care system that not only treats those who are sick but also keeps people well,” HHS Secretary Xavier Becerra said in a statement contained in the press release. “The proposed rule continues our implementation of President Biden’s historic prescription drug law. The law lowers costs for seniors and people with disabilities and uses rebates from drug manufacturers to strengthen Medicare. It also increases access to behavioral and dental care, expands access to cancer screenings, and supports caregivers.”

And CMS Administrator Chiquita Brooks-LaSure added in her statement that “The Biden-Harris Administration is committed to protecting and expanding Americans’ access to quality, affordable health care. The Calendar Year 2025 Physician Fee Schedule proposed rule supports physicians and other practitioners in delivering care that meets the needs of people with Medicare, including through telehealth flexibilities, strengthened primary, behavioral, and oral health care, and improved access to caregiver training services,” Brooks-LaSure stated.

The press release went on to note that, “Because of factors specified in law, average payment rates under the PFS are proposed to be reduced by 2.93% in CY 2025 compared to the average amount these services will be paid for most of CY 2024. The change to the PFS conversion factor incorporates the zero percent overall update required by statute, the expiration of the 2.93% increase in payment for CY 2024 required by statute, and a small adjustment necessary to account for changes in valuation for the work RVU portion of particular services. This amounts to a proposed estimated CY 2025 PFS conversion factor of $32.36, a decrease of $0.93 (or 2.80%) from the current CY 2024 conversion factor of $33.29.”

And, the press release stated, “Whole-person care means moving towards a health-care system that recognizes each unique aspect of a person and their wellbeing, including physical health, behavioral health, oral health, social determinants of health, and caregiving supports, and it all starts first with a foundation of primary care that can integrate these components,” said Meena Seshamani, M.D. Ph.D., Deputy CMS Administrator and Director of the Center for Medicare. “We are taking lessons learned from numerous CMS Innovation Center models to strengthen primary care teams and accountable care organizations, allowing them to better meet the unique needs of every person with Medicare.”

When it comes to alternative payment models, the press release stated that “A person-centered approach to health care starts with a trusting relationship with a primary care team. Over the last decade, value-based primary care models tested by the CMS Innovation Center have demonstrated that comprehensive primary care can lead to reductions in emergency department and hospital visits while better meeting patient needs. CMS is proposing to use these lessons learned to establish a new, advanced primary care management bundle under the PFS. As an important first step as part of a multiyear effort, this proposed payment uses coding describing certain primary care services that would be provided by advanced primary care teams, with adjustments for patient medical and social complexity to promote health equity. These services would be tied to primary care quality measures to improve health outcomes for people with Medicare,” the press release stated.

“In addition,” the press release stated, “the Innovation Center’s Million Hearts® model demonstrated that payment for cardiovascular risk assessment and cardiovascular care management led to fewer deaths related to cardiovascular disease and important reductions in heart attacks and strokes. Based on these evaluation results, CMS is proposing new payment and coding for these services to better assess and manage heart health.”

Per that the press release stated that “CMS continues to drive high-quality care through its Quality Payment Program and is continually strengthening the Merit-based Incentive Payment System (MIPS). This rule proposes six new MIPS Value Pathways (MVPs): ophthalmology, dermatology, gastroenterology, pulmonology, urology, and surgical care. CMS is also proposing updates to MIPS scoring methodologies and measure inventories to give all clinicians the opportunity to achieve positive scores and continued improvement. These updates will help ensure that all eligible clinician types can continue to meaningfully participate in MIPS as CMS transitions to MVPs. To further leverage progress on MVP development, the RFI “Building Upon the MVP Framework to Improve Ambulatory Specialty Care” solicits feedback on the design of a potential model to increase the engagement of specialists in value-based care. Under the potential model, participants would receive a payment adjustment based on their performance compared to other similar specialists on a set of clinically relevant MVP measures,” it said.

And, per the Medicare Shared Savings Program (MSSP), the press release stated that “CMS is also proposing to strengthen the Medicare Shared Savings Program (Shared Savings Program) further, which is Medicare’s permanent Accountable Care Organization (ACO) program. For the first time, CMS is proposing to allow eligible ACOs with a history of success in the program access to an advance on their earned shared savings, known as prepaid shared savings, to encourage investment in staffing, health care infrastructure, and additional services for people with Medicare, such as nutrition support, transportation, dental, vision, hearing, and Part-B cost-sharing reductions.”

