October 31, 2023: MGMA urges budget neutrality reforms

October 31, 2023 

The Hon. Brad Wenstrup
2335 Rayburn House Office Building
Washington, DC 20515

The Hon. Greg Murphy
407 Cannon House Office Building
Washington, DC 20515

The Hon. Michael Burgess
2161 Rayburn House Office Building
Washington, DC 20515

Dear Representatives Wenstrup, Murphy, and Burgess:

The undersigned national medical organizations and state medical societies deeply appreciate your leadership in drafting a proposal to reform the budget-neutrality policies that have been eroding Medicare physician payment levels in recent years. Your October 4 draft legislation would add needed stability and predictability to Medicare physician payments.

As one of the few Medicare providers without a payment update tied to inflation, physicians have watched inflation-adjusted payments decline 26% from 2001 to 2023. Physician payments are further eroded by frequent and large payment redistributions caused by statutory mandates for the Centers for Medicare and Medicaid Services (CMS) to make refinements to fee schedule service valuations and coding policies subject to budget neutrality. Unfortunately, it is not uncommon for CMS to overestimate utilization assumptions related to code revaluations in its budget neutrality estimates. The most prominent example of this occurred when transitional care management (TCM) services were added to the Medicare Physician Fee Schedule in 2013. CMS estimated 5.6 million new claims would be submitted for these services. Actual utilization, however, turned out to be just under 300,000 claims for the first year and it was still less than one million claims after three years. As a result of this overestimation for TCM services alone, Medicare physician payments were reduced by more than $5.2 billion from 2013 to 2021. Once these redistributions are made through the conversion factor they are not added back, even when actual utilization is far lower than projected. The net result in these circumstances is not budget neutrality, but rather permanent and unjustifiable Medicare cuts to physician payments across-the-board.
 

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