CMS Floats 3.34% Physician Pay Cut

In the face of rising costs of running a , have faced the COVID pandemic and increased inflation. Not only have failed to respond, but physicians saw a 2 percent payment reduction for 2023, creating an additional challenge at a perilous moment. For 2024, the new rule indicates there will be another downward adjustment of 3.36 percent.

When adjusted for inflation, Medicare physician payment already has effectively declined 26 percent from 2001 to 2023 before additional inflation and these cuts are factored in. Physicians are one of the only providers without an automatic inflationary increase.

The impact is relentless. Seven lean years that include a pandemic and rampaging inflation. Physicians need relief from this unsustainable odyssey.

The proposed 2024 Medicare Physician Fee Schedule raises significant concerns for medical groups related to its 3.4 percent reduction to the conversion factor, which further increases the gap between physician practice expenses and Medicare reimbursement rates. Medicare already largely fails to cover the cost of furnishing care to beneficiaries, and the proposed cut to the 2024 conversion factor compounds the problem.

Price Transparency Requirements

The proposal also includes several changes to price transparency requirements, including new requirements that hospitals standardize the charge data they report and new requirements for how hospitals publicly post the files on their websites.

The CMS is also doubling down on enforcement. Regulators want to require hospital officials to certify the data’s accuracy and completeness and acknowledge warning notices, and publish enforcement details, along with civil monetary penalties, on a CMS website.

Hospitals have been required since 2021 to post prices of the 300 most common procedures online in consumer-friendly formats. However, hospitals have had flexibility regarding what forms or formats to display the charges, and compliance has been shaky.

Only about a quarter of 2,000 U.S. hospitals are complying with price transparency requirements on their websites, according to a report earlier this year. Noncompliant hospitals included major for-profit and nonprofit chains like HCA Healthcare, Tenet and Providence.

The noncompliance led regulators to increase the maximum penalty to over $2 million for large hospitals failing to satisfy transparency requirements.

Key Points to Know

The proposed physician fee schedule conversion factor for 2024 is $32.75, down 3.34 percent from $33.89 in 2023.

CMS is proposing to implement a separate add-on payment for healthcare common procedure coding system code G2211. The add-on code will better recognize the resource costs associated with evaluation and management visits for primary care and longitudinal care of complex patients, according to the report.

CMS also proposed a 3 percent inflation update factor for both ASCs and hospital outpatient departments next year, and applied a 0.2 percentage point productivity reduction, as required by the ACA to arrive at the 2.8 percent pay increase.

CMS is accepting comments on the proposal through Sept. 11.

The Impact and What To Do About It

Full visibility into payer contracts, combined with the ability to manage these contracts in a proactive manner, is key to maximizing reimbursement for peak financial performance. Practices that do not adequately track and manage their payer contract rates experience revenue reductions averaging 4 percent (4%) below their peers who employ strong contract management processes.

The use of a comprehensive solution to manage payer contracts and identify opportunities for contract performance improvement boosts the sustainability of medical practices while simplifying contract management workflow.

Negotiating favorable contracts requires a complete understanding of the terms and conditions, including fee schedules for services and frequency of reimbursement increases. Practices must be able to easily evaluate how proposed contract terms will impact their financial performance.

Once a contract has been negotiated and is in effect, staff must be able to flag variances quickly and accurately in payment rates, contest underpayments or denials appropriately, and collect outstanding revenue in a timely manner.

Staff members must also stay aware of renewal windows, negotiation deadlines, and fee schedule changes so their practice can remain nimble and proactive when discussing contracts with payers.

The Physician's Advocate in Payer Contracting

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Once our team has a clear understanding of what your payer contract contains, we identify strengths, weaknesses, and improvement opportunities and review them with you.

Let the experts at CodeToolz take your contracting efforts from burden to competitive advantage. The bottom line is that in negotiations, knowledge is power and planning is essential. Contact Us Today! (512) 787-1852

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