Inside the proposed 2024 Medicare physician pay schedule

Kevin B. O'Reilly , Senior News Editor

AMA News Wire

Inside the proposed 2024 Medicare physician pay schedule

Aug 24, 2023

The AMA’s experts have analyzed the 2,000-page 2024 Medicare physician payment schedule proposed by the Centers for Medicare & Medicaid Services (CMS) and are sharing their summary of key provisions (PDF) ahead of the submission of formal comments that will be filed with the agency.

CMS has proposed reducing the 2024 Medicare conversion factor by 3.36% from $33.8872 to $32.7476. Similarly, the agency is proposing to reduce the anesthesia conversion factor from $21.1249 to $20.4370.

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These cuts result from a cut 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 that CMS first developed and proposed for the 2021 Medicare physician payment schedule.

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%.

“In the face of these growing costs of running a medical practice, physicians have faced the COVID pandemic and increased inflation,” AMA President Jesse M. Ehrenfeld, MD, MPH, said when the proposed 2024 Medicare pay schedule was released.

“Not only have Medicare payments failed to respond, but physicians saw a 2% payment reduction for 2023, creating an additional challenge at a perilous moment,” Dr. Ehrenfeld noted.

This is why the AMA and its partners in organized medicine strongly support (PDF) H.R. 2474, the Strengthening Medicare for Patients and Providers Act. That measure 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.

In July, a bipartisan group of 101 House members signed a letter (PDF) to House Majority Leader Kevin McCarthy and Minority Leader Hakeem Jeffries calling for urgent action to address problems in the health system that have been exacerbated by a pandemic and physician burnout. The letter points out the problematic Medicare payment system that fails patients because physician practices are struggling to keep their doors open amid spiking inflation and rising costs.

Learn about how you can take part in the fight to fix Medicare on behalf of your patients and practices at the AMA's Fix Medicare Now website.

Leading the charge to reform Medicare pay is the first pillar of the AMA Recovery Plan for America’s Physicians.

The AMA has challenged Congress to work on systemic reforms and make Medicare work better for you and your patients. Our work will continue, fighting tirelessly against future cuts—and against all barriers to patient care.

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In response to AMA advocacy, CMS is proposing 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, 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.  

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In last year’s final Medicare pay schedule rule, CMS finalized updated MEI weights for the different cost components of the MEI for 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 were budget neutral, overall physician work payment would be cut by 7% and professional liability insurance (PLI) pay 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, 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 2024 proposed rule, CMS announced that it 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 Survey. The PPI Survey launched July 31, and data is anticipated to be shared with CMS in early 2025.   

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Congress must act now on Medicare physician payment reform

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 physicians and other clinicians who would get a penalty of up to negative 9%. 

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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.
  • 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.   

Lastly—and in response to advocacy (PDF)—CMS proposes to delay mandatory electronic clinical quality measure adoption by Medicare Shared Savings Program (MSSP) participants, who may continue to use 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. The AMA was glad to see CMS recognize the lack of maturity with health IT standards to seamlessly aggregate data from electronic health records from physicians who practice at multiple sites or are part of an accountable care organization.

Visit AMA Advocacy in Action to find out what’s at stake in reforming Medicare payment and other advocacy priorities the AMA is actively working on.