The Biden administration released the initial 2024 Medicare Physician Fee Schedule, under which the government calls for over a 3.3% reduction in the conversion factor. According to the physician fee schedule, the conversion factor refers to the number of dollars assigned to the relative value unit. The system plays a significant role in calculating payouts for physicians employed in CMS.

Physician Fee Schedule:

  • CMS initially projected a 1.25% decrease in overall payment compared to 2023 but the new conversion factor is set at $32.75, resulting in a $1.14 fall from last year.
  • This represents a 3.34% reduction in the conversion factor from the previous year.
  • Agency announced other changes including a 4% reduction for interventional specialists, a 3% reduction for diagnostic radiology, a 3% reduction for nuclear medicine, and a 2% reduction for radiation oncology in preliminary relative value units.

Soon after the release went public, provider groups started expressing their concerns over it. The Medical Group Management Association (MGMA), which represents more than 15,000 physician groups across multiple specialties, has called on Congress to reevaluate existing law and raised significant concerns regarding the reduction in the conversion factor.

Anders Gilberg, senior vice president of government affairs at the MGMA, said, “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.”

CMS has tried to justify these cuts by saying that since it is also proposing pay hikes for primary care and other services in the new schedule, it has to make cuts elsewhere to achieve budget neutrality. This means decreasing overall payments and adjusting the conversion factor.

In addition, CMS has also announced that it will be rescinding its 2014 initiative called the Appropriate Use Criteria (AUC) Program, which made it an obligation for physicians to consult a decision-support system before ordering MR, CT, and other advanced imaging on patients.

The purpose of the initiative was to cut down on healthcare waste, but issues with postponement have made the initiative a hurdle.

The new rule makes a point to acknowledge that risks associated with potential beneficiary financial liability for the advanced tests, as well as beneficiary access and data integrity and accuracy, mean that the AUC is not really practical.

When these concerns were brought to light by the MGMA, CMS decided not to proceed with a program they were unable to properly implement.

Despite this, the agency does acknowledge the importance of clinical decision support in improving the quality of life and ensuring that healthcare is safer and more effective. Consequently, the agency encourages the use of any such tools that help in this regard.

CMS has allowed people to send comments on the new rule and will be entertaining all such remarks through September 11.

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