Medicare’s Proposed Physician Fee Schedule a Mixed Bag, Doc Groups Say

Despite bad news on the fee cut, some provisions on ACOs have doctors cheering

by Joyce Frieden, Washington Editor, MedPage  July 15, 2022

WASHINGTON — Physician group responses to the proposed 2023 Medicare Physician Fee Schedule ranged from disappointment over the proposed 4.4% overall payment cut to praise for many of the provisions related to accountable care organizations (ACOs).

“The scary part for most of us is we’re getting these reductions despite the fact that we’re still fighting the pandemic and despite the fact we have a relatively large inflation rate,” Sterling Ransone Jr., MD, president of the American Academy of Family Physicians, said in a phone interview. “Seeing 9% inflation for the goods and services we have to pay for, while [also having] a 4.4% reduction in what we’re being paid, is scary.”

The 4.4% decrease CMS proposed includes a decrease in the conversion factor, a multiplier used to calculate physician reimbursement for fee-for-service payments under Medicare. The proposed conversion factor for the 2023 Physician Fee Schedule rule is $33.08, a decrease of $1.53 from last year, according to a CMS fact sheet. The proposed conversion factor accounts for the statutorily required update of 0%, the expiration of a 3% increase in physician payments required by Congress, and the required budget neutrality adjustment to account for changes in relative value units, CMS said.

The total Physician Fee Schedule cut would be on top of a 4% Medicare “pay-as-you-go,” or PAYGO cut — delayed from last year — that is scheduled to take effect in January 2023.

Hoping for Help From Congress

Brian Outland, director of regulatory affairs at the American College of Physicians, noted that Congress had previously passed a 3% increase in the conversion factor “but that 3% did not transpire over to Medicare as of yet. We’re hoping Congress will act before January 1 to add that money back into the fee schedule.”

Telehealth was another area of concern for Outland. Although CMS has a waiver to continue its current payment schedule for telehealth visits for 150 days after the COVID-19 public health emergency ends, the waiver doesn’t apply to audio-only visits. which are the only type of telehealth used by some seniors who are not tech-savvy. The proposed fee schedule didn’t indicate any action would be taken on that issue, he said.

Another concern about the fee schedule, particularly for the surgery community, is that CMS is not properly valuing the evaluation and management visits that surgeons provide for their surgical patients during the “global” reimbursement period for surgery, John Ratliff, MD, chair of the Washington committee of the American Association of Neurological Surgeon/Congress of Neurological Surgeons, said in a phone interview. “The non-surgeon is getting more reimbursement for the follow-up visit than a proceduralist would for the same work being done during the global period” in which a surgeon gets a single flat fee no matter what services are provided.

“This is setting up a two-tiered system of physician reimbursement, meaning I see a patient in the outpatient clinic for, say, a Level 3 follow-up visit and they haven’t had surgery, then I get paid one value. But if I’m doing a comparable amount of work and spending a comparable amount of time on a patient I’ve recently done surgery on, the evaluation of those services are different, because one is in the global period and one isn’t,” Ratliff said. The American College of Surgeons and other surgery organizations, he said, “asked CMS to consider correcting this imbalance within the fee schedule, but CMS has consistently refused that, and it’s another challenge America’s practicing physicians face in trying to achieve appropriate reimbursement for the work we’re doing.”

Good News for Would-Be ACOs

On the other hand, the proposed fee schedule also contains several provisions aimed at encouraging more physicians to form ACOs.

For instance, in the Medicare Shared Savings program, the fee schedule would “allow eligible ACOs to receive a one-time fixed payment of $250,000 and quarterly payments for the first 2 years of their 5-year agreement period,” healthcare attorneys with the law firm Morgan Lewis said in a blog post. “Quarterly payments would be determined using a 100-point scoring methodology, which would pay greater amounts to ACOs serving high numbers of dual eligible beneficiaries or those living in areas of high deprivation … with the goal that such increased funding would be used to address the beneficiaries’ social and other health needs.”

The agency would recoup these advanced payments once the ACO begins to show shared savings, but if it doesn’t accrue savings, CMS wouldn’t recoup any funds unless the ACO gets out of the program during the agreement period, according to the blog post. ACOs could start applying for the advance funding next year, with a target start date of Jan. 1, 2024.

Such provisions are very welcome, Susan Dentzer, president and CEO of America’s Physician Groups, an organization for physician-led ACOs, said in a phone interview. “Having the advanced incentive payments up-front going to be extremely helpful in getting lot of smaller practices into the program soon,” she said.

CMS also proposes to give ACOs more time in programs that are only “upside risk” — they receive money back if they show savings compared with traditional Medicare, but they don’t have to pay any money if they don’t produce savings — before they are required to accept downside risk as well, Dentzer added. “It’s basically major encouragement for smaller practices to get into [these arrangements], and that will clearly lead to formation of ACOs in parts of country where they haven’t had much of a role.”

“Given the goals of getting everybody [now] in traditional Medicare into an ACO by 2030, they have to push on a whole bunch of levers in value-based care. So the whole new approach they borrowed from other experiments in the past” is very positive, Dentzer said.

Updating Pricing Data

America’s Physician Groups also was pleased with changes CMS is proposing to ACO performance benchmarks, Garrett Eberhardt, the organization’s director of federal affairs, said on the same phone call. “We’re very pleased they’re trying to make some accounting for fact that ACOs often have their benchmark [negatively] affected by some of the prior savings they accrued,” he said.

The American Academy of Family Physicians’ Ransone also lauded CMS’s proposal to update the data used in its clinical labor pricing, which is part of its calculation of Medicare payment rates. “Last year we found out that [their data] from the Bureau of Labor Statistics was from 2002, so it was 20 years old,” Ransone said. In his own practice, “we pay our RNs about 60% more than in 2002, and our medical assistants 40% more,” he said. “We’re happy they’re going to update [those data] so we can continue to pay our staff what they deserve,” particularly at a time when many providers have seen staff members leave for other jobs, such as travel nursing, that pay much higher rates.