CMS’ Proposed Medicare Physician Fee Schedule Provokes Strong Reactions

July 14, 2023
Industry reactions have been strongly mixed to CMS’s announcement on July 13 of its proposed Medicare Physician Fee Schedule for calendar year 2024

Industry reactions have been very mixed to the announcement by the federal Centers for Medicare and Medicaid Services (CMS) of the agency’s proposed physician fee schedule, with many national provider associations blasting the proposed fee schedule, while praising the extension of payment parity for telehealth-delivered patient care.

The agency’s announcement was posted to its website on Thursday, and began thus: “Today, the Centers for Medicare & Medicaid Services (CMS) issued the calendar year (CY) 2024 Medicare Physician Fee Schedule (PFS) proposed rule to announce rate updates, advance health equity, and expand access to critical medical services — including behavioral health care and certain oral health services. Notably, the proposed rule supports the Biden-Harris Administration’s Cancer Moonshot mission to accelerate the fight against cancer.” Importantly, the announcement noted that “The CY 2024 PFS proposed rule includes updates to PFS payments for clinicians as required by law. Overall proposed payment amounts under the PFS would be reduced by 1.25% compared to CY 2023, in accordance with factors specified by law. CMS is also proposing increases in payment for many visit services, such as primary care, and these proposed increases require offsetting and budget neutrality adjustments to all other services paid under the PFS, by law. The proposed CY 2024 PFS conversion factor is $32.75, a decrease of $1.14, or 3.34%, from CY 2023.”

“At CMS, our mission is to expand access to health care and ensure that health coverage is meaningful to the people we serve,” CMS Administrator Chiquita Brooks-LaSure said in a statement included in the announcement. “CMS’ proposals in the proposed physician payment rule would help people with Medicare navigate cancer treatment and have access to more types of behavioral health providers, strengthen primary care, and for the first time, allow Medicare payment for services performed by community health workers.”

And Meena Seshamani, M.D., CMS Deputy Administrator and Director of the Center for Medicare, said in a statement also included in the press release, that “CMS continues to demonstrate commitment to advancing health equity and building a stronger Medicare program. 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,” she said.

Under the proposed rule, payments overall would decrease by 1.25 percent compared to 2023; but the agency has set the conversion factor at $32.75, down $1.14 or 3.34. from last year. Under the physician fee schedule, the conversion factor is the number of dollars assigned to the relative value unit, a key element in how CMS calculates payouts for physicians in Medicare. In the press release, CMS said that while it is decreasing overall payments and adjusting the conversion factor, it is proposing pay hikes for primary care and other services. These increases require cuts elsewhere to achieve budget neutrality, CMS said.

In addition, CMS stated that, “Building on the agency’s commitment to health equity, and the Biden-Harris Administration’s Executive Order to support caregivers, CMS is proposing coding and payment for several new services to help underserved populations, including addressing unmet health related social needs that can potentially interfere with the diagnosis and treatment of medical problems. First, CMS is proposing to pay for certain caregiver training services in specified circumstances, so that practitioners are appropriately paid for engaging with caregivers to support people with Medicare in carrying out their treatment plans.

CMS is also proposing separate coding and payment for community health integration services, which would include person-centered planning, health system coordination, promoting patient self-advocacy, and facilitating access to community-based resources to address unmet social needs that interfere with the practitioner’s diagnosis and treatment of the patient. These are the first Physician Fee Schedule services designed to include care involving community health workers, who link underserved communities with critical health care and social services in the community and expand equitable access to care, improving outcomes for the Medicare population.”

AMGA decries cuts

Industry reactions were decidedly mixed; indeed, some associations’ reactions were mixed in themselves, condemning the pay cuts while praising the extension of telehealth payment parity. The leaders of the Alexandria, Va.-based AMGA (American Medical Group Association) released the following statement on July 13, posted to the association’s website: “AMGA today called on Congress to prevent proposed cuts to the Medicare conversion factor from hindering the ability of multispecialty medical groups and integrated systems of care to provide high-quality care to their patients. The Centers for Medicare & Medicaid Services (CMS) proposed a cut in the Medicare conversion factor that, if left unaddressed, would exacerbate the financial pressures facing AMGA members, as Medicare physician payments already are not keeping up with the increasing cost of delivering healthcare.”

