The Centers for Medicare & Medicaid Services (CMS) issued the calendar year (CY) 2022 Medicare Physician Fee Schedule (PFS) final rule earlier this week—and, while the rule is set to make some positive changes for telehealth and critical care coverage, it will also lead to dramatic cuts to physicians’ Medicare reimbursements.
The American Medical Association (AMA) pushed back against the new rule in a statement, taking particular issue with the proposed cut to the 2022 Medicare conversion factor.
“While the American Medical Association (AMA) will thoroughly analyze the 2,400+ page rule, it is a reminder of the financial peril facing physician practices at the end of the year,” AMA president Gerald E. Harmon, MD, said in the statement. “The final rule includes a reduction in the 2022 Medicare conversion factor of about 3.85 percent.”
The Medicare conversion factor is a major determinant of physician compensation for specific services under Medicare Part B. Each medical service provided by the physician, or billing code, is assigned a certain number of relative value units (RVUs) based on a resource-based relative value scale. These RVUs factor in the physician’s work, the practice’s expenses, and sometimes liability insurance costs to determine the relative value of a given service. Then, the total RVUs are multiplied by the Medicare conversion factor to calculate the amount that will be paid for that service.
“With the budget neutrality adjustment to account for changes in RVUs (required by law), and expiration of the 3.75 percent temporary CY 2021 payment increase provided by the Consolidated Appropriations Act, 2021 (CAA), the CY 2022 PFS conversion factor is $33.59, a decrease of $1.30 from the CY 2021 PFS conversion factor of $34.89,” CMS explained in a fact sheet on the final rule. “The PFS conversion factor reflects the statutory update of zero percent and the adjustment necessary to account for changes in relative value units and expenditures that would result from our finalized policies.”
In other words, starting in 2022, Medicare payments will decrease by $1.30 per RVU. Notably, while this is far from the only time that the Medicare conversion factor has been cut, this new cut will be the largest since 2011, according to the AMA.
And that is not the only Medicare payment cut physicians are facing under this new rule, the AMA added.
“Physicians are facing an array of payment cuts totaling around 10%, which will further strain physicians and their practices and could impede patients’ access to care. These include:
- “Expiration of the current reprieve from the 2% sequester stemming from the Budget Control Act of 2011.
- “Imposition of a 4% statutory pay-as-you-go sequester resulting from passage of the American Rescue Plan Act, presumably for at least another 10 years…”
- “A statutory freeze in annual Medicare PFS updates under the Medicare Access and CHIP Reauthorization Act (MACRA) that is scheduled to last until 2026, when updates resume at a rate of 0.25% a year indefinitely—a figure well below the rate of medical or consumer price index inflation.”
BreakingMED reached out to the AMA to clarify what impact these changes would have on clinical practices.
“The expiring 3.75% that was added to the conversion factor this year will affect all specialties and services the same,” the AMA told BreakingMED in an email correspondence. “The impact of other policy changes—specifically, using updated data for clinical staffing costs—will vary. Because incorporating the higher staffing costs must be implemented in a budget neutral manner, services with costs largely determined by staffing (e.g., primary care services and physical examinations) will see payment increases, while those services with costs due largely to use of expensive equipment (e.g., radiation oncology), will experience payment decreases. The impact is enough that CMS decided to implement those staffing cost changes over a four-year period.”
As for whether or not certain physician specialties or clinicians in certain regions would be harder hit by these changes, the AMA noted that it is “a complicated picture.”
“Some specialties or geographic regulations have been hit harder at different times by the pandemic, for example, so their recovery from a reduced revenue stream across all payers will vary,” the AMA told BreakingMED. “Some practices that benefited most from last year’s revisions to evaluation and management services payments and policies may have some cushion, but the pandemic hit everyone financially and 6 percent combined sequester cuts are pretty steep and hit everyone equally.”
In his statement, Harmon noted that the AMA is “strongly advocating” for Congress to take action to avert these looming Medicare payment cuts, arguing that they come “at a time when physician practices are still recovering the personal and financial impacts of the Covid public health emergency.”
