American Medical Group Association

A Medical Group Management Association survey assessing the impact of potential Medicare payment cuts found that the majority of practices would consider limiting the number of new Medicare patients, reducing charity care, reducing the number of clinical staff and closing satellite locations. Provider groups are urging the Biden administration to reconsider proposed cuts to physician payments in its annual fee schedule rule, arguing that the cuts could force service and staffing reductions as practices feel the financial pinch. In July, the Centers for Medicare & Medicaid Services (CMS) proposed a 3.34% cut to the fee schedule's conversion factor, which is used to calculate Medicare payouts to docs. Under the proposed rule, payments overall would decrease by 1.25% compared to 2023. However, CMS set the conversion factor at $32.75, down $1.14 or 3.34% from last year. Under the physician fee schedule, the conversion factor is the number of dollars assigned to the relative value unit, a key element in how CMS calculates payouts for physicians in Medicare. In the release, CMS said that while it is decreasing overall payments and adjusting the conversion factor, it is proposing pay hikes for primary care and other services. These increases require cuts elsewhere to achieve budget neutrality, CMS said. "The proposed cuts are bad policy, bad timing and bad for patients. Physicians are facing a triple whammy as pay reductions are pending on several fronts. This unsustainable approach is threatening access to care," the American Medical Association (AMA) said in a press release after it submitted a 120-page public comment letter about the proposed rule. "With higher costs for everything associated with practicing medicine, another year of Medicare payment cuts jeopardizes patient access and imperils the physician practices on which so many seniors rely,” said AMA President Jesse M. Ehrenfeld, M.D. “These cuts are unsustainable and unconscionable.” Data compiled by the AMA showed that after adjusting for inflation in practice costs, Medicare payments to physicians declined 26% from 2001 through 2023. Additionally, physicians saw a 2% payment reduction for 2023.  "Worse, the AMA is hearing that more physicians and group practices will be hit with a MIPS penalty in 2024 based on the newly released 2022 performance period feedback. These penalties can reduce Medicare payment by as much as 9%. The MIPS program was largely paused during the 2020 and 2021 performance periods due to the COVID-19 public health emergency, and the AMA has serious concerns that it may unfairly penalize physician practices—particularly small, independent, and rural practices—due to a lack of awareness of the expiration of the automatic COVID-19 flexibilities," AMA executives said in the press release. While CMS is constrained by statutory budget neutrality requirements, the Medical Group Management Association (MGMA) urged the agency to work with Congress to provide a positive update to the Medicare conversion factor in 2024 and all future years. "MGMA is deeply concerned with the estimated reduction to the CY 2024 conversion factor and its potential impact on medical group practices. The cuts stemming from the 3.36% decrease to the CY 2024 conversion factor paired with the current inflationary environment are simply unsustainable.," the organization said in its public comment letter.  A MGMA survey (PDF) of 517 medical group practices assessing the impact of potential Medicare payment cuts found that the majority of practices would consider limiting the number of new Medicare patients, reducing charity care, reducing the number of clinical staff and closing satellite locations. The organization also pushed CMS to reverse its proposal to increase the MIPS performance threshold from 75 points in 2023 to 82 points in 2024. "The agency’s own estimates suggest that over half of MIPS-eligible clinicians will be penalized. We strongly urge CMS to reduce the performance threshold and work to alleviate the overwhelming burden of MIPS during the 2024 performance period," MGMA wrote in its comments. The American Hospital Association (AHA) also advocated that CMS work with Congress to eliminate the budget neutrality cut to the payment update. “This negative update would pose significant risks to patients’ access to care and health systems’ financial stability, particularly for providers serving historically marginalized communities,” AHA wrote in its public comment letter. “Our concern is heightened by the fact that this cut is coming in the wake of over three years of unrelenting financial pressures on the health care system due to COVID-19, along with rising inflation, increasing input costs, and persisting staffing shortages and supply chain disruptions.” Another industry group, AMGA, said the multispecialty medical groups it represents are not in a position to absorb the cuts, and the decrease will likely result in a reduction of services, staff or both.  "This is no longer a theoretical problem for AMGA members,” AMGA President and CEO Jerry Penso, M.D., said in a press release about the proposed rule. “AMGA members provide vital services to their communities, and the cost of doing so has continued to increase. Medicare’s reimbursement system needs to reflect this reality. This annual cycle of cuts limits AMGA members’ ability to provide care and impedes investment in the future.  Congress needs to prevent these cuts.”    