On November 2, 2023, the Centers for Medicare and Medicaid Services (CMS) released the final rule for the 2024 Medicare Physician Fee Schedule. Under the rule, physician payment will be cut next year unless Congress intervenes. Due to budget neutrality requirements, the 2024 Medicare conversion factor will decrease by 3.39% from $33.8872 to $32.7375, with a corresponding reduction in anesthesia rates.
The California Medical Association (CMA) and the American Medical Association (AMA) had submitted detailed comments about the proposed fee schedule, underscoring serious concerns with the ongoing conversion factor payment reductions.
The budget neutrality payment reductions in the 2024 fee schedule are due to two factors: 1) a -1.25% cut Congress allowed to take effect last year and 2) a budget neutrality adjustment linked to the implementation of a CMS-developed office visit add-on code (G2211). Although the add on code was finalized in 2021, Congress had delayed introduction of this code during the COVID-19 pandemic to prevent payment cuts to specialists.
Unfortunately, although the utilization assumption for this add on code has been greatly reduced compared to when it was initially proposed in 2021, the add-on code will still lead to an additional across-the-board cut to the conversion factor due to budget neutrality requirements.
These cuts coincide with ongoing growth in the cost to practice medicine, with CMS projecting an increase in the Medicare Economic Index (MEI) of 4.6% in 2024. Physician practices cannot continue to absorb these increasing costs while their payment rates dwindle. This is why CMA, AMA and others in organized medicine are continuing to mount a full-scale advocacy effort in strong support of H.R. 2474, the Strengthening Medicare for Patients and Providers Act, which would provide a permanent, annual update equal to the increase in the MEI and allow physicians to invest in their practices and implement new strategies to provide high-value care.
CMA was successful in stopping the MEI reweighting proposal that would have cut the impact of rent payments on California physicians, reducing total California Medicare payments by nearly $100 million annually.
On October 11, 2023, the Doctors Caucus co-chairs, working closely with Ways and Means Committee Chairman, also released a discussion draft of legislation that would reform the budget neutrality policies applied to the Medicare physician payment schedule in 2025 and beyond. CMA, AMA and others in organized medicine recently sent a letter of general support.
AMA and CMA are analyzing the final rule and will circulate a more detailed summary in the near future.
In the meantime, physicians are urged to contact their Members of Congress immediately and ask them to stop the 3.4% cut and fight for financial stability for physician practices to preserve access to care for Medicare patients.