And, it went on, “Additionally, CMS is proposing to further incentivize participation in the Shared Savings Program by ACOs that serve people with Medicare who are members of rural and underserved communities by adopting a health equity benchmark adjustment similar to that in the Innovation Center’s ACO REACH Model, which has been associated with increased safety net provider participation. CMS is also proposing to move the Shared Savings Program towards the Universal Foundation of quality measures, creating better quality measure alignment for providers and driving care transformation. Further, CMS is proposing a methodology to account for the impact of improper payments when reopening an ACO’s shared savings and shared losses calculations, which is complementary to the Anomalous Increases in Billing on Medicare Shared Savings Program Financial Calculations Proposed Rule issued on (June 28, 2024).  The proposed adjustments described in both rules would improve the accuracy, fairness, and integrity of Shared Savings Program financial calculations.”

Provider associations react with concern

National provider associations reacted with concern to the proposed payment cut, as well as other elements in the proposed rule. By late Wednesday afternoon, several associations had issued statements, including the Leawood, Kan.-based American Academy of Family Physicians (AAFP), the Englewood, Colo.-based Medical Group Management Association (MGMA), the Alexandria, Va.-based American Medical Group Association (AMGA), the Charlotte-based Premier Inc., and the Washington, D.C.-based NAACOS (National Association of ACOs). And leaders at the Washington, D.C.-based American Telemedicine Association (ATA) took the opportunity to remind the administration and Congress that time is short for renewing telehealth policy and payment flexibilities authorized in the first months of the COVID-19 pandemic in 2020.

“The Medicare program is essential in helping millions of people access comprehensive, continuous primary care,” began a statement issued Wednesday afternoon by AAFP, and attributed to Steven P. Furr, M.D., the association’s president. “While the proposed 2025 Medicare physician fee schedule includes some proposals to strengthen primary care, its 2.8% reduction in the Medicare conversion factor once again highlights the urgent need for congressional action to ensure that physician payments keep up with the costs of running a practice,” Dr. Furr said.

Further, he stated, “Family physicians provide high-quality care to our patients and communities, but inadequate, falling Medicare payment rates create barriers to care for beneficiaries and strain physician practices. As a first step, Congress must enact an annual inflationary update to help physician payment rates keep pace with rising practice costs. Any payment reductions will threaten practices and exacerbate workforce shortages, preventing patients from accessing the primary care, behavioral health care, and other critical preventive services they need.”

Indeed, “While we remain firm in our efforts to reform Medicare payment more broadly by addressing the unintended consequences of factors such as budget neutrality and the lack of site-neutral payments,” Furr stated, “the AAFP is encouraged that the Centers for Medicare and Medicaid Services (CMS) is working to appropriately recognize and value primary care within the limitations of the current Medicare physician fee schedule, including the continued implementation of codes, such as G2211, that more accurately reflect the resources needed for family physicians to serve as a comprehensive focal point of longitudinal care for patients. We’re grateful that CMS will allow payment for G2211 when billed alongside an evaluation and management (E/M) visit on the same day as an annual wellness visit, vaccine administration, or any Medicare part B preventive services.”

Anders Gilberg, senior vice president of government affairs at the Englewood, Colo.-based Medical Group Management Association (MGMA), released the following statement: “CMS has again proposed a negative Medicare physician fee schedule update for 2025 with dangerous implications for beneficiary access to care. A 2.8-percent reduction to the conversion factor would be alarming in the best circumstances, but to propose doing so at a time when 92 percent of medical groups report increased operating costs and are otherwise struggling to remain financially viable is critically short-sighted. Medicare physician reimbursement is on a dire trajectory,” Gilberg stated, “and these ongoing cuts continue to undermine the ability of medical practices to keep their doors open and function effectively — the need for comprehensive reform is paramount. MGMA is once again calling on Congress to pass the Strengthening Medicare for Patients and Providers Act to implement an annual inflation-based physician payment update tied to the Medicare Economic Index, and modernize Medicare’s antiquated budget neutrality policies by enacting the Provider Reimbursement Stability Act.”

Meanwhile, AMGA released a statement that began thus: “AMGA today called on Congress to prevent pending cuts to the Medicare conversion factor, which will hinder the ability of multispecialty medical groups and integrated systems of care to provide high-quality care to their patients. As detailed in the Centers for Medicare & Medicaid Services (CMS) proposed 2025 Physician Fee Schedule rule, the conversion factor will be reduced from $33.29 to $32.36 for 2025, a 2.8 percent decrease. This proposed conversion factor will result in reduced payments, potentially forcing providers to limit services or delay investments to support value-based care models. AMGA expects CMS will finalize this proposed cut in the conversion factor, meaning Congress must act to prevent it from taking effect.”

