Q&A: Proposed physician fee schedule cuts payments but also 'signals progress'

Key takeaways:

• The proposed 2024 Medicare Physician Fee Schedule includes a $1.14 reduction in the 2024 conversion factor.
• An expert told Healio what PCPs need to know about the proposed changes.

CMS issued the 2024 Medicare Physician Fee Schedule proposed rule on July 13.

It includes a 1.25% decrease in the overall proposed payment amounts under the physician fee schedule (PFS) compared with 2023, according to a CMS press release. In addition, the proposed 2024 PFS conversion factor is $32.75 — a decrease of 3.34%, or $1.14, from 2023.

However, CMS also proposed payment increases for some visit services, like primary care.

“These proposed increases require offsetting and budget neutrality adjustments to all other services paid under the PFS,” the release said.

Healio spoke with Tochi Iroku-Malize, MD, MPH, MBA, FAAFP, president of the American Academy of Family Physicians, about what the proposed changes mean for primary care physicians, policy efforts to improve payments for physicians and more.

Healio: What are your thoughts on the proposed payment rate?

Iroku-Malize: To be clear, the 2024 Medicare PFS proposed rule signals progress for primary care. Updated coding and payment regulations that advance primary care and behavioral health integration are a meaningful step forward and help improve patients’ access to comprehensive, longitudinal primary care.

However, lack of congressional action to address inadequate Medicare physician payments may undermine this progress and jeopardize timely access to care. Although we appreciate that Congress enacted limited conversion factor relief for 2024, a nearly 3.4% reduction in the Medicare conversion factor will still result in untenable cuts for all physicians.

Healio: What is the reasoning behind the overall payment decrease?

Iroku-Malize: The Medicare physician payment system is one of the only in Medicare without a built-in inflationary update. Plus, the Medicare Access and CHIP Reauthorization Act of 2015 paused annual payment updates for physicians for several years. These challenges, combined with statutory budget neutrality requirements, have resulted in year-over-year reductions to the Medicare conversion factor — the multiplier that is used to determine Medicare physician payment rates for every service in the fee schedule.

Family physicians know that these cuts are unacceptable and any payment reductions for primary care could threaten practice stability and undermine the physician workforce —preventing patients from accessing the primary care, behavioral health care and other critical preventive services they need.

To safeguard access to care for beneficiaries, Congress must enact an annual inflationary update to help ensure physician payment rates keep pace with rising practice costs. Congress also must address Medicare budget-neutrality requirements, which fail to pay physicians appropriately for all the services patients need.

Healio: What are the consequences of this?

Iroku-Malize: Inadequate Medicare payment rates strain physician practices and create barriers to care for patients enrolled in Medicare and other coverage systems. For instance, many other health systems and payment schedules base their payment rates on the Medicare PFS, including TriCare, state Medicaid agencies and other insurers, so it’s important that Medicare rates accurately reflect the way physicians serve their patients and communities.

Unfortunately, today’s Medicare payments are extremely outdated, which can make it hard for practices to invest in the tools, staff and resources needed to continue to provide comprehensive, high-quality care. In some cases, practices relying on outdated Medicare payment rates won’t be able to keep their doors open.

Healio: What are your thoughts on the increases in payment for primary care visits?

Iroku-Malize: The AAFP applauds CMS for advancing proposals to value continuous primary care services more accurately in the Medicare PFS. Medicare has long undervalued primary care, even though evidence tells us that primary care improves individual patient and population health outcomes and advances health equity. These proposals are a meaningful, incremental step in the right direction and represent a long overdue, urgently needed investment in primary care.

But still, the lack of inflationary payment update for Medicare physician payments is causing year-over-year payment reductions that prevent practices from fully realizing the benefits of these payment improvements or investing in the resources they need to shift to value-based payment.

Healio: What legislative/policy efforts are underway to improve payments for physicians?

Iroku-Malize: Family physicians can’t reform Medicare payment alone, so we are asking Congress to modernize Medicare payments to help transform our health care system, combat consolidation and meet the needs of a growing and aging population.

To do this, Congress must enact legislation that levels the playing field for practices of all types and sizes. We’re supportive of the bipartisan Strengthening Medicare for Patients and Providers Act, which would provide physicians with an annual inflationary payment update.

Healio: Is there anything else you would like to add?

Iroku-Malize: To truly achieve the promises of health reform — better care, better health, and lower costs — we need delivery and payment systems that prioritize primary and preventive care and provide physicians with the resources and flexibility they need.

Reference:

• CMS physician payment rule advances health equity. https://www.cms.gov/newsroom/press-releases/cms-physician-payment-rule-advances-health-equity. Published July 13, 2023. Accessed July 17, 2023.