CMS Finalizes 1.25% Cut To Medicare Physician Fee Schedule For 2024
What is the Medicare Physician Fee Schedule?
The Medicare Physician Fee Schedule (PFS) is a system of payment for the services of physicians and other billing professionals who provide care to Medicare beneficiaries. The PFS covers a wide range of settings, such as physician offices, hospitals, ambulatory surgical centers, skilled nursing facilities, hospices, outpatient dialysis facilities, clinical laboratories, and beneficiaries’ homes.
The PFS payment rates are based on the relative resources typically used to furnish the service, which are measured by relative value units (RVUs) for work, practice expense, and malpractice expense. These RVUs are adjusted by geographic factors to account for variation in costs by geographic area. The RVUs are then multiplied by a conversion factor to determine the payment amount. The conversion factor is updated annually by a statutory formula, which may include positive or negative adjustments depending on various factors.
Why is the PFS conversion factor decreasing in 2024?
The final CY 2024 PFS conversion factor is $32.74, a decrease of $1.15 (or 3.4%) from the current CY 2023 conversion factor of $33.89. This decrease is mainly due to two factors:
· The expiration of a 3.75% increase in the conversion factor that was enacted by the Consolidated Appropriations Act of 2021 to mitigate the impact of significant evaluation and management (E/M) code changes that took effect in 2023.
· The budget neutrality adjustment required by law to offset the RVU increases for certain services, such as office/outpatient E/M visits, end-stage renal disease monthly capitation payments, and transitional care management services.
The final rule also includes a 0.5% increase in the conversion factor as required by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which replaced the sustainable growth rate (SGR) formula that previously determined the annual updates to the PFS.
What are the other major changes in the final rule?
In addition to the PFS payment rates, the final rule also finalizes several policy changes that affect the quality reporting, value-based payment, and beneficiary assignment for physicians and other billing professionals. Some of the major changes are:
· Establishing a new Medicare Clinical Quality Measure (CQM) collection type for accountable care organizations (ACOs) and aligning the Shared Savings Program and Merit-based Incentive Payment System (MIPS) Promoting Interoperability requirements starting in 2025.
· Modifying the financial benchmarking methodology for ACOs in agreement periods beginning in 2024 and in subsequent years, to apply a cap to risk score growth in an ACO’s regional service area, apply the same risk adjustment methodology to both the benchmark and performance years, and eliminate the overall negative regional adjustment to the benchmark.
· Adding a third step to the beneficiary assignment methodology to provide greater recognition of the role of nurse practitioners, physician assistants and clinical nurse specialists in delivering primary care services, and updating the definition of “primary care services” used for purposes of beneficiary assignment.
· Refining policies for the newly established advance investment payments (AIP) for ACOs that participate in the BASIC track’s glide path or the ENHANCED track of the Shared Savings Program.
· Updating the MIPS performance threshold, performance category weights, and quality measure benchmarks for the 2024 performance period and future years.
· Adding 113 new services to the list of telehealth services that are covered and paid under the PFS, and extending the telehealth flexibilities for certain services through December 31, 2024 or the end of the calendar year in which the public health emergency (PHE) for COVID-19 ends, whichever is later.
· Implementing the Primary Care First (PCF) Model for the second cohort of participants starting in 2024, and making technical and operational refinements to the model.
What are the implications of the final rule for physicians and other billing professionals?
The final rule will have different impacts on different specialties and types of billing professionals, depending on the mix of services they provide and the payment models they participate in. According to CMS estimates, the overall impact of the final rule on total allowed charges by specialty ranges from -9% to +8%. The specialties that will experience the largest decreases are radiology, pathology, and anesthesiology, while the specialties that will experience the largest increases are endocrinology, rheumatology, and hematology/oncology.
The final rule also introduces new opportunities and challenges for physicians and other billing professionals who participate or plan to participate in the Shared Savings Program, MIPS, PCF Model, or other value-based payment models. The final rule aims to promote the transition to value-based care by increasing the quality reporting and interoperability requirements, refining the financial benchmarking and risk adjustment methodologies, expanding the telehealth services and flexibilities, and implementing the PCF Model for the second cohort of participants.
The final rule reflects CMS’ ongoing efforts to create a more equitable, accessible, and innovative health care system that delivers better care, smarter spending, and healthier people. Physicians and other billing professionals should carefully review the final rule and assess how it will affect their practice and payment in 2024 and beyond.
