Policy Playbook: Fall 2023 Updates

Author: Micaela LaRose, MD (Emergency Medicine Resident, San Antonio, TX) // Reviewed by: Summer Chavez, DO, MPH, MPM (Attending Physician, University of Houston); Alex Koyfman, MD (@EMHighAK); Brit Long, MD (@long_brit)

Policy Playbook returns to emDOCs with a concise summary of the latest developments in emergency medicine-related health policy over the summer months. In today’s post, we’ll highlight the most important aspects of each topic.

What’s the issue?

Multiple changes to Medicare are being enacted or proposed this fall. Below we discuss three that will likely have the greatest impact on emergency medicine physicians and our patients.

Proposed cuts to Medicare 2024

Continuing with a long-running annual trend, the Center for Medicare and Medicaid Services (CMS) is proposing cuts to the 2024 Medicare physician fee schedule which is the method through which physicians are reimbursed for their work. CMS is proposing to decrease the conversion factor in the reimbursement formula by 3.36% (1). The Medicare reimbursement formula is complicated, but in simplified terms, physicians are reimbursed by multiplying pre-determined relative value units (RVUs) by a correction factor for geographical variances in cost (GPCI) and then the conversion factor determines the dollar reimbursement per RVU (2). The 2024 proposed physician fee schedule would decrease the conversion factor from $33.89 to $32.75.

This decrease in reimbursement would come at a time when the cost of health care provision in this country continues to rise (1). These proposed cuts are also part of a long trend of annual threats of cuts to the physician fee schedule. In previous years, Congress has stepped in at the last minute to avert these cuts; however, last year there was still a 2% absolute reduction in Medicare payments despite congressional intervention to avoid an 8.5% reduction. In years previous, the conversion factor has largely stayed the same resulting in physician pay falling 22% from 2001 to 2021 when adjusted for inflation (3).

These annual threats of cuts are all but guaranteed to continue under the current system. In an effort to reduce government spending, Congress has passed legislation requiring budget neutrality and “pay-as-you-go” requirements that force legislative changes to pay for themselves or trigger automatic cuts (4). In an already strained health care system, relying on the annual will of Congress to simply keep reimbursement flat is unsustainable. If the proposed cuts are allowed to go into effect the effect on the system could be harmful.

The physician fee schedule needs predictability. One proposed solution is HR 2474, which would establish a permanent annual increase in the Medicare physician fee schedule tied to the rise in costs of providing health care. This would be similar to how all other Medicare providers (long-term care facilities, hospital payments, etc.) are already reimbursed (5).

MIPS (Merit-based Incentive Payment System) requirements

This year, CMS has also proposed to increase the threshold for receiving the newer Merit-Based Incentive Payments (MIPS) (1). The MIPS system was established in 2015 as part of an effort to combat the perverse incentive to provide more care in a traditional fee-for-service model. The goal was to promote quality instead of quantity. While laudable in theory, research has continued to show that in practice the program is bureaucratically burdensome costing $12,800 per physician and over 53 hours per year (6). This disproportionately impacts smaller independent and rural practices with fewer clinicians and resources (7). Additionally, a 2022 study in JAMA found no association between MIPS measures and any meaningful clinical outcomes and moreover physicians who cared for the most medically and socially vulnerable were more likely to receive worse scores (8).

Implementation of the program has largely been paused since 2019 due to COVID and therefore so has MIPS’ impact on the already struggling health care system. Now as the pandemic wanes, and these requirements are set to go back into effect, CMS has proposed to increase the threshold to avoid penalties from 75 to 82 points. This would increase the number of physicians that would pay a reimbursement penalty of up to 9% (1).

Drug negotiations

The Inflation Reduction Act of 2022 included several provisions to address drug spending, including empowering Health and Human Services to start negotiating with drug companies on prices of medications covered under Medicare Part D. The legislation will affect drug prices starting in 2026, but the list of the first ten medications to be negotiated was released earlier this month and can be found here. It includes a number of expensive medications that patients in the ED are commonly prescribed such as Xarelto, Eliquis, and insulin. The makers of these drugs have until October 1 to agree to participate in negotiations or face steep financial penalties (9).

As expected, numerous lawsuits by drug companies opposing this legislation have been filed across the country and are currently working their way through the courts (10). As emergency medicine physicians, we are acutely aware of how being unable to afford chronic medications leads to severe life-threatening complications and preventable visits to our Emergency Departments. This contributes not only to increases in our patients’ morbidity and mortality, but also to emergency department over-crowding and boarding placing strain our system across the country. With the ability of the federal government to negotiate Medicare prescription drug prices, more of our patients will hopefully be able to afford these life-saving medications.

References

1. American Medical Association. (2023). “Inside the proposed 2024 Medicare physician pay schedule.” from https://www.ama-assn.org/practice-management/medicare-medicaid/inside-proposed-2024-medicare-physician-pay-schedule.
2. Seidenwurm, D. J. and J. H. Burleson (2014). “The medicare conversion factor.” AJNR Am J Neuroradiol 35(2): 242-243. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7965749/#:~:text=It%20is%20calculated%20by%20use,the%20regulations%20governing%20covered%20services.
3. American Medical Assoication. (2023). “Inside the proposed 2024 Medicare physician pay schedule.” from https://www.ama-assn.org/practice-management/medicare-medicaid/inside-proposed-2024-medicare-physician-pay-schedule.
4. Rosso, R. J. (2023). Medicare and Budget Sequestration, Congressional Research Service. https://crsreports.congress.gov/product/pdf/R/R45106
5. American Medical Association. (2023). “Medicare physician pay must track inflation—every year.” from https://www.ama-assn.org/practice-management/medicare-medicaid/medicare-physician-pay-must-track-inflation-every-year.
6. Khullar, D., et al. (2021). “Time and Financial Costs for Physician Practices to Participate in the Medicare Merit-based Incentive Payment System: A Qualitative Study.” JAMA Health Forum 2(5): e210527. https://jamanetwork.com/journals/jama-health-forum/fullarticle/2779947
7. Cosgrove, J. (2018). Small and Rural Practices’ Experiences in Previous Programs and Expected Performance in the Merit-based Incentive Payment System, Government Accountability Office. https://www.gao.gov/assets/gao-18-428.pdf
8. Bond, A. M., et al. (2022). “Association Between Individual Primary Care Physician Merit-based Incentive Payment System Score and Measures of Process and Patient Outcomes.” JAMA 328(21): 2136-2146. https://jamanetwork.com/journals/jama/article-abstract/2799153
9. Center for Medicare and Medicaid Services. (2023). Fact Sheet: Key Information on the Process for the First Round of Negotiations for the Medicare Drug Price Negotiation Program. https://www.cms.gov/files/document/fact-sheet-negotiation-process-flow.pdf
10. Kaiser Family Foundation. (2023). “FAQs about the Inflation Reduction Act’s Medicare Drug Price Negotiation Program.” from https://www.kff.org/medicare/issue-brief/faqs-about-the-inflation-reduction-acts-medicare-drug-price-negotiation-program/. 

This post is a collaboration between emDocs and the EMRA Health Policy Committee.