Physician groups decry finalized Medicare payment cuts for 2024 as expenses rise

The Biden administration Thursday finalized policy changes for Medicare reimbursements in 2024 that will cut payments to physicians by 1.25% compared to 2023.

The 2024 Medicare Physician Fee Schedule rule includes a 3.34% decrease to the fee schedule's conversion factor, which is used to calculate Medicare payouts to docs. CMS set the conversion factor at $32.74, a decrease of $1.15, or 3.4%, from 2023.

The Centers for Medicare and Medicaid Services also is finalizing increases in payment for visits for many services, such as primary care and longitudinal care.  These increases require cuts elsewhere to achieve budget neutrality, CMS said.

Beginning January 1, 2024, CMS is finalizing implementation of a separate add-on payment for healthcare common procedure coding system (HCPCS) code G2211. This add-on code will better recognize the resource costs associated with evaluation and management visits for primary care and longitudinal care, according to a CMS fact sheet. Generally, it will be applicable for outpatient and office visits as an additional payment, recognizing the inherent costs involved when clinicians are the continuing focal point for all needed services, or are part of ongoing care related to a patient’s single, serious condition or a complex condition.

“CMS remains steadfast in our commitment 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,” said CMS Administrator Chiquita Brooks-LaSure in a statement. 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.”

But physician groups were quick to condemn CMS' payment cuts to doctors, which was initially proposed in the draft rule released in July.

“Despite appeals from MGMA and hundreds of physician organizations, this afternoon CMS finalized a substantial reduction to the 2024 Medicare conversion factor — further increasing the gap between physician practice expenses and reimbursement rates, and dangerously impeding beneficiary access to care," wrote Anders Gilberg, senior vice president of government affairs at MGMA (Medical Group Management Association). 

The payment cuts for 2024 follow a 2% payment reduction for physicians in 2023.

"The Medicare physician payment schedule released today is an unfortunate continuation of a two-decade march in making Medicare unsustainable for patients and physicians," wrote Dr. Jesse Ehrenfeld, president of the American Medical Association in a statement.

“For 2024, the new rule indicates there will be another downward adjustment of 3.4%, on top of the 2% payment reduction in 2023. At the same time, the payment schedule confirms the Medicare Economic Index (MEI) increase at 4.6%, the highest this century and on top of last year’s 3.8%. MEI is the government measure of inflation in medical practice costs," Ehrenfeld said.

He added, "This is a recipe for financial instability. Patients and physicians will wonder why such thin gruel is being served."

While physicians routinely have faced cuts in the last two decades, the past few years have not been "routine," Ehrenfeld said.

"Physicians have faced the COVID pandemic and subsequent burnout. They have seen the costs soar for running a medical practice, while Medicare payment updates have offered too little relief," he said.

Physician groups argue that payment cuts could force service and staffing reductions as practices feel the financial pinch, which would impact patient care.

“The declining revenues in the face of steep cost increases disproportionately affect small, independent, and rural physician practices, as well as those treating low-income or other historically minoritized or marginalized patient communities," Ehrenfeld said.

Data compiled by the AMA showed that after adjusting for inflation in practice costs, Medicare payments to physicians declined 26% from 2001 to 2023 before additional inflation and these cuts are factored in. 

While CMS is constrained by statutory budget neutrality requirements, the MGMA urged the agency to work with Congress to provide a positive update to the Medicare conversion factor in 2024 and all future years.

"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," Gilberg said.

As a result of the rule, “Medicare physician fees will continue to fall even as inflation and practice expenses climb, and many physicians continue to leave the practice of medicine. The situation is unsustainable, and we look forward to working with Congress and other policymakers to redress these fee cuts soon," said APG (America's Physician Groups) president and CEO Susan Dentzer in a statement.

Momentum seems to be building for payment reform. In March, the Medicare Payment Advisory Commission recommended a physician payment update tied to the Medicare Economic Index (the government’s index of inflation in medical practice costs) for the first time.

In March, the Medicare Payment Advisory Commission recommended a physician payment update tied to the MEI for the first time.

In April, a bipartisan group of House members introduced a bill that seeks to tie physician payment rates to inflation as doctor groups have implored lawmakers to overhaul the federal pay process. The Strengthening Medicare for Patients and Providers Act aims to address concerns amid the industry that Medicare payments have not kept pace with financial challenges such as inflation.

MGMA applauded CMS for scrapping its proposal to increase the MIPS performance threshold from 75 to 82 points, which by its own estimates would have resulted in a majority of eligible clinicians receiving a negative payment adjustment.

The Physician Fee Schedule rule included a number of other policies to support primary care, advance health equity, assist family caregivers, promote value-based care and expand access to behavioral and certain oral health care, CMS said.

“The impact of these changes means that people with Medicare will be able to access Marriage and Family Therapists and Mental Health Counselors for behavioral health treatment, access culturally-sensitive care from community health workers, care navigators, and peer support workers, access primary care where the provider is invested in a long-term, trusting relationship, and that caregivers for persons with Medicare will have access to appropriate training,” said Meena Seshamani, M.D., CMS Deputy Administrator and Director of the Center for Medicare, in a statement. “Taken holistically, these are some of the largest changes ever towards a Medicare that recognizes people with Medicare as whole persons, with their own families and unique life stories. After all, people are more than the sum of their ailments and diagnoses.” 

Medicare Shared Savings Program changes

The PFS rule for 2024 includes changes to the terms of participation in the Medicare Shared Savings Program (MSSP). A fact sheet outlining the changes can be found here.

