The cut included in the 2024 Physician pay rule, which was finalized by the Centers for Medicare & Medicaid Services in November, affects doctors working in nursing homes and other long-term care settings, as well as pay for therapists and other ancillary services. 

In the last few years, Congress has moved to offset similar reductions, which don’t necessarily reflect true costs of physician services but are required if CMS decides to put a greater share of its funding toward other types of care.

The ongoing regular reductions to reimbursement are “an existential threat” to the long-term care sector’s therapists and other providers who bill Medicare Part B, said Cynthia Morton, executive vice president of advocacy group ADVION, earlier this year.

Congress included a 3% offset to conversion factor cuts for 2023 and planned another 1.25% offset for 2024 in the 2023 Consolidated Appropriations Act. But bills that would help make that 2024 change more significant have not moved forward yet this session. 

Morton told McKnight’s Long-Term Care News that the next best opportunity for a fix is  ahead of the government funding expiration on Jan. 19.

“Whatever funding vehicle will be advanced to continue that, we want to have our Physician Fee Schedule patch attached to that,” Morton said. “It’s important that Congress deal with this patient issue in January because the reductions will have already gone into place on Jan. 1.” 

Looking for silver linings

A rate correction could be made retroactive, as has happened in the past.

While ADVION and other provider groups are still advocating for a full 3.7% patch to address the cut, the Senate Finance Committee has so far passed a 1.5% patch and the House Committee on Energy and Commerce passed a 1.25% patch.

Bills that could be a vehicle for the patch are: the Preserving Seniors’ Access to Physicians Act of 2023 (H.R. 6683), which would eliminate the 3.37% conversion factor reduction; and the Strengthening Medicare for Patients and Providers Act (H.R. 2474), which would add a permanent payment update to the Medicare PFS that is tied to inflation, as measured by the Medicare Economic Index.  

There also was a bipartisan letter of almost 200 House members sent to House and Senate leadership asking them to end the 3.37% reduction, Morton noted.

Meanwhile, the American Medical Association, which represents physicians and physician practices, has warned that Congress’ inaction so far could force some providers to cut office hours or forgo treating Medicare patients.

On Monday, the AMA recommended that lawmakers transfer about $1.8 billion from the FY 2024 National Defense Authorization bill to cover the cut. It includes $2.2 billion in money shifted from the Medicare Trust Fund to a Medicare Improvement Fund, which would be more than enough to stop the cuts.

“Facing a nearly 10% reduction in Medicare payments over the past four years and rising practice costs on top of the burdens and burnout of three years of COVID-19, for many physicians, continuing down this road is unsustainable,” said AMA President Jesse M. Ehrenfeld, MD, MPH. 

“These cuts will be felt first and hardest in rural and underserved areas that continue to face significant healthcare access challenges. Medicare physicians do not receive inflationary payment updates, which is why eliminating these cuts is so crucial.”

Pressure to adopt a continuing resolution instead of hammering out a final 2023 budget could leave key solutions for physicians, therapists and others who work in nursing home’s on the table.

And those solutions could be harder to come by and implement after Jan. 1. 

Physicians are facing these pay cuts next calendar year: a 4.5% cut to Medicare’s physician fee schedule conversion factorial, PAYGO cuts required as an offset by an element of the American Rescue Plan, and discontinuation of a 5% bonus for some alternative pay models. 

Lawmakers have typically restored cuts, even if only partially. But if lobbyists can’t convince lawmakers to lower the cuts in a spending bill by years’ end, provider advocates have said delayed action would complicate billing and reimbursement in 2023.

The Washington Post reported late Tuesday night that Democrats and Republicans were pursuing another week-long continuing resolution, which could give negotiators through Dec. 23 to finalize a full omnibus bill before the holiday recess.

Last week, the American Health Care Association joined more than 100 advocacy groups in a letter to lawmakers calling for “desperately needed relief” to “help provide financial stability for practices until permanent payment reforms are established.”

