Physician groups warn nearly 10% in Medicare cuts could stall shift to value-based care, force staff cuts

The American Medical Group Association is hoping Congress will delay nearly 10% in cuts to Medicare payments as part of an end-of-year spending package. (Tupungato/GettyImages)

Several medical groups say a new round of cuts to Medicare payments set to go into effect in 2022 will derail their move to value-based care and impact hiring of new staff.

Medical groups spoke about the need for Congress to avert a series of cuts during a briefing on Tuesday sponsored by the American Medical Group Association (AMGA), which represents specialty medical groups.

“On heels of public health emergency to be dealt this blow it does feel a little bit like ‘death by a thousand paper cuts,’” said Carol Brockmiller, CEO of Quincy Medical Group, a group of more than 150 doctors, during the briefing.

Providers are facing 9.75% in cuts to Medicare reimbursements in the next year. This includes 4% in cuts due to go into effect under the PAYGO law, which calls for Congress to install a series of cuts across the federal government if spending reaches a certain threshold.

Congress also temporarily increased physician payment rates by 3.75% last year to help physicians offset financial shortfalls caused by the pandemic.

The Centers for Medicare & Medicaid Services also proposed to reduce the physician fee schedule conversion factor by 3.75%, but that increase is expected to go away after this year.

RELATED: Providers push Congress to include value-based care bill in $3.5T infrastructure package

Congress issued a moratorium last year to pause a 2% Medicare cut imposed under sequestration. Currently, the moratorium is expected to run through 2021, but a bipartisan infrastructure package that passed the Senate in the summer would resume the cuts to help pay for the roughly $1 trillion package.

Medical group leaders said if all the cuts go through, it could take years to fully recover.

“What are the things that you would cut in the short term and what are the longer-term initiatives planning to put in place to continue to deliver healthcare,” asked Scott Hines, M.D., chief quality officer for the group Crystal Run Healthcare.

Group leaders said the push to value-based care would likely be on the chopping block.

“We have done everything that has been asked of us to try to move towards value, and it has cost money,” said Brockmiller. “To be in that defensive position as opposed to a proactive [position] changing the paradigm of healthcare as a result of costs … it’s not where any of us should be spending our time.”

A survey conducted of 92 AMGA members also found that if the cuts were to go into effect, 42.7% will install hiring freezes and 36.8% will eliminate services. Another 22.2% will no longer accept Medicare patients.

“Our workforce needs support to want to stay in healthcare,” said Luis Garcia, president of the Stanford Health Clinic, during the briefing.

It remains unclear whether Congress will act to prevent all of the cuts from moving forward. Lawmakers have delayed PAYGO cuts from going into effect before, including acting to forestall cuts that were triggered by the 2017 tax reform law.

AMGA admitted that delaying the 2% sequester payment cut again could be the toughest of the three cuts to avert. The bipartisan infrastructure package, which has yet to pass the House, calls for resuming the cuts to help pay for the package.

“That is a harder one,” conceded AMGA Chief Policy Officer Chet Speed. “But 2% is still 2% so we are going for all of them.”

Speed said that the group is hoping to get delays to the cuts included in a larger government spending package that Congress will likely pass in December and not in a massive infrastructure package being hammered out by Democrats now.