MPFS Final Rule Cuts Physician Payments

Praise and Patient Access Concerns Raised from the Cuts

On November 2, 2023, the Centers for Medicare & Medicaid Services (CMS) released its finalized Medicare Physician Fee Schedule (MPFS) for calendar year (CY) 2024. While the finalized fee schedule cuts payments to physicians, there are a number of other (more positive) provisions in the final rule. An update to the September 2023 article on the proposed changes to the MPFS, this article explores the various changes and updates included in the MPFS final rule.

On November 2, 2023, the Centers for Medicare & Medicaid Services (CMS) released its finalized Medicare Physician Fee Schedule (MPFS) for calendar year (CY) 2024. While the finalized fee schedule cuts payments to physicians, there are a number of other (more positive) provisions in the final rule. An update to the September 2023 article on the proposed changes to the MPFS, this article explores the various changes and updates included in the MPFS final rule.

Payment Rate Updates for MPFS

The overall MPFS payment rates will be reduced in CY 2024 by 1.25%.[1] The conversion factor will decline by $1.15, to $32.74 (a nearly 3.4% reduction from 2023’s conversion factor of $33.89),^[2] the fourth straight year that physician payment rates have experienced a decrease. The conversion factor converts a relative value unit (RVU)—a geographically-adjusted number that represents the amount of resources required to perform each procedure listed in the MPFS—into a payment amount for a given service.^[3] This conversion factor is updated yearly by a formula that takes into account: (1) the previous year’s conversion factor; (2) the estimated percentage increase in the Medicare Economic Index (MEI) for the year (which accounts for inflationary changes in office expenses and physician earnings); and (3) an update adjustment factor.^[4] All physician services, except anesthesia services, use a single conversion factor.^[5] The CY 2024 conversion factor decrease is the result of: a 0% statutory update; a -2.18% budget neutrality adjustment; and a “funding patch” included in the Consolidated Appropriations Act of 2023 (CAA).[6]

Changes to the Medicare Shared Savings Program (MSSP)

CMS finalized a number of changes to the Medicare Shared Savings Program (MSSP) in the MPFS final rule.[7] For performance year 2024 and following years, CMS established a new option for reporting quality measures: Medicare Clinical Quality Measures (CQMs) for Accountable Care Organizations Participating in the MSSP. [8] CMS intends for this new data collection type to act as a transitional step in “helping ACOs build the infrastructure, skills, knowledge, and expertise necessary to report all-payer/all-patient” CQMs[9] and moving ACOs “toward digital measurement of quality.”[10]

CMS also finalized changes to ACO financial benchmarking methodologies.[11] Beginning January 1, 2024, CMS will: (1) cap the risk score growth in an ACO’s regional area of service; (2) apply the same methodology for risk adjustment to both the performance and benchmark years; and (3) eliminate any overall regional adjustment that may be negative for the benchmark, which would aim to encourage the participation of ACOs serving high-cost, medically complex beneficiaries.[12] The aim of changing the methodology for financial benchmarking is to encourage ACOs that serve complex populations to participate in the MSSP.[13]

CMS also finalized methodology changes for beneficiary assignment that would promote access to accountable care for beneficiaries who rely on nurse practitioners, clinical nurse specialists, and physician assistants for their primary care needs.[14] The change would place more importance on the role of clinical nurse specialists, nurse practitioners, and physician assistants in their delivery of primary care services.[15]

Telehealth Changes

CMS is finalizing the implementation of multiple telehealth-related provisions included in the 2023 CAA, including:

• The temporary expansion of the scope of originating telehealth sites (for any services which may be furnished via telehealth) to include any site in the nation where the beneficiary is located at the time when services are rendered;
• The expansion of the current definition of a telehealth practitioner to include qualified audiologists, speech-language pathologists, physical therapists, and occupational therapists;
• The continued payment for services furnished through telehealth by federally qualified health centers (FQHCs) and rural health centers (RHCs) using the same methodology which was established during the COVID-19 public health emergency (PHE);
• Delaying requirements for in-person visits with a practitioner or provider within six months before initiating telehealth services related to mental health; and
• The continuation of payment and coverage for telehealth services included on the Medicare Telehealth Services List.[16]

All these telehealth flexibilities will continue at least until the end of 2024.[17] However, one change that will occur, beginning in CY 2024, is that telehealth services rendered to Medicare beneficiaries in their homes will be paid at the lower, non-facility MPFS rate (currently, they are paid at the higher, facility MPFS rate).[18]