And, as the AMA explained in October, a bipartisan pair of congressional physicians is currently leading the charge: Reps. Ami Bera, MD, D-Calif., and Larry Bucshon, MD, R-Ind., along with over 245 other representatives from both parties, sent a letter asking House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy, both of California, to make every effort to stop these payment cuts.
“As Congress considers a framework to ensure appropriate reimbursements and improve the Medicare payment system broadly, we must act before the end of the year to avert the imminent cuts, including extending the 3.75% payment adjustment, and provide continued stability for physicians and other health care professionals,” Bera and Bucshon wrote. “Otherwise, the profound exhaustion from the pandemic combined with the stress of uncertainty in payments may lead to further retirements, office closures, or reduced staffing, ultimately limiting patient access to care.”
The American College of Surgeons (ACS) shared the same concern.
“Surgeons and their patients have already been significantly impacted by the pandemic,” ACS executive director David B. Hoyt, MD, FACS, said in a statement. “These Medicare cuts will further exacerbate our pandemic-strained health care system and cause further delay in care to the patients who need it most.”
“Congress is beginning to recognize that this financial instability could limit health care access for Medicare patients,” AMA president Harmon concluded. “The clock is ticking.”
Is the New Rule All Bad?
The American College of Physicians (ACP) also weighed in on the 2022 Medicare PFS final rule and agreed that these “drastic” cuts should be reconsidered.
“It is imperative that Congress step in to prevent the cuts and ensure stability while our health care system is still in the midst of the Covid-19 pandemic,” said ACP president George M. Abraham, MD, MPH, MACP, FIDSA, in an ACP press release. “The impact to physician practices will be even greater when you couple these cuts with the huge impact that the pandemic has had on internal medicine specialists and other frontline physicians. We need to ensure that practices across the country are able to continue to operate and provide frontline care that improves health equity and patient access in their communities.”
That being said, the ACP also pointed to a number of positive changes the rule would implement for 2022.
For example, in comments on the proposed Medicare rule that ACP submitted earlier this year, ACP expressed concern regarding a proposal that would have prevented physicians from reporting any evaluation and management (E/M) services provided to a patient on the same day as a critical care visit, as well as a proposal “that would have prevented reimbursement for a critical care visit that occurs while a patient is in a global surgical period.” Neither of these proposals made it into the final rule, which ACP was “extremely happy” to see, Abraham wrote.
“ACP noted several other positive provisions in the final Fee Schedule rule,” the organization continued. “CMS will allow more time to phase in changes in practice expenses for clinical labor pricing. Allowing a four-year transition period will help provide payment stability and maintain beneficiary access to care. The Fee Schedule also extended the time that some additional services, which were added on a temporary basis during the Covid-19 Public Health Emergency (PHE), are going to be included in the allowed telehealth services list for Medicare. ACP supports this extension since they allow for additional time for stakeholders and CMS to gather data supporting the potential permanent addition of these services and would sustain the continuity of increased access to telehealth services by reducing the uncertainty regarding timing relative to the end of the public health emergency.”
ACP was also happy to see that proposed flexibilities for telehealth and coverage for audio-only technology to provide telehealth for mental and behavioral services will be moving forward—under the new rule, the requirement that patients have an in-person mental health visit six months prior to initiation of telehealth will be waived under certain circumstances, and patients will only need an in-person visit every 12 months; meanwhile, audio-only telehealth services will be reimbursed for mental health treatment, but it can only be used in cases where the patient is incapable of making a video call.
The AMA also conceded some positive changes in the new rule:
“The AMA has a team of people still reviewing this and other important regulations released this week,” the AMA told BreakingMED, “But continuation of telemedicine coverage, improved payments for vaccine administration, and phasing out cost-sharing for diagnostic colonoscopy procedures that result from performing a screening colonoscopy are all positive policy changes.”
John McKenna, Associate Editor, BreakingMED™
Cat ID: 509
Topic ID: 505,509,791,509,556,730,192,418,463,925