Advocacy Update

July 28, 2023: Medicare Payment Reform Advocacy Update


On July 13, the Centers for Medicare & Medicaid Services (CMS) released the proposed rule (PDF) for the calendar year (CY) 2024 Medicare Physician Payment Schedule. The AMA has just finished analyzing the 2,000-page rule and has provided a summary of key provisions (PDF).

First, the 2024 Medicare conversion factor is proposed to be reduced by 3.36% from $33.8872 to $32.7476. Similarly, the anesthesia conversion factor is proposed to be reduced from $21.1249 to $20.4370. These cuts result from a reduction in the temporary update to the conversion factor under current law and a negative budget neutrality adjustment stemming in large part from the adoption of an office visit add-on code, discussed below. The AMA has developed a specialty impact analysis (PDF) illustrating the combined effect of the budget neutrality proposals in the rule and the reduction to the conversion factor under current law. Unfortunately, these cuts coincide with ongoing growth in the cost to practice medicine as CMS projects the increase in the Medicare Economic Index (MEI) for 2024 will be 4.5%. Physician practices cannot continue to absorb these increasing costs while their payment rates dwindle. This is why the AMA and our partners in organized medicine strongly support (PDF) H.R. 2474, the Strengthening Medicare for Patients and Providers Act, which would provide a permanent, annual update equal to the increase in the MEI and allow physicians to invest in their practices and implement new strategies to provide high-value care. Visit the AMA’s Fix Medicare Now site and join the fight for financial stability for physician practices to preserve access to care for Medicare beneficiaries.   

Second, in response to AMA advocacy, CMS proposes to mitigate anticipated cuts due to the budget neutrality impact of adding the new evaluation and management (E/M) add-on code, G2211, which was finalized in 2021 but then delayed for three years by Congress. Specifically, CMS has lowered the estimated utilization assumption of the add-on code from 90% in its 2021 rule to 38% when initially implemented in 2024 and 54% once the code has been fully adopted. The AMA had highlighted several likely barriers to implementing this code, including ambiguity about when to use it and how to document it, as well as concerns about patient cost-sharing obligations. Unfortunately, as noted above, although the utilization assumption has been greatly reduced, the add-on code will still lead to an additional across-the-board cut to the conversion factor due to budget neutrality requirements. The AMA is strongly urging (PDF) Congress to pass common sense modifications to the statutory budget neutrality requirements to reduce the severity and frequency of payment cuts stemming from these rules.  

In last year’s Final Rule, CMS finalized updated MEI weights for the different cost components of the MEI for CY 2023. However, CMS also noted that they postponed implementation of the MEI changes until time uncertain, referencing the need for continued public comment due to the significant impact to physician payments. If the implementation of the MEI weights was budget neutral, overall physician work payment would be cut by 7% and PLI payment would be reduced severalfold. These large shifts are principally due to a substantial error in CMS’ analysis of the U.S. Census Bureau’s Service Annual Survey (SAS), which omitted nearly 200,000 facility-based physicians. After correcting for this major omission, the physician work MEI weight would instead increase and PLI would experience a much smaller reduction.   

In the CY 2024 proposed rule, CMS announced that they will continue to postpone implementation of the updated MEI weights, referencing the AMA’s national study to collect representative data on physician practice expenses, the AMA Physician Practice Information (PPI) Survey. The PPI Survey launches on July 31, and data is anticipated to be shared with CMS in early 2025.   

“In light of the AMA’s intended data collection efforts in the near future and because the methodological and data source changes to the MEI finalized in the CY 2023 PFS final rule would have significant impacts on PFS payments, we continue to believe that delaying the implementation of the finalized 2017-based MEI cost weights for the RVUs is consistent with our efforts to balance payment stability and predictability with incorporating new data through more routine updates. Therefore, we are not proposing to incorporate the 2017-based MEI in PFS ratesetting for CY 2024.”  

CMS also proposes to increase the performance threshold to avoid a penalty in the Merit-based Incentive Payment System (MIPS) from 75 points to 82 points. CMS estimates this would result in an increase in the number of MIPS-eligible clinicians who would receive a penalty of up to –9%. The AMA will strongly oppose increasing the threshold and is alarmed that CMS would propose an increase that results in a significant increase in physicians being penalized by MIPS, as the program has been largely paused since 2019 due to the significant disruptions caused by the COVID-19 pandemic. Research (PDF) continues to show that MIPS is unduly burdensome; disproportionately harmful to small, rural and independent practices; exacerbating health inequities; and divorced from meaningful clinical outcomes. The AMA has developed a comprehensive analysis of the 2021 MIPS performance period (PDF), including information about MIPS scores by specialty and state. The AMA is also urging (PDF) Congress to make statutory changes to improve MIPS and address these fundamental problems with the program.   

Finally, due to AMA advocacy (PDF), CMS proposes to delay mandatory electronic clinical quality measure (eCQM) adoption by Medicare Shared Savings Program (MSSP) participants, who may continue to utilize the CMS web interface in 2024. As finalized in previous rulemaking, MSSP participants would have been required to report their quality measures electronically starting in 2024. We are very glad to see CMS recognize the lack of maturity with health information technology (HIT) standards to seamlessly aggregate data from electronic health records from physicians who practice at multiple sites and/or are part of an Accountable Care Organization.   

Additional links

With the Congressional August recess almost upon us, the American Medical Association’s top federal priority this summer is reforming Medicare’s broken physician payment system. The August recess provides physician advocates unique opportunities to engage on this important issue with their members of Congress “back home” in the district.  

To make these interactions with your legislators as impactful as possible, the AMA has developed an online August recess resources site that is your one-stop-shop for toolkits and information on scheduling and preparing for in-district legislative meetings, hosting members of Congress at site visits, and best practices for interacting and conversing with them online. The site also contains issue one-pagers, a recording of a recent AMA grassroots webinar on August recess engagement, and an easy to fill out feedback from once you have completed your in-district meetings and interactions.    

Everyone agrees that the Medicare physician payment system is broken—let’s do something about it.

The next two installments of the AMA’s Medicare Basics explainer series are now available. One outlines how the process of approving clinical data registries (PDF) under the Merit-based Incentive Payment System (MIPS) is “complex and cumbersome,” and another focuses on MIPS data problems (PDF).