Other Provisions

CMS is finalizing their proposal for payments to practitioners that train caregivers to assist patients with certain illnesses or diseases in carrying out plans of treatment.[19] These services will be paid for by Medicare when furnished by a physician, non-physician practitioner, or therapist.[20] Medicare will also advance their health equity efforts by separately paying for services related to social determinants of health risk assessments, community health integration, and principal illness navigation.[21] Payments will include and account for resources when clinicians work alongside healthcare support staff (such as care navigators, peer support specialists, and community health workers) to furnish care.[22]

CMS finalized the implementation of a separate payment for healthcare common procedure coding system (HCPCS) add-on code G2211: “visit complexity inherent to evaluation and management [E/M] associated with medical care services that serve as the continuing focal point for all needed healthcare services and/or with medical care services that are part of ongoing care related to a patient’s single, serious condition or a complex condition.”[23] The add-on code, for which providers can start billing beginning January 1, 2024, will help providers better recognize the costs related to evaluation and management (E/M) visits for longitudinal and primary care, which necessarily relies on the long-term relationship between the patient and the physician.[24] The add-on payment aims to better recognize clinicians’ costs related to a patient’s ongoing care for a serious or complex condition.[25] CMS provided a situational example of when the code may be used: “a patient has a primary care practitioner that is the continuing focal point for all healthcare services [i.e., has a long-term relationship with the provider], and the patient sees this practitioner to be evaluated for sinus congestion.”[26] CMS stated that:

“… the inherent complexity that this code (G2211) captures is not in the clinical condition itself—sinus congestion—but rather the cognitive load of the continued responsibility of being the focal point for all needed services for this patient … The primary care practitioner must decide—what course of action and choice of words in the visit itself, would lead to the best health outcome in this single visit, while simultaneously building up an effective, trusting longitudinal relationship with this patient for all of their primary health care needs.”[27]

CMS also revised the definition of “substantive portion” of a shared or split E/M visit. E/M codes capture time the healthcare provider spends in a hospital or other facility setting (not in the office) “evaluating or managing a patient’s health.”[28] E/M visits are often performed by both a physician and an advanced practice clinician (APC), such as a nurse practitioner or a physician assistant. Who can bill for the time spent evaluating and managing a patient is important because only one provider can bill for the service, and Medicare reimburses physicians a higher amount for E/M visits than APCs. CMS requires that the provider who performs a “substantive portion” of a shared (or split) E/M visit bill for their time (at their rate).[29] The final rule revised “substantive portion” to be defined as over half of the total amount of time spent with a physician or non-physician practitioner that is performing the shared or split visit, or a major portion of the decision making.[30] Previously, the term was defined “as one of the following: either one of the three key E/M elements (that is, history, exam, or [medical decision making]) or more than half of total time.”[31]

Comments from Stakeholders

Industry trade associations strongly condemned the cuts to physician payments contained in the MPFS final rule. The Medical Group Management Association (MGMA) implored Congress to act to avoid cuts to physician payments, stating that the reduction would be increasing “the gap between physician practice expenses and reimbursement rates, and dangerously impeding beneficiary access to care.”[32] The President of the American Medical Association (AMA) stated that “the Medicare physician payment schedule released today is an unfortunate continuation of a two-decade march in making Medicare unsustainable for patients and physicians.”[33] The AMA and other physician groups criticized the rule before it was even finalized, taking their case to Congress to argue that Medicare physician fees should not be reduced.[34]

However, some associations did praise other provisions. The National Association of ACOs (NAACOS) President and CEO, Clif Gaus, stated that the “NAACOS appreciates that CMS continues to support the growth of value-based care.”[35] Gaus also expressed NAACOS’s support of CMS’s leadership to “create stronger pathways for clinicians and health systems who want to provide higher quality, more cost effective, coordinated care for patients.”[36]

Conclusion

According to CMS Administrator, Chiquita Brooks-LaSure, “CMS remains steadfast in [its] commitment to supporting physicians and ensuring that people with Medicare have access to the care they need to stay healthy as well as navigate health conditions they are facing.”[37] However, providers believe that cuts to physician payments will in fact have the opposite effect—reduced patient access to care. On November 8, 2023, after provider trade associations lobbied for the government to override the MPFS final rule cuts, the Senate Finance Committee approved legislation which included language that scaled back the Medicare payment cuts for physicians.[38] While the legislation would not completely reverse the cut, it would soften the impact by replacing the 3.4% reduction with a 2.15% cut.[39] The effect on physician payment rates will be determined by CMS once the legislation is enacted.[40]

This article was previously published by HCC in Health Capital Topics, Volume 16, Issue 11 (November 2023), and is republished here by permission.

 

[1]     “Calendar Year (CY) 2024 Medicare Physician Fee Schedule Final Rule” Centers for Medicare & Medicaid Services, November 2, 2023, https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2024-medicare-physician-fee-schedule-final-rule (Accessed 11/15/23).

[2]     Ibid.