CMS established the Medicare Clinical Quality Measures (CQMs) as an alternative collection type for MSSP accountable care organizations (ACOs). This policy reduces barriers in the adoption of digital measurement to allow the Shared Savings Program to align with the Universal Foundation for adults in 202, the agency said.

The agency finalized its proposal to increase the performance threshold score that Merit-Based Incentive Payment Systems participants must achieve to earn positive payment adjustments, but it will not increase the quality data completeness threshold as originally proposed. CMS retained the performance threshold for the CY 2024-MIPS performance period/2026 MIPS payment year at 75 points.

The agency is delaying the implementation of the MIPS Promoting Interoperability performance category until 2025.

CMS also finalized changes to the financial benchmarking methodology for ACOs in agreement periods beginning on January 1, 2024, and in subsequent years, to apply a cap to risk score growth in an ACO’s regional service area (similar to the cap applied on an ACO’s risk score growth), apply the same risk adjustment methodology to both the benchmark and performance years, and eliminate the overall negative regional adjustment to the benchmark to encourage participation by ACOs caring for medically complex, high-cost beneficiaries. 

Many industry groups applauded the changes.

“We’re very pleased to see the many changes in store for the Medicare Shared Savings Program, which will only increase the odds that more healthcare providers will participate in the program,” said APG's Dentzer. “Clearly CMS has listened closely to physicians with long experience in ACOs in making these changes.”

APG is a nationwide association representing physician groups involved in value-based contracting.

The National Association of ACOs said the rule finalizes several policies that support clinicians in accountable care organizations, including improvements in quality reporting, more fair benchmarking policies, a smooth transition to a new risk adjustment model, keeping advanced payments for new ACOs who transition to risk, helping ACOs who serve high-cost beneficiaries and others. "Despite the positive changes, we are disappointed that several favorable policies only apply to new or renewing ACOs in 2024, leaving out existing ACOs," said Clif Gaus, president and CEO of the National Association of ACOs, in a statement.

For the Quality Payment Program, CMS finalized the creation of five new, optional Merit-based Incentive Payment System Value Pathways for reporting beginning in 2024.

The new MVPs are: Focusing on Women’s Health, Quality Care for the Treatment of Ear, Nose and Throat Disorders, Prevention and Treatment of Infectious Disorders Including Hepatitis C and HIV, Quality Care in Mental Health and Substance Use Disorders, and Rehabilitative Support for Musculoskeletal Care.

Health equity provisions and caregiver training services

CMS is finalizing separate coding and payment for several new services to help underserved populations, including addressing unmet health related social needs that can potentially interfere with the diagnosis and treatment of medical problems. 

According to the final rule, CMS will pay for certain caregiver training services in specified circumstances, so that practitioners are appropriately paid for engaging with caregivers to support people with Medicare in carrying out their treatment plans.  

The agency also is finalizing separate coding and payment for community health integration services, which include person-centered planning, health system coordination, promoting patient self-advocacy, and facilitating access to community-based resources to address unmet

social needs that interfere with the practitioner’s diagnosis and treatment of the patient. These are the first Physician Fee Schedule services designed to specifically include care involving community health workers, CMS said.

The final rule also includes coding and payment policies for principal illness navigation services, which describe similar care navigation services for individuals with high-risk conditions, including cancer. 

The rule also finalizes coding and payment for social determinants of health risk assessments, which can be furnished as an add-on to an annual wellness visit or in conjunction with an evaluation and management or behavioral health visit. 

Expanding access to behavioral health services

The Physician Fee Schedule final rule finalized some of the most important changes to improve access to behavioral health care in the Medicare program’s history, according to CMS.

The rule allows marriage and family therapists and mental health counselors, including eligible addiction, alcohol, or drug counselors who meet qualification requirements for mental health counselors, to enroll for the first time in Medicare starting today and bill for their services starting January 1, 2024. The rule also increases payment for crisis care, substance use disorder treatment, and psychotherapy.

Based on public comments, CMS is also finalizing increased payment for psychotherapy performed in conjunction with an office visit and for Health Behavior Assessment and Intervention services. 

Medicare Diabetes Prevention Program (MDPP) expanded model enhancements

CMS finalized changes to promote care for individuals with diabetes by enhancing the Medicare Diabetes Prevention Program (MDPP) Expanded Model to further increase participation and access in underserved communities. The rule extends the MDPP Expanded Model’s Public Health Emergency Flexibilities for four years, which will allow all MDPP suppliers to continue to offer MDPP services virtually through December 31, 2027, as long as suppliers maintain an in-person Centers for Disease Control and Prevention organization code. 

Telehealth policies

CMS addressed the fact that on Jan. 1 practitioners who render telehealth services from home would have been required to report their home address on enrollment and claims forms. The agency delayed this provision until Jan. 1, 2025. hrough CY 2024, CMS will continue to permit a distant site practitioner to use their currently enrolled practice location instead of their home address when providing telehealth services from their home. 

The American Telemedicine Association had called for this exact extension, emphasizing the need to maintain the confidentiality and security of the provider’s address.

“Clinicians, their loved ones, and other stakeholders can breathe a sigh of relief – at least until the end of 2024 – that Medicare providers will not be required to publicly report their home address as their practice location. This reprieve will help to maintain the safety and privacy of physicians and removes a significant roadblock to access to care,” said Kyle Zebley, senior vice president, public policy, the ATA, and executive director, ATA Action, in a statement.