Physicians Slam Fee Schedule Cuts, Call for Medicare Payment Reform

September 07, 2022 - The American Medical Association (AMA) and other physician advocacy groups are calling on CMS to reverse proposed Medicare Physician Fee Schedule updates, which would slash Medicare payment for physicians next year.

CMS proposed in July to decrease the Fee Schedule conversion factor by $1.53 to $33.08 in 2023. The proposed decrease would account for the expiration of the 3 percent increase in Physician Fee Schedule reimbursements in CY 2022 as required by the Protecting Medicare and American Farmers From Sequester Cuts Act, as well as CMS’ statutory obligation to implement a 0 percent conversion factor in 2023.

If finalized, however, the Fee Schedule cut would harm patient access to care, according to the AMA.

“As you know, the AMA is deeply alarmed about the growing financial instability of the Medicare physician payment system due to a confluence of fiscal uncertainties physician practices face related to the ongoing pandemic, statutory payment cuts, lack of inflationary updates, and significant administrative barriers,” the industry group said in a Sept. 6th letter to CMS Admnistrator Chiquita Brooks-LaSure.

“The payment system is on an unsustainable path that is jeopardizing patient access to physicians,” the letter continued.

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

The difference between the costs of running a physician practice and actual Medicare payment could incentivize providers to consolidate further as they also face administrative and financial burdens of participating in Medicare, AMA stated.

Healthcare consolidation has been a major concern for federal and state governments. Nearly three-quarters of physicians are now employed by hospitals, health systems, and other corporate entities because of acquisitions. Additionally, the top ten largest health systems control about a quarter market share because of consolidation. Policymakers are concerned that this consolidation is leading to higher prices for patients.

Physician practices continue to feel the economic impact of the ongoing COVID-19 pandemic, the Medical Group Management Association (MGMA) also told CMS.

MGMA said in a comment letter on the proposed Medicare Physician Fee Schedule rule for 2023 that group practices have yet to return to a “new normal” as staffing shortages and increased demand for care make it difficult for practices to deliver timely, appropriate care.

“Staffing shortages jeopardize patient outcomes and increase costs for practices and waste for the healthcare system. Looking ahead to Medicare payment policies in CY 2023, each proposed policy must be considered in the context of the current state of the healthcare system; one in which practices do not have excess time, staff, or resources to devote to administratively burdensome tasks that neither add value nor improve the quality of care provided to patients,” the industry group’s letter stated.

READ MORE: Providers Face Cuts in Medicare Physician Fee Schedule Proposed Rule

Physicians are also staring down additional Medicare payment reductions if Congress does not act to prevent cuts scheduled for 2023, including the 1.5 percent budget neutrality reduction, the statutory annual freeze, and the 4 percent PAYGO sequester.

The American Medical Group Association (AMGA) also expressed concerns about telehealth reimbursement rates in the proposed Medicare Physician Fee Schedule rule. CMS had reimbursed Medicare physicians for telehealth visits at the same rate as an office-based visit during the COVID-19 public health emergency. The proposed rule, however, would reduce the rate of telehealth visits.

“Telehealth is an increasingly important option for patients and providers,” Jerry Penso, MD, MBA, president and CEO of AMGA, said in a recent statement. “Without adequate reimbursement, offering such care will be difficult and diminish a needed service.”

Physician advocacy groups, including the AMA, have recognized the importance of expanding telehealth coverage and reimbursement after the COVID-19 public health emergency ends. AMA said in its letter that it strongly supports CMS’ efforts to add about 150 services to Medicare’s telehealth list, including emergency department visits, critical care, home visits, and telephone visits. The groups also pointed out the proposal to allow certain telehealth services to remain on Medicare’s list for 151 days after the expiration of the public health emergency.

However, major Medicare payment reform is still necessary to support services like telehealth and provide a more stable physician reimbursement system.

READ MORE: Rising Expenses Continue to Hurt Health System, Hospital Finances

AMA and 120 state medical and national specialty societies have created the “Characteristics of a Rational Medicare Physician Payment System.” The document includes three core principles: ensuring financial stability and predictability, promoting value-based care, and safeguarding access to high-quality care.

Within the principles, the physician advocacy groups call for a baseline positive annual update reflecting inflation in practice costs and for the elimination or replacement of the budget neutrality requirements. They also urge policymakers to reward providers for delivering value-based care, rather than administrative activities, through a variety of alternative payment models tailored to specific specialties and practice settings.

Additionally, payment models should be risk-adjusted and incentivize the advancement of health equity.

“These core set of principles serve as the basis for reforming the broken physician payment system,” AMA stated in its comment letter.

The comment period for the proposed Medicare Physician Fee Schedule rule ended on Sept. 6th. CMS will review stakeholder feedback and release a final rule.