Medicare Payment and Reimbursement

Massive federal spending bill alleviates reimbursement concerns for hospitals, but less so for physicians

A bill to fund the federal government through FY23 includes Medicare reimbursement provisions deemed vital by hospital advocates. It also has implications for telehealth, value-based payment and Medicaid.

December 20, 2022 7:30 pm

Healthcare provider advocates applauded the inclusion of key reimbursement relief measures and other policies in a proposed federal spending bill for FY23, although physician groups expressed concern about the outlook for their constituents.

With a divided Congress looking to muster the votes to pass the legislation before a self-imposed deadline of week’s end, the bill includes many of the provisions that healthcare stakeholders were seeking.

Perhaps most urgently, the bill postpones a 4% across-the-board Medicare payment cut that was scheduled for 2023. The cut, which stemmed from a pay-for clause (known as PAYGO) in the American Rescue Plan, now would be implemented no earlier than 2025. The 2% payment sequester, which was reinstated this year after being waived for part of the pandemic, remains in place.

Rural hospitals would retain access to key supplemental payments through the Medicare-Dependent Hospital and low-volume hospital programs. Funding would have expired this month but now would last until 2025.

“This legislation will deliver critical support and resources so we can better care for our patients and create healthier communities,” Rick Pollack, president and CEO of the American Hospital Association, said in a written statement.

Physicians get additional relief from cuts that would have totaled 8.5% between PAYGO and reductions to the Medicare Physician Fee Schedule (MPFS). A scheduled 4.5% decrease in the MPFS final rule for 2023 instead would be 2%.

The partial relief left advocates such as the American Medical Association bemoaning the fact that any cuts are in store. In a statement, Jack Resneck Jr., MD, president of the AMA, noted that the 2% decline follows “two decades of flat payment rates” and will have “consequences on healthcare access for older Americans.”

He pointed out that the global economic picture has been particularly adverse for physicians because, unlike with hospitals, their payment update is not tied to inflation. When adjusted for inflation, Medicare physician payment fell by 22% between 2001 and 2021, according to the AMA.

“We are deeply worried that many practices will be forced to stop taking new Medicare patients — at a time when access to care is already inadequate,” Resneck said. “Congress must immediately begin the work of long-overdue Medicare physician payment reform that will lead to the program stability that beneficiaries and physicians need.”

Key waivers get extended

The legislation includes a two-year extension of pandemic-era waivers for telehealth and for hospital-at-home programs. Without the extension, the waivers were scheduled to expire five months after the end of the COVID-19 public health emergency (PHE), which is expected to continue until at least April.

Telehealth accommodations during the pandemic have removed geographic restrictions on providing care while expanding the originating sites and categories of providers that can bill for telehealth and the services that can be billed. The new legislation also prolongs the waiver of the requirement that telehealth visits for behavioral health be preceded by an in-person visit. And audio-only evaluation and management (E/M) telehealth visits would continue to be reimbursable.

Hospital-at-home programs were bolstered by a November 2020 waiver that allowed hospitals to receive payment for providing inpatient-level care in patients’ homes. The legislation makes that waiver available through 2024.

Advanced APMs get a partial reprieve

Although physicians are disappointed about their overall payment situation, the bill ensures those who participate in certain value-based payment models will continue to benefit in terms of reimbursement.

The 5% bonus for participation in advanced alternative payment models (APMs) as designated in the Medicare and CHIP Reauthorization Act of 2015 is expiring at the end of the 2022 performance year.

The legislation makes available a 3.5% bonus for participating in an advanced APM in 2023. The National Association of ACOs (NAACOS) lauded the provision even though it represents a reduction from recent years but added that it should be viewed as an interim step.

“This should be considered a bridge toward greater reforms needed to encourage providers’ move into accountable care organizations,” Clif Gaus, ScD, president and CEO of NAACOS, said in a written statement. “Without additional carrots and sticks, doctors and hospitals will continue to be stuck in a volume-driven, fee-for-service payment system that discourages keeping patients healthy and out of the hospital.”

The Medicaid ‘unwinding’ comes into focus

A big concern about the end of the COVID-19 PHE is the prospect that millions of Medicaid beneficiaries will lose eligibility with the expiration of the requirement to maintain continuous enrollment. The federal government projects that 15 million people will leave the program during a year-long period following the PHE.

The bill attempts to bring clarity to the “unwinding” process by establishing that states can choose to initiate a 12-month disenrollment period for beneficiaries who don’t meet eligibility criteria starting April 1, 2023. The federal payment boost to Medicaid programs would decrease from 6.2 percentage points to 5 points in Q2, 2.5 points in Q3 and 1.5 points in Q4.

By giving states a clear timeline that doesn’t hinge on the end of the PHE, Congress hopes to avoid some of the chaos that many stakeholders anticipate for the unwinding.


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