Providers Face Cuts in Medicare Physician Fee Schedule Proposed Rule

The CY 2023 Medicare Physician Fee Schedule proposed rule would follow through on several cuts to physician reimbursement while aiming to bolster behavioral and ACO care.

By Jacqueline LaPointe

July 11, 2022 – CMS has proposed a decrease to the Medicare Physician Fee Schedule conversion factor, which would lead to significant cuts to physician reimbursement next year.

The federal agency released the Medicare Physician Fee Schedule for calendar year (CY) 2023 earlier today. The proposed rule includes a $1.53 decrease in the conversion factor, resulting in a CY 2023 conversion factor of $33.08.

CMS explained in the proposed rule that the conversion factor is slated to be lower next year due to the expiration of the 3 percent increase in Physician Fee Schedule reimbursements in CY 2022 as required by the Protecting Medicare and American Farmers From Sequester Cuts Act. Congress temporarily boosted physician reimbursement to mitigate the impact of pandemic-related expenses.

CMS is also obligated by federal statute to implement a 0 percent conversion factor in FY 2023 and ensure payment rates for individual services do not significantly impact estimated Medicare spending.

Physician advocacy organizations have been calling on CMS and Congress to expand specific pandemic-era relief measures, such as the boost in physician reimbursement, to provide continued support to struggling providers. Physicians dodged a nearly 10 percent cut to their reimbursement this year when Congress prevented statutory reductions in Medicare payments in December 2021.

Physicians may be facing more payment cuts in the coming year. However, CMS has also proposed other payment policies to increase access to care, including behavioral healthcare and access to accountable care organizations (ACOs).

In the proposed rule, CMS put forth a policy to allow licensed professional counselors, marriage and family therapists (LMFTs), and other behavioral health practitioners to provide behavioral health services under general (rather than direct) supervision. Medicare would also pay for clinical psychologists and licensed clinical social workers to provide integrated behavioral health services as part of a patient’s primary care team.

Additionally, the proposed rule would bundle certain chronic pain management and treatment services into monthly payments to increase team-based care access. Medicare would also cover opioid treatment and recovery services furnished in mobile units to boost access for homeless and rural populations.

The proposed rule also contains changes to Medicare’s flagship ACO program, the Medicare Shared Savings Program. CMS is floating a policy to include advance shared savings payments to certain new Shared Savings Program ACOs. The agency intends for the upfront payments to support activities that address patient social needs and encourage providers in rural and underserved areas to join an ACO.

CMS also proposed to give smaller ACOs more time to transition to downside financial risk.

Under the previous administration, CMS revamped the Shared Savings Program to transition ACOs to downside financial risk faster. The administration believed downside financial risk was key to advancing value-based care while bringing down healthcare costs. However, many ACOs criticized the move for pushing providers too aggressively. Participation in the Shared Savings Program has decreased since the revamp.

The CY 2023 Medicare Physician Fee Schedule proposed rule would also add a health equity adjustment to an ACO’s quality performance score to reward providers for delivering quality care to underserved populations. This policy, in addition to other benchmark adjustments proposed in the rule, aims to advance health equity and help CMS meet its goal of having all Traditional Medicare beneficiaries cared for by providers in accountable care models by 2030.

“At CMS, we are constantly striving to expand access to high quality, comprehensive health care for people served by the Medicare program,” CMS Administrator Chiquita Brooks-LaSure said in an announcement earlier today. “Today’s proposals expand access to vital medical services like behavioral health care, dental care, and cancer treatment options, all while promoting access, innovation, and cost savings in the Medicare program.” 

To view the complete proposed rule, click here—more coverage of the proposed rule to follow.


The physician community is not pleased with the CY 2023 Medicare Physician Fee Schedule proposed rule based on immediate reactions from physician advocacy groups. Many groups have suggested that the proposed cuts to physician reimbursement actually threaten patient access to care.

“It is immediately apparent that the rule not only fails to account for inflation in practice costs and COVID-related challenges to practice sustainability, but also includes a significant and damaging across-the-board reduction in payment rates,” Jack Resneck Jr., MD, president of the American Medical Association (AMA), said in a statement last night.

“Such a move would create long-term financial instability in the Medicare physician payment system and threaten patient access to Medicare-participating physicians. We will be working with Congress to prevent this harmful outcome,” Resneck added, pointing to an AMA statement from June emphasizing the unsustainable nature of the current Medicare physician payment system.

The Surgical Care Coalition, a group of 14 surgical professional associations representing nearly 150,000 surgeons in the US, shared similar thoughts on the proposed rule. The Coalition had previously launched a campaign to stop reductions in Medicare physician payment.

“The current Medicare Physician Fee Schedule is broken. It fails to incentivize collaboration and pits doctor against doctor every year,” stated Joseph C. Cleveland Jr., MD, chair of The Society of Thoracic Surgeons Council on Health Policy and Relationships. “It’s crucial that Congress work to address these cuts and create a more sustainable payment system. Failure to do so presents a serious risk to patients during a time of declining access to surgical care and rising prices for services and treatments.”

Given the financial impact of the COVID-19 pandemic over the past two years, groups like the Medical Group Management Association (MGMA) are also calling for changes to Medicare physician payment policies.

“These proposed cuts, coupled with the 4% PAYGO sequestration scheduled to take effect on Jan. 1, 2023, will have a detrimental impact on group practices, with 58% of recently surveyed groups indicating they are considering limiting the number of new Medicare beneficiaries served,” Anders Gilberg, senior vice president of government affairs at MGMA, said in an email to RevCycleIntelligence.

“The extension of regulatory Medicare telehealth flexibilities to align with the 151 days of congressionally extended telehealth policies will ensure practices have the ability to continue furnishing the highest quality care to patients,” Gilberg added.


Despite widespread dismay regarding Medicare physician payment policies in the proposed rule, ACOs are happy with potential changes to the Shared Savings Program. Specifically, ACOs are applauding CMS for proposing to give ACOs more time before taking on higher downside financial risk, altering financial benchmarking to account for projected administrative growth, and adding a health equity adjustment for high-performing ACOs that treat a higher proportion of underserved populations.

The National Association of ACOs also said proposals to provide advanced shared savings payments to smaller ACOs, accounting for an ACO’s prior savings in rebased benchmarks, and changing quality scoring were also positive steps.

“NAACOS sends a big bravo to the Centers for Medicare and Medicaid Services (CMS) for taking steps to reach its goal of creating a stronger Medicare by strengthening accountable care models and speed the movement toward value for all patients,” Clif Gaus, ScD, CEO of the organization said in a statement last week.

“While we are still studying the major changes, policies in today’s proposed Physician Fee Schedule will help grow participation in accountable care organizations (ACOs), helping realize the CMS Innovation Center’s recent Strategy Refresh to have every Medicare beneficiary in a relationship with a provider accountable for his or her quality and total cost of care by 2030. “

NAACOS estimates that the proposals would save Medicare over $15 billion and produce $650 million in higher shared savings payments to ACOs.