Physician groups mostly unhappy with proposed Medicare Fee Schedule

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Physician and other health care organizations responded swiftly—and largely negatively—to CMS’s announcement of its proposed 2024 Medicare Physician Fee Schedule (PFS). Most of the objections focused on the proposed 3.34% reduction in the conversion factor—a major element in the formula used to determine reimbursement rates for specific procedures. But many also included calls for sweeping changes to Medicare’s payment system.

“The proposed Medicare physician payment schedule released today is a critical reminder that patients and physicians desperately need Congress to develop a permanent solution that addresses the financial instability and threatens access to care,” American Medical Association President Jesse M. Ehrenfeld, M.D, M.P.H., said.

Ehrenfeld noted that the Medical Economic Index, the government measure of the inflation rate for medical practice costs, is 4.5%, and was 3.8% in 2022. “When adjusted for inflation, Medicare physician payment already has effectively declined 26% from 2021 to 2023 before additional inflation and these cuts are factored in.

“These increasingly thin or negative operating margins disproportionately affect small, independent, and rural physician practices, as well as those treating low-income or other historically minoritized or marginalized patient communities,” he added. “Piling on more cuts is an unsustainable approach. Congress needs to turn its attention to fixing Medicare so we can preserve access for patients.”

Tochi Iroku-Malize, M.D., M.P.H., FAAFP, president of the American Academy of Family Physicians, acknowledged that the proposed PFS contains provisions that would strengthen some aspects of primary care. But she called the cuts that would result from reductions in the conversion factor “unacceptable” and said they could “undermine physicians’ goals of increasing access to primary care.”

“Medicare beneficiaries deserve a system that enables primary care physicians to invest in the tools, technology and people required meet their patients’ unique health needs,” she added. “These investments are essential to advancing the transition to value-based payment models, which better support access to and delivery of the primary care services patients benefit from most.”

Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association, said the conversion factor reduction “further increases the gap between physician practice expenses and Medicare reimbursement rates. Medicare already largely fails to cover the cost of furnishing care to beneficiaries, and the proposed cut to the 2024 conversion factor compounds the problem.

“Congress must reexamine existing law to provide an annual physician payment update commensurate with inflation and do away with Medicare’s ‘robbing Peter to pay Paul’ budget neutrality requirements to provide much-needed financial stability for medical practices.” Gilberg added.

Jerry Penso, MD, MBA, president and CEO of the American Medical Group Association, said its members won’t be able to absorb the proposed reductions. “Their expenses are continuing to increase, and Congress needs to act to ensure Medicare’s reimbursement reflects the cost of delivering high-quality care to patients. We’re concerned AMGA members may be forced to make tough decisions on staffing and the services they can offer to their communities if proposed cuts are left unaddressed,” Penso said.

However, he commended CMS for “proposing reimbursement policies that treat telehealth care as equivalent to in-office care. It has become evident that the cost of treating patients through telehealth does not differ from an in-person visit, and AMGA is pleased that CMS’ proposal for Medicare reimbursement policy reflects this fact.”

The National Association of ACOs (NAACOS) supported the proposed PFS, saying that it demonstrated CMS’s commitment to supporting value-based care.

“It addressed several issues that NAACOS has been advocating for, 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,” said Clif Gaus, Sc.D., NAACOS president and CEO.

“NAACOS thanks CMS for its continued leadership on this issue and its willingness to address the barriers standing in the way of clinicians and health systems who want to provide higher quality, more cost effective, coordinated care for patients,” Gaus added.

Kyle Zebley, senior vice president, public policy for the American Telehealth Association and executive director, ATA Action, applauded the proposed changes.

"We are encouraged to see that the proposed policy changes in the Physician Fee Schedule continue to reflect the Biden Administration’s strong support of telehealth and clearly indicate CMS’ continued interest in providing access to telehealth services for Medicare beneficiaries, acknowledging that both audiovisual and audio-only telehealth services have enabled individuals in rural and underserved areas to have improved access to care," he said.