They asked for a full, preventative solution, saying anything less would further exacerbate significant financial hardships related to inflation. The Medicare Physician Fee Schedule is the only payment system within Medicare lacking an annual inflationary update.

The GOP Doctors Caucus has told Democratic House leadership it would help avert missing the deadline, according to a Dec. 12 story in Inside Health Policy.

But some stakeholders don’t expect lawmakers to meet the deadline.

Reps. Susan Wild (D-PA) and Mariannette Miller-Meeks (R-IA) have shared a draft letter encouraging both chambers’ leaders to mitigate the entire PAYGO and conversion factor cuts. Last year, Congress came through with 3% relief, lowering a 3.75% proposed cut to .75%.

“Providers will face cuts of more than 10% to Medicare payments on Jan. 1, 2023,” they wrote.

“We have heard from provider organizations that if these additional Medicare cuts are not prevented, medical groups and integrated systems of care would be forced to eliminate services, furlough staff, implement hiring freezes and delay population health initiatives.”

The GOP Doctors Caucus sent out its own draft letter.

“Uncertain payment rates will only lead to physicians closing their doors and enhance the existing barriers to care these patients already face, exacerbating poorer quality of life for seniors,” its letter says. “Attention to overarching payment reforms will be essential in fulfilling Medicare’s promise to current seniors and future generations. Policies that address physician payment stability in the immediate future and beyond will be critical to the continued success of the Medicare program.”

Panic set in Tuesday in some quarters after Senate Minority Leader Mitch McConnell (R-KY) said it might be best to pass a long-term continuing resolution to keep the government funded and running into 2023. Providers are desperately hoping a 2023 appropriations bill will give relief from physician fee services cuts set by the Centers for Medicare & Medicaid Services.

The cuts would be 4.47% if Congress doesn’t lower them. Last year it lowered the cuts 3% to .75%.

McConnell said it might be too late to pass another short-term continuing resolution after some members of Congress signaled that was their goal. Extending funding until approximately Dec. 23 could be the plan, which give lawmakers the ability to turn their attention to the policies that could make up the final legislative package.  

Congress still has plenty of time to pull a deal together, assured Advion Executive Vice President Cynthia Morton in comments to McKnight’s Long-Term Care News Wednesday.

“The worry would be that the (fees) cuts go into effect with no help from Congress,” she explained.  “Congress then helps in late January or February and there’s a retroactive fix, which is an administrative mess and costly because providers would have to re-submit claims.”

In that event, Congress would wait until 2023 to take up policies that are pending right now, said Morton.

“Congress could include the Physician Fee schedule fix on the long-term CR but there are so many other priorities that need to also be addressed, the question would be would they just use the long-term CR as the vehicle for the final package,” Morton said. “The policies may not be ready yet and are still receiving vetting, like the Congressional Budget Office determining their score.”

Congress has lightened the blow of CMS pay cuts the last two years but many observers, including Morton, worry that legislators’ appetite to do it again has diminished.

The Centers for Medicare & Medicaid Services announced the change to the Medicare Physician Pay Schedule conversion factor in a broader pay rule published Nov. 1. The factor is part of a CMS formula used to reimburse for Part B care, including physician and nurse practitioner services, rehab, labs and X-rays for Medicare nursing home patients. Lobbyists are hoping for a repeat of last year, when CMS proposed a 3% cut that Congress eventually offset.

“Congress is becoming fatigued with restoring this cut, and so we are concerned that (it) won’t mitigate the entire 4.4% cut that CMS has now finalized,” Advion Executive Vice President Cynthia Morton told McKnight’s Long-Term Care News.

Physicians could see total Medicare payments cut by nearly 8.5% next year.

Read late-breaking developments on this story here.

The House approved the 19-month physician pay fix with a 245-171 vote, Bloomberg News reported.  A separate vote on an extension of jobless benefits passed by a narrower 215-204. To appease Republicans and conservative Democrats, House leaders tossed aside a provision that would extend by six months a temporary increase in the federal medical assistance percentage (FMAP), despite written support for the extension from 219 House members. (McKnight’s, 5/14/10) Long-term care providers had been hoping that this provision would be in the bill. Some states already have factored the six-month extension into next year’s budgets.