And the association quoted its president and CEO Jerry Penso, M.D., as stating that “The proposed cut illustrates the need for Congress to rethink the current reimbursement system. This annual cycle of cuts needs to stop. Congress should prevent this cut from occurring and then work with stakeholders to reform the Medicare payment system for professional services so it provides stable, predictable payments that support providers’ ability to treat their patients.”  

The association’s statement also noted that “AMGA recently surveyed its membership on what actions they would be forced to take if these Medicare cuts were implemented next year. They also were asked about what actions they took in 2023 in reaction to previous year’s Medicare cuts. Twenty-four percent of AMGA respondents either furloughed or laid off employees in 2023. Forty-nine percent of respondents said they will be forced to furlough or lay off employees in 2024 if the cuts continue. Also, 44% of these provider groups eliminated services to Medicare patients in 2023, and 65% expect to continue doing so in 2024 if cuts are implemented. Twenty-one percent of respondents instituted delays in social determinants of health investments, and 57% are expected to continue these delays in 2024 if cuts continue. The survey is available on the AMGA website.”

Premier, NAACOS weigh in on ACO elements

Meanwhile, the leaders of Premier, Inc. and NAACOs weighed in Wednesday afternoon on the ACO-related elements in the proposed rule. Premier’s statement was attributed to Soumi Saha, senior vice president, government affairs, who stated that “Premier commends the Centers for Medicare & Medicaid Services (CMS) for its continued focus on bolstering the success and sustainability of accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP). Premier is disappointed, however, that CMS proposes to move forward with expanding the number of required quality measures for MSSP ACOs without first addressing the underlying challenges Premier highlighted last year.  Building upon a broken system only creates a larger broken system,” she said. “This approach could ultimately undermine the Administration’s goals for expanding ACO participation, as it may force ACOs to reconsider their provider networks or potentially push them out of the program entirely. These underlying challenges must be addressed if the Administration intends to meet its 2030 goal of having all Medicare beneficiaries in an accountable care relationship.”

And Clif Gaus, Sc.D., president and CEO of NAACOS, stated that ““The National Association of ACOs appreciates CMS’s continued work to ensure ACOs are held harmless for significant anomalous and highly suspect billing activity, establishing long-term policies that creates certainty for ACOs. We also are pleased that CMS continues to evolve the Medicare Shared Savings Program by reducing burden associated with beneficiary notifications, providing prepaid savings for historically successful ACOs, adding an upward benchmark adjustment for ACOs serving rural and underserved communities, establishing advanced primary codes that can be billed by ACOs, and continuing to develop a higher risk and reward track within the model.”

But he went on to state that, “Despite these positive changes, we remain concerned that CMS has yet to address significant issues that will cause providers to leave the Shared Savings Program. In the next two years, a majority of ACOs will enter new agreements and have their benchmarks ratcheted down, ultimately being penalized for past strong performance. Additionally, the change in quality reporting options and requiring reporting on beneficiaries outside of the ACO, will cause ACOs and their providers to make significant investments in technology that will not result in useful quality data. These looming crises deter clinicians from participating in ACOs and hamper progress towards CMS’ goal of all payments in an accountable care relationship by 2030.”

And even as most of the comments focused on payment and ACO elements in the rule, the leaders of the American Telemedicine Association (ATA) and ATA Action, its advocacy partner, released a statement confirming that “The American Telemedicine Association (ATA) and ATA Action are committed to thoroughly reviewing the recently released 2025 Physician Fee Schedule (PFS) and Outpatient Prospective Payment System (OPPS) proposed rules published by the Centers for Medicare & Medicaid Services (CMS).”

Kyle Zebley, senior vice president, public policy, ATA, and executive director, ATA Action, stated that "We are eager to work with CMS and the Biden administration on the draft rule to ensure that telehealth remains a cornerstone of modern healthcare. Our extensive, broad-based ATA and ATA Action community will be offering thorough comments to ensure that the proposed policies support sustainable, high-quality healthcare delivery."

“The ATA and ATA Action emphasize the urgency for Congress to act as soon as possible on extending or making permanent the pandemic-era telehealth flexibilities in the Medicare program to prevent any disruption in access to clinically appropriate telehealth care for Americans after January 1, 2025,” the ATA/ATA Action statement said.

"There is an extensive, bipartisan, bicameral consensus on the need to extend these telehealth flexibilities, and we are deeply appreciative of the strong support from both Congress and the Biden administration," Zebley added. “We are grateful that CMS and the administration recognize the importance of telehealth and have taken the first step in preserving access to telehealth flexibilities for providers and patients alike through this proposed rule. However, it is imperative that Congress acts now to maintain the progress we have made in expanding access to telehealth services."

This is a developing story. Healthcare Innovation will keep its readers updated on further developments.

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