AMGA’s statement quoted its president and CEO, Jerry Penso, M.D., as stating that “AMGA members cannot absorb this proposed payment cut. Their expenses are continuing to increase, and Congress needs to act to ensure Medicare’s reimbursement reflects the cost of delivering high-quality care to patients. We’re concerned AMGA members may be forced to make tough decisions on staffing and the services they can offer to their communities if proposed cuts are left unaddressed.”  

The AMGA statement went on to note that “CMS has proposed a conversion factor of $32.75 for 2024, reflecting a 3.4-percent decrease from the CY 2023 conversion factor of 33.89 percent. AMGA opposes this cut.”

At the same time, the statement noted that “AMGA commends CMS for proposing reimbursement policies that treat telehealth care as equivalent to in-office care. It has become evident that the cost of treating patients through telehealth does not differ from an in-person visit, and AMGA is pleased that CMS’ proposal for Medicare reimbursement policy reflects this fact. Today’s rule builds on the lessons learned from the COVID-19 public health emergency, which demonstrated how vital telehealth care is to providing access to high-quality healthcare.”

“Providing telehealth services is as labor- and time-intensive as an in-person visit,” Penso added. “It simply isn’t the case that telehealth is a less expensive way of treating patients, and this proposal is a welcome development. Patients expect telehealth to be available, and today’s rule will help ensure it remains a viable option for AMGA members and their patients.”

The association’s statement concluded with this: “AMGA is reviewing the proposed rule and will provide detailed comments.”

AMA: “This is almost biblical in its impact”

Meanwhile, the Chicago- and Washington, D.C.-based American Medical Association (AMA) posted the following statement to its website, also on July 13, and attributing the statement to AMA president Jesse M. Ehrenfeld, M.D., M.P.H.: “The proposed Medicare physician payment schedule released today is a critical reminder that patients and physicians desperately need Congress to develop a permanent solution that addresses the financial instability and threatens access to care. The payment schedule estimates the Medicare Economic Index (MEI) increase at 4.5 percent, the highest this century and on top of last year’s 3.8 percent. MEI is the government measure of inflation in medical practice costs,” Ehrenfeld pointed out.

Further, the statement continued, “In the face of these growing costs of running a medical practice, physicians have faced the COVID pandemic and increased inflation. Not only have Medicare payments failed to respond, but physicians saw a 2-percent payment reduction for 2023, creating an additional challenge at a perilous moment. For 2024, the new rule indicates there will be another downward adjustment of 3.36 percent. When adjusted for inflation, Medicare physician payment already has effectively declined (PDF) 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. This is almost biblical in its impact. Seven lean years that include a pandemic and rampaging inflation. Physicians need relief from this unsustainable journey.”

What’s more, Ehrenfeld said in the statement, "Momentum is building for reform. In January, the Medicare Payment Advisory Commission recommended a physician payment update tied to the MEI for the first time. And in April, a bipartisan group of House members introduced a bill that would provide annual inflation updates to the Medicare fee schedule based on the MEI. At the AMA’s recent Annual Meeting, physicians from across the country called for a campaign to address this situation. These increasingly thin or negative operating margins disproportionately affect small, independent, and rural physician practices, as well as those treating low-income or other historically minoritized or marginalized patient communities. Piling on more cuts is an unsustainable approach. Congress needs to turn its attention to fixing Medicare so we can preserve access for patients.”

Further, Ehrenfeld stated, “The AMA and our partners in organized medicine have developed a set of principles (PDF) to guide efforts on Medicare physician payment reform. This is part of the AMA’s Recovery Plan for America’s Physicians and represents our ongoing work to establish a rational Medicare physician payment system that provides financial stability through positive annual payment updates, improves the financial viability of physician practices, and eases administrative burdens.”

