Physician Payment and Reimbursement

Congress doesn’t seem to be mulling a fix for the 2024 Medicare physician payment cut

Key provisions in the ’24 physician payment rule include a one-year continuation of telehealth flexibilities.

November 27, 2023 1:12 pm

Congress has mitigated a scheduled Medicare payment cut for physicians going into each of the last three years, but relief does not appear to be on the way for a fourth year running.

Medicare’s 2024 final rule for physician payments includes a $1.15 decrease to the conversion factor, amounting to a reduction of more than 3.3%. At this point, nothing to address that cut is queued up for the remainder of 2023.

The payment rules for 2021 through 2023 included reductions that were softened as part of year-end government funding bills in the waning days before the full cut would have taken effect. However, the type of omnibus spending bill that served as a vehicle for those payment boosts apparently is not an option this time. House Republicans have said they are disinclined to pass a consolidated funding bill.

Even though the Senate Finance Committee passed a large bill that would partially address the payment cut, the outlook for getting anything through Congress is murky while legislators work on the FY24 budget. Congress also can point to 2022 year-end legislation that already lessened the coming year’s decrease by 1.25%.

Even with that adjustment, the conversion factor in 2024 will have fallen by 9.3% since 2020. Meanwhile, based on the Medicare Economic Index, practice costs are projected to rise by 14% during that span (data for 2023 and 2024 is subject to change).

The interim bill that keeps the government fully funded until Jan. 19 included a few key healthcare provisions, such as a delay to the start of a nearly $32 billion cut to Medicaid disproportionate share hospital payments. But physician payments were not part of the package.

Driving the decrease

Budget neutrality requirements stemming from increases in payments for certain services — specifically through the new HCPCS code G2211, which is a “complexity” add-on code for office and outpatient evaluation and management (E/M) services — will result in a negative 2.18% adjustment to the physician fee schedule in 2024.

The code initially was set to debut in 2021 before Congress passed legislation delaying implementation to reduce the impact of budget neutrality on the fee schedule during the pandemic. Developed to improve payment accuracy, the code captures longitudinal services provided for patients with serious or complex conditions.

As a nod to concerns about the budget neutrality implications, the 2024 rule states that the code cannot be applied to an office or outpatient E/M visit in which a procedure or other service is the focus (e.g., visits associated with payment modifier -25). CMS estimates that the new code will be used in 38% of office or outpatient E/M visits, down from 54% before the change.

Table 119 on page 1953 of the rule shows the impact of the payment update on individual specialties. Some face reductions of 2% or more, whereas specialties with more of a primary care focus stand to reap a positive update of 2% or better.

The rule also includes updates to the policy determining payment for split or shared E&M visits, which typically refer to those taking place in hospital settings and involving both physicians and nonphysician practitioners.

New codes for SDoH and more

The final rule includes provisions to help clinicians promote health equity by addressing health-related social needs. (Most such services also are billable when ordered by facility-based clinicians under the Medicare payment system for outpatient care.)

For example, new G codes are designed to accommodate payments for community health integration. These payments recognize medically necessary care provided by community health workers during an initiating E/M visit. Examples of covered services include assessments, care coordination, health education, patient self-advocacy skills for navigating the healthcare system, and facilitation of behavioral change.

Principal illness navigation codes are being expanded to include services furnished by auxiliary personnel such as patient navigators and certified peer specialists to help patients with serious health conditions. Auxiliary personnel at community-based organizations can be reimbursed if they operate with the required level of supervision from the billing practitioner.

Social determinants of health (SDoH) risk assessments will be billable every six months per patient, including as part of annual wellness visits, E&M visits and behavioral health visits.

“When performed in conjunction with an E/M or behavioral health visit [the risk assessment] is not designed to be a screening, but rather tied to one or more known or suspected SDoH needs that may interfere with the practitioners’ diagnosis or treatment of the patient,” CMS clarified in the rule.

Continued telehealth permissions

As confirmed in the new final rule, 2022 omnibus legislation set expanded coverage of telehealth services to run through 2024. Among other continuations, the originating site for telehealth services can include patients’ homes, and patients need not make an in-person visit within six months of receiving mental health services via telehealth. Some services can be provided on an audio-only basis.

In addition, the clinical supervisory requirements for Medicare to cover a service can continue to be fulfilled via telehealth, including supervision of residents furnishing care at teaching hospitals.

A permanent provision clarifies that the non-facility payment rate based on the physician fee schedule will be in effect when telehealth services are provided to patients in their homes, as indicated by place-of-service (POS) code 10. The facility rate will apply to telehealth services when the originating site is a location other than a patient’s home, as indicated by POS 2.

The final rule implements additions to the list of covered telehealth services, including SDoH risk assessments on a permanent basis and health and well-being coaching for the upcoming year.

Other payment policies

Some Part B drug payments in 2024 are affected by provisions of the Inflation Reduction Act. For example, payment for certain biosimilars during a five-year period is average sales price (ASP) plus 8% of the reference biological, compared with the standard rate of ASP plus 6%. The enhanced rate applies to drugs for which the ASP is lower than that for the reference biological during at least one calendar quarter over the five-year period.

The final rule maintains the additional payment for administering COVID-19 vaccines in patients’ homes and expands that policy to cover hepatitis B, influenza and pneumococcal vaccines. Multiple vaccines administered during one home visit would be eligible for only a single add-on payment.


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