[3]     “Physician Reimbursement Under Medicare” By Alan M. Scarrow, MD., Neurosurgical Focus, Vol. 12, No. 4: Article 8 (April 2002), p. 2.

[4]     “Part B Payments: General Limits and Payment Rules” In “2009 Master Medicare Guide” CCH Health Editorial, Wolters Kluwer, 2009, p. 901.

[5]     Ibid., p. 900.

[6]     “Policy Update: CMS Releases CY 2024 Physician Fee Schedule Final Rule” By Jeffrey Davis, et al., McDermott+ Consulting, November 6, 2023, available at: https://www.mcdermottplus.com/insights/cms-releases-cy-2024-physician-fee-schedule-final-rule/ (Accessed 11/20/23).

[7]     “Calendar Year (CY) 2024 Medicare Physician Fee Schedule Final Rule — Medicare Shared Savings Program Fact Sheet” Centers for Medicare and Medicaid Services, November 2, 2023, https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2024-medicare-physician-fee-schedule-final-rule-medicare-shared-savings-program#_ftn1 (Accessed 11/17/23).

[8]     Ibid.

[9]     “2024 CMS Proposed Rule: Introducing Medicare CQMs as a New Reporting Option for ACOs” MDinteractive, July 15, 2023, https://mdinteractive.com/mips-blog/2024-cms-proposed-rule-introducing-medicare-cqms-new-reporting-option-acos (Accessed 11/27/23).

[10]   “Calendar Year (CY) 2024 Medicare Physician Fee Schedule Final Rule — Medicare Shared Savings Program Fact Sheet” Centers for Medicare and Medicaid Services, November 2, 2023, https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2024-medicare-physician-fee-schedule-final-rule-medicare-shared-savings-program#_ftn1 (Accessed 11/17/23).

[11]   Ibid.

[12]   Ibid.

[13]   “AMA: Medicare physician payment proposal a wake-up call for Congress” American Medical Association, July 13, 2023, https://www.ama-assn.org/press-center/press-releases/ama-medicare-physician-payment-proposal-wake-call-congress (Accessed 11/22/23).

[14]   “Calendar Year (CY) 2024 Medicare Physician Fee Schedule Proposed Rule” Centers for Medicare and Medicaid Services, July 13, 2023, https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2024-medicare-physician-fee-schedule-proposed-rule (Accessed 11/14/23).

[15]   “Calendar Year (CY) 2024 Medicare Physician Fee Schedule Final Rule — Medicare Shared Savings Program Fact Sheet” Centers for Medicare and Medicaid Services, November 2, 2023, https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2024-medicare-physician-fee-schedule-final-rule-medicare-shared-savings-program#_ftn1 (Accessed 11/17/23).

[16]   “Calendar Year (CY) 2024 Medicare Physician Fee Schedule Final Rule” Centers for Medicare & Medicaid Services, November 2, 2023, https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2024-medicare-physician-fee-schedule-final-rule (Accessed 11/15/23).

[17]   “Calendar Year (CY) 2024 Medicare Physician Fee Schedule Final Rule — Medicare Shared Savings Program Fact Sheet” Centers for Medicare and Medicaid Services, November 2, 2023, https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2024-medicare-physician-fee-schedule-final-rule-medicare-shared-savings-program#_ftn1 (Accessed 11/17/23).

[18]   “CMS Issues Physician Fee Schedule Final Rule with Payment Rate Cut” American Health Law Association, November 3, 2023, https://www.americanhealthlaw.org/content-library/health-law-weekly/article/e144866d-b571-4b10-98d0-530c46f3f5e7/CMS-Issues-Physician-Fee-Schedule-Proposed-Rule-wi?Token=549ef0b5-a159-47d3-abab-87e5b19e8876 (Accessed 11/15/23).

[19]   “CMS Finalizes 1.25% Cut To Medicare Physician Fee Schedule” By Jacqueline LaPointe, RevCycleIntelligence, November 3, 2023, https://revcycleintelligence.com/news/cms-finalizes-1.25-cut-to-medicare-physician-fee-schedule (Accessed 11/15/23).

[20]   Ibid.

[21]   “Calendar Year (CY) 2024 Medicare Physician Fee Schedule Final Rule” Centers for Medicare & Medicaid Services, November 2, 2023, https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2024-medicare-physician-fee-schedule-final-rule (Accessed 11/15/23).

[22]   Ibid.

[23]   Ibid.; “2024 MPFS final rule includes cuts to conversion factor, implementation of new add-on visit code” Nahri, November 8, 2023, https://nahri.org/articles/2024-mpfs-final-rule-includes-cuts-conversion-factor-implementation-new-add-visit-code (Accessed 11/22/23).