The Senate, meanwhile, adjourned for a weeklong Memorial Day recess without acting on the physician pay cut, allowing it to once again take effect. But the Centers for Medicare & Medicaid Services Thursday sent a letter to physicians alerting them that the agency has “instructed its contractors to hold claims containing services paid under the [Medicare Physician Fee Schedule] … for the first 10 business days of June.” CMS took a similar action when the physician pay cuts went into effect April 1 of this year. Nursing homes’ Part B therapy reimbursement is tied to the physician fee schedule.

The current delay to the Medicare physician pay cut is set to expire June 1. The multiyear proposal would have delayed the cut until 2014, further delaying consideration of a permanent fix to the perennial difficulty. The compromised proposal, along with reductions in jobless benefits, which are also part of the jobs bill, would reduce the cost of the bill by $40 billion. That cuts the estimated cost of the whole package to $150 billion, The New York Times re[prted.

The cost of a permanent fix is estimated at roughly $250 billion, but could rise to more than $513 billion in five years without permanent action, according to a recent American Medical Association Analysis. The House was set to vote on the measure Thursday evening, but had not done so as of press time. Senate Majority Leader Harry Reid has vowed to keep the Senate in session over the weekend in order to pass the measure.

Senate Democrats Wednesday night cleared a last procedural hurdle and are expected to vote on the package, which includes an extension of unemployment benefits, today. The pay cut was scheduled to take effect April 1 after the Senate neglected to act on an extension bill before its spring recess. CMS placed a hold on all Medicare physician claims for 10 business days in hopes that the Senate would address a physician pay fix before the end of that period. Many senators have balked at the bill’s $9.2 billion price tag, since the funds were not offset by spending reductions elsewhere. It is estimated that a permanent fix to the physician pay problem would cost roughly $200 billion over 10 years.

The bill only provides a two-week respite for physicians before the pay cuts return. Another bill currently working its way through Congress, the American Workers, State and Business Relief Act, would delay the physician payment cut until Sept. 30.

Senators voted Monday night 60-34 to end debate and move toward a final vote on a package of bills that includes freezing Medicare payment cuts. The bill would extend higher payments through April 30. The extension package was the first major issue taken up by the Senate after its spring recess. Besides the physician pay schedule fix, the bill extends unemployment insurance provisions under COBRA until May 5. The bill, H.R. 4851, is the latest in a string of temporary extension packages to pass through Congress since Jan 1. Medicare Part B therapy rates are in limbo until the Senate takes action on the physician pay issue.

The so-called “doc fix” has become an annual dilemma for lawmakers. While they have talked about ending the scheduled annual cuts, they have not resolved how to pay for restoring the payments long-term.

Part B therapy rates for skilled nursing facilities are closely linked to the physician fee schedule, according to the American Association of Homes and Services for the Aging. The physician fee schedule was subject to a 21.2% cut on Jan. 1. A litany of legislative stopgap measures and payment holds implemented by the Centers for Medicare & Medicaid Services have held off the cut.

Most recently, the House of Representatives passed a stopgap measure that would delay cuts until April 30. The Senate failed to act on the bill before the spring congressional recess. CMS had ordered a 10-day hold on reimbursement claims filed on or after April 1.

Legislation under debate in Congress would have further delayed the pay cut until Oct. 1, but lawmakers adjourned for their April recess before the provision could be passed. The physician pay cut is one provision not covered in the recently passed healthcare reform law. An extension of the Medicare therapy caps exceptions process, which had been subject to a number of stopgap fixes over the last few months, was part of the reform legislation. The process will be in effect until the end of the year.

It is the second time this year that the Centers for Medicare & Medicaid Services has delayed the physician payment cut in this way.

In related news, President Obama signed the reconciliation healthcare bill (H.R. 4872) into law Tuesday. The legislation makes changes to the Senate bill (H.R. 3590) that the president signed into law last week. These two comprise the sweeping healthcare reform law.