In its public comment letter, the National Association of ACOs expressed concerns that continual cuts create a disincentive for clinicians to adopt population health models. "When physician payment is cut, clinicians face an untenable financial landscape on which to adopt value-based care, which takes investment in staff, extra services, and technology. Additionally, as future ACO benchmarks are set on declining FFS rates, benchmarks may not adequately reflect the costs of providing comprehensive coordinated care. We must ensure that clinicians in FFS receive adequate payment and build additional financial and nonfinancial incentives for clinicians to adopt accountable care," the organization wrote in its letter. Momentum seems to be building for payment reform. In March, the Medicare Payment Advisory Commission recommended a physician payment update tied to the Medicare Economic Index (the government’s index of inflation in medical practice costs) for the first time. In April, a bipartisan group of House members introduced a bill that seeks to tie physician payment rates to inflation as doctor groups have implored lawmakers to overhaul the federal pay process. The Strengthening Medicare for Patients and Providers Act aims to address concerns amid the industry that Medicare payments have not kept pace with financial challenges such as inflation. Despite opposition to the payment cuts, many provider groups applauded CMS' proposal, as outlined in the rule, to continue paying for telehealth services provided nationwide and to patients in their homes. "Telehealth has become a vital tool for AMGA member physicians. AMGA greatly appreciates CMS’ willingness to maintain payment parity between telehealth services and in-office care, as these services are equally resource intensive for physicians," the group wrote. “Keeping telehealth and in-office payments equivalent will help ensure telehealth remains a viable option for AMGA members and their patients,” Penso said. “We appreciate CMS’ willingness to reconsider its earlier policy to revert to a pre-pandemic telehealth payment policy.” MGMA, which also approved of CMS' telehealth proposals, noted in its comments that medical groups continue to utilize telehealth services to best serve their patients. In an August 2023 MGMA poll, 81% of medical groups reported that reimbursement for telehealth services at the facility rate, rather than the non-facility rate, would deter them from offering those services. Many groups, including the AHA, encouraged CMS to work with Congress on permanent adoption of waiver provisions such as eliminating the originating and geographic site restrictions for all telehealth services and expanding telehealth eligibility to certain practitioners.

The Centers for Medicare & Medicaid Services said in a release on the physician fee schedule that while payments overall will see a cut, key areas such as primary care will see reimbursements increase. The Biden administration is proposing cuts to physician payments in its annual fee schedule, and doctors are not happy. Major industry groups have roundly called for Congress to step in to prevent the Medicare reimbursement changes from going through. Last week, the Centers for Medicare & Medicaid Services (CMS) proposed a 3.34% cut to the fee schedule's conversion factor, which is used to calculate Medicare payouts to docs. In a statement, the American Medical Group Association (AMGA) said that Medicare payments already fail to keep up with "the increasing cost of delivering healthcare," and further cuts would only exacerbate that problem. “AMGA members cannot absorb this proposed payment cut,” said AMGA President and CEO Jerry Penso, M.D. “Their expenses are continuing to increase, and Congress needs to act to ensure Medicare’s reimbursement reflects the cost of delivering high-quality care to patients. We’re concerned AMGA members may be forced to make tough decisions on staffing and the services they can offer to their communities if proposed cuts are left unaddressed.” This echoes comments from the Medical Group Management Association that were issued shortly after the rule dropped. The group said Congress should examine existing Medicare law to ensure that physicians are compensated fairly, and "do away with Medicare’s ‘robbing Peter to pay Paul’ budget neutrality requirements to provide much-needed financial stability for medical practices.” CMS said in a release on the physician fee schedule that while payments overall will see a cut, key areas such as primary care will see reimbursements increase. The agency is also proposing new codes to pay for caregiver training as well as behavioral health services provided by marriage and family counselors as well as mental health counselors, both firsts in Medicare. However, these measures were not enough to stave off the ire of physicians. Jesse Ehrenfeld, M.D., president of the American Medical Association (AMA), said in a statement that the latest fee schedule proposal is "a critical reminder that patients and physicians desperately need Congress to develop a permanent solution that addresses the financial instability and threatens access to care." Ehrenfeld noted that the fee schedule estimates the Medicare Economic Index, which is the government's measure of inflation for medical practices, will grow by 4.5%, the highest rate so far this century. AMA said that Medicare payments to docs have declined effectively by 26% since 2001 when adjusted for inflation, and physicians are one of the only providers who do not receive an automatic inflationary increase. “This is almost biblical in its impact," Ehrenfeld said. "Seven lean years that include a pandemic and rampaging inflation. Physicians need relief from this unsustainable journey." Earlier this year, AMA and its partners developed a road map (PDF) for reforming Medicare payments to physicians. The policy proposals center on ensuring docs have financial stability and predictability while enabling value-based care and ensuring that the quality of services provided does not suffer. The recommendations are endorsed by dozens of physician organizations. The American Academy of Family Physicians (AAFP) acknowledged CMS' positive efforts in the physician fee schedule but said the lack of intervention from Congress on payments "may undermine this progress and jeopardize timely access to care." "These cuts are unacceptable and could threaten practice stability and undermine physicians’ goals of increasing access to primary care. MedPAC and the Medicare Board of Trustees share our concerns and recently recommended action to update payment rates," said Tochi Iroku-Malize, M.D., president of AAFP.  “Sweeping reform will help protect Medicare beneficiaries’ access to primary care in their own communities—but physicians can’t do this alone."

