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Analyzing CMS’ Proposed 2024 Updates to Medicare Physician Rates

Decline in physician reimbursement set to continue

BY ALEX TAIRA | JULY 2023

In the proposed 2024 updates to the Medicare Physician Fee Schedule (MPFS), the Centers for Medicare & Medicaid Services (CMS) proposed a conversion factor (CF) of $32.7476 for 2024, which would represent a 3.36 percent decrease from the 2023 CF.

Policies contained in the MPFS affect the professional fees for clinicians operating in surgery centers. In addition, office-based rates in the ASC payment system are based on the MPFS rates for those procedures.

Stakeholders wishing to submit comments on MPFS proposed policies must do so by September 11, 2023. ASCA will submit comments and traditionally supports the advocacy of the major specialties that work in surgery centers.

Cascading Reimbursement Cuts

While a 3.36 percent decrease to the CF might seem alarming, it is not entirely unexpected. The decrease can be traced back to 2020 when CMS finalized rate increases to certain evaluation and management (E/M) codes as recommended by the Relative Value Scale Update Committee (RUC). However, because the MPFS is a budget-neutral payment system—as is the Hospital Outpatient Prospective Payment System (OPPS)/ASC payment system—the sudden increase to E/M rates meant CMS was forced to finalize a substantial decrease to the conversion factor to offset the anticipated increased spending on E/M services. The result was a 10.2 percent cut to the 2021 physician conversion factor, a decrease that was obviously untenable for the physician community.

Congress stepped in via the Consolidated Appropriations Act, 2021 (H.R. 133), which provided a one-year, 3.75 percent increase to the CF to partially offset the cuts. This process has continued in each subsequent year: CMS proposes a cut to the physician CF and Congress provides partial relief at year’s end thanks to heavy advocacy efforts by the physician community. The latest fix, found in the Consolidated Appropriations Act, 2023 (H.R. 2617), gave physicians a 2.5 percent increase to the CF in 2023 and a 1.25 percent increase in 2024.

The 1.25 percent increase was not enough to offset the ongoing budget neutrality adjustments, and many surgical specialties are in line for cuts of 2 to 3 percent, according to the American College of Surgeons. Additionally, Congress has indicated an unwillingness to continually provide year-end relief to physicians, as evidenced by the decreasing one-year CF increases seen each year since 2020. Instead, in April, a bipartisan coalition of congressional doctors introduced H.R. 2474, the Strengthening Medicare for Patients and Providers Act. This bill, supported by ASCA and more than 100 major healthcare organizations, would apply a permanent, annual inflation update to the MPFS that would help stabilize reimbursement rates. The MPFS is one of the only Medicare payment systems that does not currently have an annual inflation update.

2024 Policy Updates

The CY 2024 MPFS proposed rule contains numerous other policy updates, many of which will not affect ASCs. CMS is proposing to permanently cover several telehealth-related provisions that were implemented on a temporary basis during the COVID-19 pandemic. CMS also will add Medicare Part B coverage and payment for numerous behavioral health services, including marriage and family therapists, mental health counselors and psychotherapy for crisis services. Of note for ASCs, CMS will continue its third year of updates to clinical labor pricing as planned. Last year, ASCA requested that CMS pause the pricing updates amidst the myriad other policies affecting physician reimbursement. The United Specialists for Patient Access estimated that pricing updates could cause some specialists, such as vascular surgeons, to see reimbursement cuts as high as 11 percent.

CMS released the proposed 2024 updates to the MPFS on July 13. The MPFS is the payment system that establishes physician professional reimbursement rates, as well as providing updates to ancillary programs such as the Merit-based Incentive Payment System and Advanced Alternative Payment Models.

Write Alex Taira with any questions.