NAACOS offers praise for CMS

One association that offered praise to CMS was NAACOS, the Washington, D.C.-based National Association of ACOs, which represents the interests of accountable care organizations nationwide. In a statement attributed to Clif Gaus, Sc.D., NAACO’s president and CEO, the association stated that “The Centers for Medicare & Medicaid Services (CMS) showed its commitment to supporting value-based care and growing participation in accountable care organizations in this proposed rule. It addresses several issues that NAACOS has been advocating for, including improvements in quality reporting, more fair benchmarking policies, a smooth transition to a new risk adjustment model, keeping advanced payments for new ACOs who transition to risk, helping ACOs who serve high-cost beneficiaries and others.   NAACOS thanks CMS for its continued leadership on this issue and its willingness to address the barriers standing in the way of clinicians and health systems who want to provide higher quality, more cost effective, coordinated care for patients.”

Anesthesiologists highly critical

Leaders at the Schaumburg, Ill.- and Washington, D.C.-based American Society of Anesthesiologists (ASA) were highly critical of the proposed physician fee schedule. In a lengthy press release posted to the association’s website under the headline, “Broken Medicare System Results in CMS Proposing Reduced Physician Payments in 2024,” they stated that, “On July 13, 2023, the Centers for Medicare & Medicaid Services (CMS) released its Calendar Year (CY) 2024 Medicare Physician Fee Schedule (PFS) proposed rule, (PDF) which includes proposals related to Medicare physician payment and the Quality Payment Program (QPP). Within the fee schedule, CMS proposed Medicare payment cuts to the Anesthesia Conversion Factor that will only compound the financial strain that anesthesia groups are already facing. The proposed rule has a 60-day comment period. Final regulations will be issued on or around November 1 and unless otherwise noted, policies will be effective on January 1, 2024.”

The ASA’s press release went into considerable detail explaining the impacts on anesthesiologists, with several paragraphs of figures and charts, noting that “ASA opposes these additional Medicare payment cuts included in the CY 2024 PFS proposed rule. The proposed rule underscores how the Medicare payment system is broken, especially during a time when anesthesia groups are faced with continued inflation pressures. ASA has already launched an initiative to engage legislative stakeholders and regulatory agencies to minimize and reverse these cuts that negatively impact anesthesiologists.”

Further, ASA leaders stated, “Anesthesiologists continue to face financial pressures beyond these reductions. Medicare payments, including physician services, are also subject to across-the-board cuts due to federal budget rules. Last year, Congress passed legislation that defers until 2025 cuts of 4% that were otherwise scheduled to be implemented in 2022. Mandated by the “Pay-As-You-Go Act of 2010,” these cuts were meant to offset increases in the federal deficit. Although this legislation provided a 1.25% update to the conversion factor for CY 2024, this is less than the 2.5% update Congress approved for CY 2023. ASA is committed to advocating for changes to the broken Medicare payment system and ensure that anesthesiologists and pain medicine physicians are paid fairly,” the ASA statement concluded. “ASA has supported an inflation adjustment to Medicare payments to allow for the compensation of our physicians and other clinicians to match rising cost of living across the country.”

ASTRO leaders see cuts to radiation therapy services hitting patient access

Leaders at the Arlington, Va.-based American Society for Radiation Oncology (ASTRO) were equally critical, issuing a statement attributed to Geraldine M. Jacobson, M.D., chair of the association’s board of directors. Dr. Jacobson stated, “Another year brings another round of cuts to radiation therapy services for people with cancer under the proposed Medicare fee schedule. ASTRO is disappointed that CMS once again undervalues the impact of radiation oncology and intends to cut reimbursement by an additional 2 percent in 2024 for this essential cornerstone of cancer care. Medicare spends less on all radiation therapy services than it does on just three top cancer drugs, although radiation is utilized by twice as many beneficiaries. Despite this outsized value, CMS has cut radiation oncology physician fee schedule payments by over 20 percent in the last decade – more than nearly all other physician specialties.”

Jacobson went on in the statement to say that “The ongoing cuts to radiation oncology reimbursement, coupled with broader cuts to Medicare services, threaten to decrease patients' ability to receive vital, high-value cancer care close to home by driving practice consolidation and undermining the viability of smaller practices. These cuts also underscore the need for long-term, overarching reimbursement reform that will ensure patients can access the care they need.” She went on to note that ASTRO has created “The ASTRO-proposed Radiation Oncology Case Rate (ROCR) program [which] represents a legislative initiative to reverse disastrous Medicare payment trends that are expected to continue. ASTRO believes ROCR represents the best chance to secure long-term rate stability and continue to deliver cutting-edge care to our patients close to home.”