[24]   “Calendar Year (CY) 2024 Medicare Physician Fee Schedule Final Rule” Centers for Medicare & Medicaid Services, November 2, 2023, https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2024-medicare-physician-fee-schedule-final-rule (Accessed 11/15/23); “Medicare and Medicaid Programs; CY 2024 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; Medicare Advantage; Medicare and Medicaid Provider and Supplier Enrollment Policies; and Basic Health Program” Federal Register, Vol. 88, No. 220 (November 16, 2023), p. 78973.

[25]   “CMS Finalizes 1.25% Cut To Medicare Physician Fee Schedule” By Jacqueline LaPointe, RevCycleIntelligence, November 3, 2023, https://revcycleintelligence.com/news/cms-finalizes-1.25-cut-to-medicare-physician-fee-schedule (Accessed 11/15/23).

[26]   “Medicare and Medicaid Programs; CY 2024 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; Medicare Advantage; Medicare and Medicaid Provider and Supplier Enrollment Policies; and Basic Health Program” Federal Register, Vol. 88, No. 220 (November 16, 2023), p. 78973.

[27]   Ibid., p. 78973–78974.

[28]   “Evaluation and Management (E/M) Coding” American Medical Association, 2023, https://www.ama-assn.org/topics/evaluation-and-management-em-coding# (Accessed 7/26/23).

[29]   “CMS issues CY 2024 physician fee schedule proposed rule” American Hospital Association, July 13, 2023, https://www.aha.org/news/headline/2023-07-13-cms-issues-cy-2024-physician-fee-schedule-proposed-rule (Accessed 7/14/23).

[30]   “Calendar Year (CY) 2024 Medicare Physician Fee Schedule Final Rule” Centers for Medicare & Medicaid Services, November 2, 2023, https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2024-medicare-physician-fee-schedule-final-rule (Accessed 11/15/23).

[31]   “Medicare and Medicaid Programs; CY 2024 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; Medicare Advantage; Medicare and Medicaid Provider and Supplier Enrollment Policies; and Basic Health Program” Federal Register, Vol. 88, No. 220 (November 16, 2023), p. 78983.

[32]   “MGMA statement on CMS’ final 2024 Medicare Physician Fee Schedule” By Anders Gilberg, Senior Vice President, Government Affairs, Medical Group Management Association, November 2, 2023, https://www.mgma.com/press-statements/november-2-2023-mgma-statement-on-cms-final-2024-medicare-physician-fee-schedule (Accessed 11/15/23).

[33]   “Physicians hit with Medicare pay cut under final rule” By Alison Bennett, Modern Healthcare, November 2, 2023, https://www.modernhealthcare.com/policy/medicare-physician-fee-schedule-final-rule-2024-cuts-payment (Accessed 11/15/23).

[34]   Ibid.

[35]   “NAACOS Statement on Final 2024 Medicare Physician Fee Schedule” National Association of ACOs, November 2, 2023, https://www.naacos.com/press-release–naacos-statement-on-final-2024-medicare-physician-fee-schedule (Accessed 11/15/23).

[36]   Ibid.

[37]   “Physician groups decry finalized Medicare payment cuts for 2024 as expenses rise” By Heather Landi, Fierce Healthcare, November 2, 2023, https://www.fiercehealthcare.com/providers/physician-groups-decry-finalized-medicare-payment-cuts-2024-expenses-rise (Accessed 11/17/23).

[38]   “Senate moves to delay $16B hospital cut, trim doctor pay hit” By Michael Mcauliff, Modern Healthcare, November 8, 2023, https://www.modernhealthcare.com/politics-policy/medicare-physician-pay-cuts-medicaid-dsh-cuts-senate-bill (Accessed 11/27/23).

[39]   Ibid.

[40]   Ibid.

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Todd A. Zigrang, MBA, MHA, FACHE, CVA, ASA, ABV, is president of Health Capital Consultants, where he focuses on the areas of valuation and financial analysis for hospitals and other healthcare enterprises. Mr. Zigrang has significant physician-integration and financial analysis experience, and has participated in the development of a physician-owned, multispecialty management service organization and networks involving a wide range of specialties, physician owned hospitals, as well as several limited liability companies for acquiring acute care and specialty hospitals, ASCs, and other ancillary facilities.

Mr. Zigrang can be contacted at (800) 394-8258 or by e-mail to tzigrang@healthcapital.com.

Jessica Bailey-Wheaton, Esq., is vice president and general counsel for Heath Capital Consultants, where she conducts project management and consulting services related to the impact of both federal and state regulations on healthcare exempt organization transactions, and provides research services necessary to support certified opinions of value related to the fair market value and commercial reasonableness of transactions related to healthcare enterprises, assets, and services.

Ms. Bailey-Wheaton can be contacted at (800) 394-8258 or by e-mail to jbailey@healthcapital.com.