ED Coding and Reimbursement Alert

Here’s what factored into the final decrease.

It’s happened again.

With no one displaying an appetite for new cuts to physician payment in 2024, Medicare went ahead and made the cuts anyway. Not only that, the cuts are even deeper than originally proposed.

Context: In November, the Centers for Medicare & Medicaid Services (CMS) published the calendar year (CY) 2024 Medicare Physician Fee Schedule (MPFS) final rule in the Federal Register, which is unsurprisingly mammoth in size and scope. There are many positives among the policies — particularly in the areas of primary care, telehealth, and behavioral healthcare — and CMS continues to rectify systemic issues uncovered during the pandemic, including post-COVID PHE regulatory reforms.

However, the final rule isn’t all roses — and many clinicians will find less money in their wallets due to regulatory requirements and 2024 rate-setting. Read on to learn more about these 2024 MPFS specifics.

Cut Exceeds Proposed Reduction

Last July, CMS proposed a 3.34-percent cut to the CF. But in the final rule, the agency opted to reduce the CF further by 3.37 percent, which equates to $32.7442 or $1.15 less than the 2023 CF of $33.89. On top of that, CMS anticipates overall payment rates under the CY 2024 MPFS will fall by 1.25 percent, according to the final rule.

“CMS is taking important steps toward those goals in this rule by improving payment for primary care and access to mental health care, paying for new navigation services to help people with cancer and other serious illnesses navigate their treatment, supporting family caregivers, paying for services involving community health workers to address health-related social needs that impact care, and enhancing access to dental care for people with certain cancers,” says CMS Administrator Chiquita Brooks-LaSure in a release on the rule.

Experts were not thrilled with the CF; however, they encourage practices to accept the CF and look to tighten their belts — again.

“Any decrease in payment of services is a decrease in reimbursement for medical practices. To prepare for this new 2024 fee schedule, practices should take their biggest procedure codes, E/M [evaluation and management] services and any other services they bill to determine how this cut will affect their bottom line,” recommends Catherine Brink, BS, CPC, CMM, president of Healthcare Resource Management in Spring Lake, New Jersey.

Several Factors Impacted CMS’ 2024 Changes

A combination of federal laws, budgetary constraints, and expiring legislation all factored into the CF decrease for CY 2024.

First: CMS must update the CF under MACRA by 0.00 percent. MACRA replaced the Sustainable Growth Rate (SGR) in 2015, and the law requires a 0.00-percent update to the CF for 2020 through 2025. “Section 101 repeals the Medicare SGR methodology for updates to the physician fee schedule (PFS) and implements scheduled PFS updates, including a higher update rate for ‘qualifying APM participants’ beginning in 2026,” CMS notes in a FAQ on physician payment reform.

Looking ahead, Quality Payment Program (QPP) guidance suggests that qualifying APM participants will receive a 0.75 percent boost in 2026 while non-qualifying participants will receive a 0.25-percent increase to the CF.

Next: In the Consolidated Appropriations Act, 2023 (CAA, 2023), Congress offered a solution to the massive CY 2023 pay cut with a two-pronged approach: a 2.5-percent statutory payment increase for CY 2023 and a 1.25-percent payment adjustment for CY 2024. CMS addresses both the expiration of the statutory payment and the payment adjustment in the CF decrease and payment rate changes.

Last: But the necessary decreases to rectify the CAA, 2023 changes aren’t “the only cut[s] CMS made to the CY 2024 CF,” clarifies healthcare executive Jeffery Davis with McDermott+Consulting, an affiliate of law firm McDermott Will & Emery, in the firm’s Regs and Eggs blog. “CMS also made a 2.1 percent cut to preserve budget neutrality — and the majority of that cut was due to CMS’ decision to implement the same add-on code for complexity that CMS had initially implemented for CY 2021 and Congress delayed until CY 2024.”

Remember, Section 1115 of the Social Security Act requires CMS to make budget-neutrality adjustments to physician payment rates. In a nutshell, Medicare spending cannot exceed Medicare costs. “Increases in payment for physician services in a given year will require across-the-board decreases in payment for all physicians,” explains the American College of Surgeons in online guidance. “This does not take into consideration the varying costs associated with performing these services.”

Industry Org Weighs In

When the CY 2024 MPFS proposed rule came out in July, the American Medical Association (AMA) urged the feds to take inflation, costs, and COVID fallout into consideration. That didn’t happen, and the trade group implies patients will suffer.

“This is a recipe for financial instability. Patients and physicians will wonder why such thin gruel is being served,” exhorted AMA President Jesse M. Ehrenfeld, MD, MPH, in a release on the final rule. “When adjusted for inflation, Medicare physician payment already has effectively declined 26 percent from 2001 to 2023 before additional inflation and these cuts are factored in,” he warned.