Some experts say that Congress and the administration will need to work together to continue to rein in Medicare Advantage overpayments. While provider and payer groups were happy that the Biden administration delayed implementation of changes to Medicare Advantage’s (MA's) risk adjustment model, they hinted at a sustained campaign to get rid of them entirely.  Industry reaction to the final 2024 MA payment rule released late Friday details the next fight the Centers for Medicare & Medicaid Services (CMS) can expect in its efforts to rein in overpayments to MA plans. The agency decided to phase in the risk adjustment changes over three years starting in 2024. “We appreciate that CMS moved to a phased-in approach, but the underlying policy is fundamentally unchanged,” said Mary Beth Donahue, president and CEO of the insurer group Better Medicare Alliance (BMA), in a statement last Friday. The BMA was one of the most vocal groups opposing CMS’ proposed pay rule that introduced the risk adjustment concerns.  BMA—which aired television ads in the Washington, D.C., market bashing the proposed rule—did not comment further on what its next steps are. Another point of contention was the rule's pay rate change, which was proposed at 1% and bumped to 3.3% in the final regulation. The American Medical Group Association (AMGA) is hoping that the agency sees the error of its ways at the end of the three-year phase-in period.  “With this more cautious approach, CMS will have an opportunity to refine the plan based on the effects the changes have on providers and their patients,” said AMGA President and CEO Jerry Penso, M.D., in a statement.  Providers and payers had raised concerns over CMS' decision to change the risk adjustment model for MA plans. The agency will shift the codes it relies on from the International Classification of Diseases (ICD) 9 coding system to ICD-10, which has been in use by physicians since 2015.  The agency also targeted the removal of more than 2,000 diagnostic codes from the MA risk adjustment model. The goal is to identify codes most likely to be abused by plans for up-coding, a practice to make patients appear sicker than they are to inflate risk scores and get higher payments from Medicare.  But providers complained in comments and statements to CMS that the code removal could shift resources away from caring for dual eligible Medicare-Medicaid beneficiaries. An analysis from primary care company Oak Street Health showed that the changes could lead to non-dual patients getting more resources thanks to the removal of the codes. CMS Administrator Chiquita Brooks-LaSure pushed back on the notion that duals coverage will be hurt. She told reporters Friday that there are “hundreds of codes left” for all the diagnoses that have codes removed. However, the agency appeared to acknowledge concerns from providers around the short transition to the new system, which was set to start on Jan. 1, 2024. Instead, next year the risk adjustment model will make up two-thirds of the current system and one-third of the new model. By 2026, the new model will be fully phased in. Some experts say that CMS needs to go further, though, to rein in over-payments to MA plans, especially as the program has surged to make up more than 30 million enrollees.  “The secretary has the authority to go further through the coding intensity adjustment,” said Mark E. Miller, vice president of health policy for the nonprofit Arnold Ventures, in an interview with Fierce Healthcare. “If they do, they will be attacked like they were on the part of the industry.” CMS must include via federal statute a 5.9% coding adjustment to account for differences in diagnostic coding between MA and traditional fee-for-service Medicare. The agency can go higher than that amount but has chosen not to.  The Alliance of Community Health Plans (ACHP), which represents nonprofit plans, said in a statement that CMS also needs to be more transparent on MA data.  “For years, ACHP has requested CMS share backup justification for its risk score trend and assumptions utilized in development of new risk adjustment models,” the group said.  Miller said the agency should go further as studies from the Medicare Payment Advisory Commission, an independent body that advises Congress on Medicare payment issues, has shown MA plans get overpaid.  “If there is going to be real action taken here I think it will have to be collectively between the administration and the Congress,” he said.  There has been some movement towards a potential compromise on the issue in Congress. Sens. Bill Cassidy, R-Louisiana, and Jeff Merkley, D-Oregon, recently introduced legislation that includes some key reforms to MA coding.  However, it remains unclear whether the legislation can make it through a divided Congress.  “The question of whether anything will happen here will depend on how serious Congress gets on addressing the debt more broadly,” Miller said.