Broken Medicare System Results in CMS Proposing Reduced Physician Payments in 2024

On July 13, 2023, the Centers for Medicare & Medicaid Services (CMS) released its Calendar Year (CY) 2024 Medicare Physician Fee Schedule (PFS) proposed rule, (PDF) which includes proposals related to Medicare physician payment and the Quality Payment Program (QPP). Within the fee schedule, CMS proposed Medicare payment cuts to the Anesthesia Conversion Factor that will only compound the financial strain that anesthesia groups are already facing. The proposed rule has a 60-day comment period. Final regulations will be issued on or around November 1 and unless otherwise noted, policies will be effective on January 1, 2024.

ASA opposes these additional Medicare payment cuts included in the CY 2024 PFS proposed rule. The proposed rule underscores how the Medicare payment system is broken, especially during a time when anesthesia groups are faced with continued inflation pressures. ASA has already launched an initiative to engage legislative stakeholders and regulatory agencies to minimize and reverse these cuts that negatively impact anesthesiologists.

Fee Schedule Provisions:

The 2024 proposed anesthesia conversion factor (CF) is $20.4370, representing a decrease of 3.26% from the 2023 anesthesia CF of $21.1249. The 2024 proposed RBRVS CF is $32.7476. This represents a decrease of 3.36% from the 2023 CF of $33.8872. The CFs will affect physician payments in several ways:

• Unless Congressional action is taken, clinicians identified as qualified participants in an Advanced Alternative Payment Model will receive an annual 0.75% update, and all other clinicians will receive a 0.25% annual update, along with an additional rate adjustment for relative performance in the Merit-based Incentive Payment System.
• This negative adjustment also results from a statutorily mandated budget neutrality adjustment to account for changes in work Relative Value Units (RVUs). This means spending in one year needs to be balanced by reductions and CMS cannot increase or decrease expenditures by more than $20 million without triggering automatic budget neutrality adjustments.
• The proposed budget neutrality adjustment for CY 2024 is negative 2.17%. CMS notes that approximately 90 percent of this negative 2.17% budget neutrality adjustment is attributable to a new add-on code for complex patients that could be appended to any office and outpatient Evaluation and Management (E/M) code. The impact of this add on code is most detrimental to specialties like anesthesiology.

Specialty Impact on Anesthesia and Pain Medicine

Actual payment rates are impacted by a range of proposed policy changes related to physician work, practice expense, and malpractice RVUs. CMS estimated these changes in Table 104 in the proposed rule. Impact by practice will vary based on service mix. Specialty impacts ranged from -4% for Interventional Radiology, to +3% for Endocrinology and Family Practice. The table indicates that the impact of policies in the proposed rule will have on anesthesiology and interventional pain management. Note, changes to the CF are not reflected in the impact table.

*Note: Combined Impact may not equal the sum of work, PE and malpractice due to rounding.

Source: Table 104, CY 2024 Proposed PFS, display copy

Pain Medicine Code Updates

Starting January 1, 2024, pain medicine physicians will be able to get paid by Medicare for providing percutaneous sacroiliac (SI) joint arthrodesis using an intra-articular implant(s), such as bone allograft material or synthetic devices. A new category I code (2X000- Arthrodesis, sacroiliac joint, percutaneous, with image guidance, including placement of intra-articular implant(s) (eg, bone allograft[s], synthetic device[s]), without placement of transfixation device) was created to replace the current Category III code 0775T. Code 2X000 was surveyed by the AMA/Specialty Society RVS Update Committee (RUC) which recommended a work RVU of 7.86 to CMS. For CY 2024, CMS has proposed a work RVU of 7.86 for CPT code 2X000, which is the same as the RUC recommended value.

The table below reflects CMS’s proposed work RVUs for the new Arthrodesis, sacroiliac joint code.

Implementation of code G2111 (Complexity add-on code)

In 2021, CMS implemented G2211, a new add-on code for complex patients that could be appended to any office and outpatient Evaluation and Management (E/M) code. CMS assumed G2211 would be a frequently utilized code that would have a significant impact on budget neutrality. G2211 accounted for an estimated $3.3 billion increase in PFS spending and a corresponding 3%cut to the RBRVS CF in 2021. Due to the potential reduction in payments for physicians who do not bill office and outpatient E/M services, Congress delayed the implementation of G2211 until CY 2024. However, since this policy had been finalized in the CY 2021 PFS final rule and was simply delayed by Congress until CY 2024, the policy will go into effect without any further action on January 1, 2024.

