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ACP disappointed with the remaining 2 percent payment cuts in 2023; is engaging with members of Congress and making Medicare physician payment reform a top priority

Jan. 13, 2023 (ACP) — Facing pressure from the �鶹ֱ��app and other medical societies, Congress agreed in December to pull back on cuts to Medicare physician payments. As a result, many primary care internal medicine physicians will see increases in physician fee schedule (PFS) payment rates in 2023.

The end-of-year congressional spending bill includes a partial restoration of Medicare physician payments but “falls short of what is needed to protect patients and physicians,” ACP said in a statement.

There is still much more work to be done to repair the nation's Medicare payment system. “ACP and internal medicine physicians need to renew our efforts this year to educate policymakers on the toll that these policies are taking and urge them to take specific steps to address these needs this year,” said David Pugach, ACP vice president for governmental affairs and public policy.

As Pugach explained, physicians faced the potential of not one but two significant cuts to Medicare payment rates at the start of 2023. Combined, these cuts represented a potential 8.5 percent reduction to Medicare payment rates for physicians.

One portion of these cuts is a byproduct of “Pay-As-You-Go” budget rules, which impose automatic spending reductions at the end of the year if expenditures increase the deficit. “The cumulative impact would have required a 4 percent cut to Medicare spending as well as other federal programs at the start of 2023,” Pugach said.

The second cut is tied to legal restrictions on Medicare known as “budget neutrality,” which require increases to PFS payment rates to be offset by cutbacks. The cut to the 2023 PFS was slated to be nearly 4.5 percent.

“The majority of these cuts were averted as part of the large, wide-ranging legislative package adopted by Congress just before the holidays,” Pugach said. “The Pay-As-You-Go requirement was waived, and the PFS conversion factor was increased by 2.5 percent for 2023 to avert more than three-quarters of the combined cut. This means that most internal medicine physicians will see small increases in their Medicare PFS payment rates increase in 2023, based on revisions to E/M rates a few years ago that increased payment rates for primary care services.”

ACP was pushing Congress to go further. “We have been urging Congress to stop the full budget neutrality cut, provide an inflationary update to the PFS, and take steps toward meaningful payment system reform that provides physicians with greater stability and strengthens patient access to physician-led care,” Pugach said. “While the year-end package stopped most of the cuts, it did not stop the full cut.”

Congress also extended an incentive payment — previously set at 5 percent — to support physician practices participating in alternative payment models (APMs). “Rather than allowing the entire incentive payment to expire at the end of 2022, Congress extended it for one year at the rate of 3.5 percent and also extended the current freeze on participation thresholds for qualification for the APM bonuses for an additional year,” Pugach said.

ACP is pleased that Congress supported other vital areas of funding and policy in the year-end budget package that will improve the health of Americans and support physicians. In an especially important victory for ACP, Congress extended current Medicare coverage for telehealth services, including audio-only services, through 2024.

However, there were other ACP priorities that Congress did not include in its year-end work. One example is a prior authorization reform bill passed by the House earlier in the year that the Senate did not take up before adjourning and will now need to be reintroduced. One reason Pugach offered for why Congress failed to pass this and other legislation, such as an inflationary update to the PFS, is that “any legislation that has a cost associated with it needs to be paid for, and there are few noncontroversial offsets available to cover the likely cost of Medicare payment reform or even build an inflationary adjustment into the base for Medicare payment rates,” he said. “Another challenge is that members of Congress are not hearing enough from physicians in their communities to understand the effect that current payment policies have on patient access to care. Too many members of Congress do not fully appreciate the impact of inadequate payment rates. As a result, there is an erroneous perception that these policies are not detrimental to their constituents.”

Moving forward, Pugach said, “Longer-term policy changes are still needed in order to protect patients and physicians. The cycle of financial uncertainty stemming from PFS budget neutrality requirements combined with two decades of physician payment rates not being adjusted for inflation have hampered physicians' ability to absorb increased practice expenses and navigate staffing and medical supply shortages.”

As the new congressional term begins, ACP is engaging with congressional leadership and identifying payment reform as a top priority. “In addition to direct outreach to leaders and other members of Congress, ACP is exploring a number of avenues to advance our priorities, including grassroots advocacy, collaboration with our chapters and partnership with other stakeholder organizations,” Pugach noted. “There is a foundation of strong bipartisan support for physicians in Congress. However, to make meaningful progress, we must broaden that base of support and make these issues a higher priority for more members of Congress.”

Back to the January 13, 2023 issue of ACP Advocate