Medicare Fee Schedule Cuts and the Cascading Negative Impact on Medical Groups

A Note Before We Start. This is not our 1st rodeo; we’ve been doing this for decades. We anticipate these Medicare cuts to be reversed. If and when they are, our CodeToolz Contract Analyzer will be updated within one business day.

Let’s Start

#Physicians may have hoped that the continued rise in inflation and the growing costs of running a #medicalpractice would nudge the feds to keep #medicarepayments stable for 2024, but that doesn’t appear to be the case.

Despite industry outcry and widespread discontent surrounding another decrease in the conversion factor (CF) for 2024, Medicare went ahead and cut it anyway and for more than originally promised.

On January 1, 2024, a 3.37 percent across-the-board cut to Medicare physician payments took effect. A cut of this magnitude will be devastating for physician practices.

With an expected 4.6% rise in health care inflation this year, the net impact on physician payments will be an 8% decrease in 2024.

Sizing Up Specialty Impacts

The final rule includes comparative data showing the estimated overall change to Medicare reimbursement, per specialty, expected for this year.

Interestingly, despite the lower CF, some specialties, such as internal medicine and family practice, have a projected positive change in their Medicare payment percentage due to changes in relative value units (RVUs) for many services.

Conversely, specialties such as ophthalmology and optometry are slated to realize a reduction of -1 and -2 percent, respectively.

H.R. 6683, the Preserving Seniors' Access to Physicians Act

There is an opportunity for the payment cut to be cancelled.? Bipartisan legislation introduced at the end of 2023 (H.R. 6683, the Preserving Seniors' Access to Physicians Act), would eliminate the entire payment cut.

If Congress acts to cancel the cut, the Centers for Medicare & Medicaid Services will update payment files and reprocess claims as necessary.

Should the reduction be remedied, medical groups will face administrative turmoil if CMS pays out claims prior to the enactment of a fix and later has to reprocess them.

Commercial Plan Implications

Some commercial plans determine their rates based off the Medicare Physician Fee Schedule. In previous iterations of these cuts being retroactively adjusted, commercial plans often times have not gone back and changed their contracts but kept the artificially low rates. This underscores the cascading negative impact these cuts have on medical groups.

Comparing commercial-allowed amounts to Medicare FFS rates requires either specialized expertise, including an understanding of the complex Medicare FFS reimbursement rules, or software to assign the Medicare-allowed amounts.

Provider reimbursement as a percentage of Medicare FFS rates provides a consistent and well-understood basis for comparing reimbursement rates. Using this common basis enables comparison to reimbursement benchmarks.

Summary

Payer contracts are a road map of revenue for providers. When contracts are negotiated, the rates provide a map with which a physician, medical group and/or manager can forecast revenue. However, inefficient healthcare contract modeling and management can result in the loss of valuable revenue dollars.

Given the financial, operational, and legal implications of managed care contracts, automating contract terms and managing the requirements of a multitude of contracts has moved beyond the capabilities of manual processes.

The essential tools of managing payer contracts allow providers to monitor, track, manage and analyze negotiated contract terms and rates. Simplified views of contracts by payer allow for full analysis of contract terms and reimbursements across your organization. When implemented, the tools empower physicians and managers to monitor contract performance and improve revenue. That’s the ultimate goal.

The Physician's Advocate in Payer Contracting

Our customized approach meets the unique needs of each of our clients from a single physician practice to large IPA’s and everything in between. We take your payer contracting from burden to competitive advantage.

Contract Relations | We know how payers work. We have negotiated contracts for 25 years with the majority of national payers including federal programs. We have developed provider networks for Medicare Advantage plans, Accountable Care Organizations, and many commercial plans.

Contract Evaluation | We review your payer contracts and fees to create a unique written analysis giving you our seasoned opinion on contract language, requirements, payer contacts and fee analysis.

Contract Fee Analysis | We focus on your bottom line, comparing all your contract rates and developing an average acceptable rate.

Contract Negotiations | We bring 25 years of successful negotiations with payers. After our review, if there is potential for renegotiation, we will draft all correspondence and be involved with the entire negotiation process.

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