For CY 2024, CMS reaffirms that G2211 will go into effect as expected on January 1, 2024. CMS does, however, modify its assumptions of how frequently G2211 will be utilized. Instead of assuming that G2211 will be billed with 90 percent of all office visit claims, CMS now estimates that G2211 will be billed with 38 percent of all office visit claims initially, but estimates that when fully adopted after several years, G2211 will be billed with 54 percent of all office visit claims.

Despite these revised utilization assumptions that CMS is proposing, G2211 continues to drive a significant payment reduction to the PFS overall for CY 2024. Specifically, CMS notes that approximately 90 percent of the negative 2.17 percent budget neutrality adjustment to the CF for CY 2024 is attributable to G2211 with all other proposed valuation changes making up the other 10 percent.

Anesthesiologists continue to face financial pressures beyond these reductions. Medicare payments, including physician services, are also subject to across-the-board cuts due to federal budget rules. Last year, Congress passed legislation that defers until 2025 cuts of 4% that were otherwise scheduled to be implemented in 2022. Mandated by the “Pay-As-You-Go Act of 2010,” these cuts were meant to offset increases in the federal deficit. Although this legislation provided a 1.25% update to the conversion factor for CY 2024, this is less than the 2.5% update Congress approved for CY 2023.

ASA is committed to advocating for changes to the broken Medicare payment system and ensure that anesthesiologists and pain medicine physicians are paid fairly. ASA has supported an inflation adjustment to Medicare payments to allow for the compensation of our physicians and other clinicians to match rising cost of living across the country. Legislation—H.R. 2474, the Strengthening Medicare for Patients and Providers Act—is now introduced in Congress to achieve this change. ASA has also supported Congress and policymakers re-evaluating the budget neutrality clauses of the PFS that greatly restrict payment and cause continued decreases in CFs. ASA looks forward to advocating our position before Congress and in working with CMS and other government stakeholders on proposed solutions.

Please contact [email protected] with any questions related to the Medicare Physician Fee Schedule.

Quality Payment Program Provisions:

CMS also released its 2024 Quality Payment Program (QPP) Proposed Rule. The proposed rule provides details on how CMS intends for eligible clinicians and groups to participate in the Merit-based Incentive Payment System (MIPS), Alternative Payment Models and other features of the QPP during the 2024 performance year.

For the 2024 reporting year:

• CMS is proposing to increase the CY 2024 MIPS performance threshold to 82 points. Scoring above 82 points would allow an individual or group a payment bonus while scoring below 82 points would result in a payment penalty in 2026.
• By law, the weights of the different MIPS requirements will not change: the quality performance category will be weighted at 30% and the cost performance category will be weighted by 30%. Promoting interoperability and Improvement Activities performance categories will maintain their respective 25% and 15% weights.
• CMS did not make any changes to the anesthesia measure set.
• As finalized last year, CMS will increase the data completeness threshold for the MIPS Quality Performance Category to 75% for the 2024, 2025, and 2026 performance years. The data completeness threshold will increase to 80% in 2027.

Anesthesiologists will continue to have the opportunity to report the Anesthesiology MIPS Value Pathway in 2024. MIPS Value Pathways, CMS believes, will alleviate some of the reporting burdens that anesthesiologists and other physicians encounter in the MIPS program. For 2024, CMS has proposed adding three quality measures:

• ABG44: Low Flow Inhalational General Anesthesia
• EPREOP31: Intraoperative Hypotension among Non-Emergent Noncardiac Surgical Cases
• Q487: Screening for Social Drivers of Health

CMS is proposed to add the IA_MVP: Practice-Wide Quality Improvement in MIPS Value Pathways to this MVP as well.

For more information on the Quality Payment Program, please contact the ASA Department of Quality and Regulatory Affairs (QRA) at [email protected].

ASA leaders and staff will review the rule and submit comments by the deadline. Unless otherwise noted, finalized provisions will become effective on January 1, 2024.

For more information:

• Proposed rule (PDF)
• Medicare PFS Proposed Rule fact sheet
• QPP fact sheet