Status of January 1 Medicare Physician Payment Cut

Congress has concluded its 2023 session without taking action on a more than 3% pending Medicare physician payment cut scheduled to take effect on January 1, 2024.  Accordingly, ASA and other physician organizations, including the Surgical Care Coalition and the American Medical Association, have shifted their lobbying campaign to urging Congress to block the cut upon their return to session in January. 

Without any action by Congress, Medicare Physician Fee Schedule (PFS) rates will decline for services provided on or after January 1, 2024 by 3.37% compared to 2023 rates, while rates for anesthesia services will decline by 3.27% compared to 2023. There will also be no bonus for participation in alternative payment models (APMs) for the 2024 performance year unless legislation is passed.

If Congress does pass legislation early in January 2024 (perhaps even by January 19, 2024, the first deadline of the two-tiered continuing resolution funding bill ), providers will receive higher payments in accordance with the relief provided by Congress and will not be paid at a rate that includes the full Conversion Factor (CF) reduction (if the legislation includes a retrospective change to January 1, 2024). In any case, claims for services provided in 2023 will continue to be paid at 2023 fee schedule rates.

Past the two-week mark, if Congress still has not acted, it is less clear how the Centers for Medicare and Medicaid Services (CMS) will move forward with Medicare PFS claims We expect to know more in the new year, including how Medicare Administrative Contractors (MACs) will address this potential scenario.

ASA will continue advocating for Congress to take action to reverse the Medicare cuts when it returns in January, and encourages all its members to send a message to their lawmaker on this issue here.

The following questions and answers outline how Medicare PFS claims could be impacted based on past experience and steps the Centers for Medicare & Medicaid Services (CMS) might take to mitigate the impact to claims and payment. Final action will ultimately depend on Congress and CMS.

Frequently Asked questions about Potential Payment Delays 

If Congress does not enact legislation instituting a fix to the Medicare PFS CF by January 1, 2024, do providers have to hold on to PFS claims with dates of service on or after January 1, 2024, or should they continue to submit them to MACs?

Providers do not have to hold on to claims with dates of service on or after January 1, 2024. They can continue to submit claims as they would normally do under their current billing practices. Any holds to these claims would be done by MACs at the instruction of CMS.

What if relief for the fee schedule is passed much later in 2024? Will claims be updated retroactively?

If Congress has not acted, MACs will process claims with the published 2024 rates. If Congress subsequently enacts relief later in 2024, CMS may choose to instruct MACs to simply add an extra amount to Medicare claims for the remainder of 2024 to make physicians whole over the course of the year. This was the experience in past years and prevented the administrative burden of reprocessing claims.

What needs to happen operationally if Congress passes a patch to the fee schedule conversion factors?

If Congress passes relief for the PFS CFs as it has in years past, CMS will officially update the CFs and then revise the Medicare PFS payment files as necessary. The process of updating the CFs and all associated payment files can usually be completed within a few days of the legislation being passed into law. However, implementing the change in the claims processing system can take additional time.

What are the Medicare claims reprocessing requirements?

Typically, MACs receive specific instructions from CMS on which claims to reprocess and the timeline for doing so. When claims are reprocessed, MACs pay providers the difference between what they were paid initially and the revised payment amount for each service.

If reprocessing is needed, do providers have to request that claims be reprocessed or adjusted?

Generally, no. In the majority of cases, providers will not have to request adjustments because the MACs will automatically reprocess claims. In the past, CMS has asked that providers not resubmit claims because they may be denied as duplicate claims and slow the retroactive adjustment process.

What is the timeframe for claims to be reprocessed?

The timeframe will vary by claim type, claim volume, and the individual MAC. In the past, when MACs needed to reprocess a lot of claims, CMS provided six months for MACs to complete the reprocessing. Providers may need to contact their MACs about the estimated completion date.

How will a congressional fix to the Medicare PFS CFs affect Medicare Advantage health plan payments to providers?

There is no impact on Medicare Advantage (MA) payments to providers. The 2024 PFS CFs cuts and any legislative fix enacted by Congress technically only impacts Medicare FFS payments. MA plans negotiate payment rates with the providers in their networks independently, and CMS is prohibited by law from interfering with contract negotiations between health plans and providers.