Here’s an oldie but a goodie for today. The House Ways and Means Committee is reportedly considering a markup of legislation this month that would revamp Medicare’s physician payment system. This move could increase the likelihood of incorporating a “doc fix” into a lame duck legislative package.
Historic readers and followers of Reg’s Blog will recall the numerous posts on this topic from years gone by. Easily searched using the words “doc fix”, a sample is available here: https://rhislop3.com/2014/03/14/house-passes-doc-fix-bill-destined-for-nowhere/
On July 10, 2024, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule to announce and request public feedback on the proposed policy changes for Medicare payments under the Physician Fee Schedule (PFS) and other Medicare Part B issues, to be effective from January 1, 2025.
Since 1992, Medicare payments have been issued under the Physician Fee Schedule (PFS) for services provided by physicians and other billing professionals. Services rendered under the PFS occur in diverse settings, such as physician offices, hospitals, Ambulatory Surgical Centers (ASCs), skilled nursing and other post-acute care facilities, hospices, outpatient dialysis centers, clinical laboratories, and the homes of beneficiaries. Payments are also disbursed to various suppliers for technical services, typically in settings that do not receive institutional payments. Calendar Year (CY) 2025 Medicare Physician Fee Schedule Proposed Rule | CMS
Aside from physician fees, the Part B Physician Fee Schedule Rule impacts numerous other providers and suppliers, including outpatient rehabilitation therapy providers. Outpatient therapy is significant for senior living, particularly independent and assisted living providers.
The proposal indicates reductions in therapy payment rates. Multiple factors influence reimbursement. Firstly, the 2.93% relief granted by Congress this year expires on December 31, 2024, obligating CMS to reduce at least that percentage from the 2025 budget due to statutory constraints. Secondly, the persistent issue of budget neutrality requirements also plays a role. These factors have led to a proposed overall decrease in reimbursement of 2.80%. The actual reduction in reimbursement will vary based on several elements, such as specialty, billed codes, and geographic location. A good overall summary is available here: Therapy plan certification and 2025 proposed rule (mcknights.com)
When the proposed reductions in this year’s CY 2025 Proposed Rule and sequestration are combined, the total cuts to therapy payments are nearly 33%. This figure rises to 52% when including the reduction for services provided by physical therapists or occupational therapy assistants starting January 1, 2022, and the expected expiration of PAYGO. Below is a graphic illustrating historic fees schedule changes/impacts to rehabilitation therapists and assistants.
I’ve been writing this blog since 2009. Every year (examples of posts abound), Congress has been messing with the Medicare Physician Fee Schedule, implementing patches (fixes) to avoid significant cuts to the fee schedule. The problem exists along a two level “fault-line”. First, the schedule is tied to utilization factors. Second, it is required in the end, after rates are set, to be budget neutral (known as paygo).
Physician Fee Schedule (PFS) payment rates are determined by the relative resources typically required to provide the service. This is represented by three categories of Relative Value Units (RVUs) for work, practice expense, and malpractice expense, as established by the Centers for Medicare & Medicaid Services (CMS) for each service. These RVUs are then converted into PFS payment rates using a fixed-dollar conversion factor. Additionally, geographic adjusters, known as Geographic Practice Cost Indexes (GPCIs), are applied to account for variations in resource costs across different areas.
The PFS payment rates are updated annually through a notice and comment rulemaking process to incorporate any statutory updates to the conversion factor and other adjustments. A quick video gives a good review: An Overview of the CMS Physician Fee Schedule- Part 1 (youtube.com)
The “fix” would likely match earlier legislative efforts that would raise the budget neutrality limit and impute a standard inflation-based payment update versus the multifactorial method presently in use.
It’s possible that lawmakers on the committee could consider legislation that is similar to the discussion draft that the GOP Doctors Caucus released last year, per a House aide and a lobbyist.
- The proposed bill aims to update the Medicare Physician Fee Schedule by increasing the budget neutrality threshold from $20 million to $53 million. This change is designed to address the escalating costs faced by providers, marking the first update to the threshold since the fee schedule’s inception.