CMS Finalizes 1.25% Cut To Medicare Physician Fee Schedule

November 03, 2023 - CMS has released the Medicare Physician Fee Schedule (PFS) final rule for calendar year (CY) 2024, finalizing a 1.25 percent overall reduction for physician services next year.

The federal agency landed on a CY 2024 PFS conversion factor of $32.74, a decrease of $1.15 from CY 2023. The reduction in the conversion factor represents a 3.4 percent reduction compared to this year’s conversion factor.

Trade associations representing physicians have been fighting the conversion factor cut first proposed by CMS this past July. The associations, including the American Medical Association (AMA), the American Hospital Association), and the Medicare Group Management Association (MGMA), called the proposed PSF payment cut harmful to physician practices and unsustainable.

CMS Administrator Chiquita Brooks-LaSure said in a statement released yesterday night that the agency remains committed “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.”

Brooks-LaSure also highlighted how other finalized payment policies in the rule will improve rates for primary care and access to mental healthcare. Through the final rule, Medicare will also start paying for new navigation services to support Medicare beneficiaries with serious illnesses, including cancer.

READ MORE: Provider Groups Oppose Proposed Payment Cuts in Physician Fee Schedule

The final rule states that Medicare will make payment when practitioners train caregivers on carrying out treatment plans for patients with certain diseases or illnesses like dementia. Medicare will pay for these services under the PFS when furnished by a physician or a non-physician practitioner (i.e., nurse practitioners, clinical nurse specialists, certified nurse-midwives, physician assistants, and clinical psychologists) or therapist (i.e., physical therapist, occupational therapist, or speech-language pathologist) as part of an individualized treatment plan or therapy care plan.

CMS said Medicare will advance health equity by paying separately for services related to community health integration, social determinants of health (SDOH) risk assessment, and principal illness navigation. The payment will account for resources when clinicians involve certain types of healthcare support staff, such as community health workers, care navigators, and peer support specialists, to deliver care. These practitioners have been able to previously practice incident to the services of a Medicare-enrolled billing physician or practitioner.

Additionally, CMS finalized the implementation of a separate add-on payment for Healthcare Common Procedure Coding System (HCPCS) code G2211, another policy trade associations urged the final agency to scrap.

CMS said the add-on code will better recognize the resource costs related to evaluation and management (E/M) visits for primary care and longitudinal care through its use for outpatient and office visits. The code will be attached to an additional payment for qualifying E/M visits, such as when a primary care clinician establishes a trusting relationship with a patient as part of long-term care. Patients are more likely to adhere to treatment plans and attend follow-up visits if they have an established relationship with the primary care clinician, CMS explained.

The add-on code, however, will impact other Medicare PFS services due to budget-neutrality requirements. CMS noted that these redistributive impacts are comparatively less than what the agency initially estimated.

READ MORE: Medical Groups May Reduce Staff, Patients Amid Medicare Payment Cuts

The final rule also revises the definition of a “substantive portion” of a split or shared E/M visit to mean over half of the total time spent a physician or non-physician practitioner performing the split visit or a substantive part of medical decision-making. These align with the revisions to the AMA’s  Current Procedural Terminology (CPT) guidelines.

AMA said the Medicare PFS final rule for CY 2024 is “an unfortunate continuation of a two-decade march in making Medicare unsustainable for patients and physicians.”

“For 2024, the new rule indicates there will be another downward adjustment of 3.4 percent, on top of the 2 percent payment reduction in 2023. At the same time, the payment schedule confirms the Medicare Economic Index (MEI) increase at 4.6 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,” Jesse M. Ehrenfeld, MD, MPH, president of AMA, continued in a statement.

Ehrenfeld called the finalized policies and subsequent payment cut a “recipe for financial instability” that could harm patient access to care.

MGMA echoed these sentiments in a separate statement, saying the reduced PFS conversion factor will widen the gap between physician practice expenses and reimbursement rates.

READ MORE: Will Medicare Physician Fee Schedule Changes Drive Value-Based Care?

“Congress must pass legislation to stop this downward spiral in the Medicare program and at a minimum avert CMS’ 3.4% cut to the conversion factor. MGMA looks forward to working with Congress to establish a sustainable solution to the Medicare physician payment system, safeguarding medical groups’ ability to continue providing high-quality, accessible patient care,” said Anders Gilberg, senior vice president of government affairs at MGMA.

More coverage of the Medicare PFS to follow.