Patients and practices face dire consequences of projected Medicare payment cuts

During the COVID-19 pandemic, the financial resiliency of practices was tested. The pandemic challenged medical practices’ financial models with significant changes in patient volumes, shifts in costs for COVID-19-related care and inflation, not to mention other difficulties, such as staffing shortages. Looking ahead to 2023, several policy changes related to Medicare payment are slated to take effect.

Compounding ongoing challenges related to the pandemic, an Aug. 30, 2022, MGMA Stat poll finds that 90% of medical practices report that the projected 8.5% payment cut to 2023 physician Medicare payment will reduce patient access to care.

The poll had 541 applicable responses.

Congress appropriated billions of dollars in additional funding over two calendar years to avoid catastrophic cuts to Medicare payments during the pandemic. MGMA and other leading healthcare organizations are turning to Congress to provide the necessary funding for 2023 to ensure Medicare beneficiaries retain access to care and to support the financial viability for group practices across the country. Without intervention from Congress, Medicare payments across the board will be dramatically lower next calendar year compared to now.

Practices are facing a slew of projected cuts to Medicare, including:

1.A 4.5% negative adjustment to the Medicare conversion factor (CF)

The introduction of coding and payment updates to inpatient and other Evaluation and Management (E/M) services and the expiration of billions of dollars in congressional funding result in an approximate 4.5% reduction in the Medicare CF in 2023. As introduced in the proposed 2023 Medicare Physician Fee Schedule (MPFS), the Centers for Medicare & Medicaid Services (CMS) estimates the 2023 CF to be $33.0775, a decrease of $1.53 from the 2022 CF of $34.6062.

2. Paying for congressional action: 4% PAYGO sequestration

In response to the passage of the American Rescue Plan Act of 2021 (P.L. 117-2), a 4% sequester to Medicare payments was triggered. The Statutory Pay-as-You-Go Act of 2010 (PAYGO) (P.L. 111-139) places certain restrictions on increases to federal spending without offsets. During the pandemic, Congress acted by passing a $1.9-trillion COVID-19 relief package to support the nation’s COVID-19 response efforts (American Rescue Plan). However, as required by PAYGO, this spending package triggered the 4% Medicare PAYGO sequester, which would result in approximately $36 billion in cuts. At the end of last year, Congress delayed these cuts through 2022, but without congressional intervention, these cuts will be triggered in 2023.

3. Medicare Physician Fee Schedule: 0% update for physicians

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) made significant changes to the Medicare Physician Fee Schedule (PFS), impacting how providers are paid and what quality incentives are tied to the payment. A major component of the law is establishing a 0% payment adjustment for physicians through 2025.
 
Amid the pandemic and the highest rate of inflation in decades, group practices may be especially impacted by this neutral payment adjustment. Contrastingly, Congress is making positive adjustments to other facility types in 2023. The increasing financial instability of the Medicare program is creating significant disruptions for medical groups, especially with increasing administrative costs and major staffing shortages.

Significant impact on patients, providers and the healthcare system

Combined, these policies will result in significant reductions to Medicare payment in 2023. Already facing major operational challenges including staffing shortages, additional regulatory burden due to increased prior authorizations and surprise billing requirements, and navigating changing commercial payer policies, further reductions to payment will have an even greater detrimental impact on patient access to care.

In response to the MGMA Stat poll, medical practice leaders stated the payment cuts will result in delayed access to care, which can result in missed or delayed diagnoses, more advanced diseases, worsened patient outcomes and premature death. The most commonly identified direct impacts due to the pending payment cuts include:

• Limiting the number of Medicare beneficiaries serviced,
• Reducing staff, and
• Considering the closure of office locations.

As a greater number of practices face financial stress during a time in which the number of Medicare beneficiaries continues to rise, patient access will continue to be challenged. Further, current metrics to evaluate beneficiary access to care rely on the number of providers in a given geographic region compared to number of patients. However, as more and more practices limit the number of Medicare patients served, the healthcare system will need to evaluate access more critically across the healthcare system.



Shifting Medicare payments impact more than just Medicare payment rates. The federal program serves as the benchmark for Medicaid rates, as well as for most commercial insurers. These reductions will reduce overall practice revenue by a substantial percentage. Practices will be forced to make tough decisions about their future. They may have to consider offsetting payment reductions by reducing appointment availability, shortening practice hours, withdrawing from a voluntary value-based payment arrangement aim at improving patient outcomes, and/or cutting other practice improvement initiatives.

Congress and CMS have the authority to work in tandem to avert these payment cuts and ensure undisrupted access to care for Medicare beneficiaries.

Join MGMA in advocating for payment reform

MGMA is committed to working with Congress and other national organizations to develop a commonsense approach to rectifying inadequate Medicare payment in 2023. MGMA is asking Congress to provide an inflationary update to physician payment, offset the proposed 4.5% reduction in the Medicare conversion factor, and waive the 4% PAYGO sequester.

MGMA Government Affairs will be launching an advocacy campaign later in September 2022. Sign up for updates from our team to engage in this important topic!

While MGMA is focused on urging Congress to take swift action to avert the payment cuts slated to take effect in less than four months, MGMA continues to advocate for a long-term solution to these annual payment challenges. Collectively, MGMA, the American Medical Association, and other leading healthcare organizations published a set of principles used to inform discussions with Congress on how to effectively provide financial stability and predictability for practices. The annual déjà vu of repeated pending payment cuts is unsustainable for most practices and greatly disrupts the healthcare system and patient access to care. Congress must engage with the stakeholder community to enact appropriate updates to physician Medicare payment.

Learn more

• More information about MGMA advocacy to address the upcoming potential changes to Medicare payment in CY 2023 can be found in the MGMA Medicare Physician Payment Issue Brief.
• For the latest updates on federal health policy, please sign up to receive the Washington Connection e-newsletter at MGMA.com/WC.
• Get involved in #MGMAAdvocacy by sending a template letter to you congressional representatives at MGMA.com/ContactCongress urging congressional action to protect the financial solvency of medical group practices.

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