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Medicare Doctor Payment Cuts Spur Calls to Congress for Relief

Nov. 10, 2022, 5:26 PM

Medicare payment rules and pending reimbursement cuts next year are causing unease among doctors and other providers who say the scheduled reductions don’t account for increased labor costs and inflation.

They’re looking to Congress for relief. And lawmakers from both parties appear supportive.

One day after the Centers for Medicare & Medicaid Services finalized a rule imposing a nearly 4.5% across the-board cut for providers next year, 46 senators called on the chamber’s party leaders “to work with members on a bipartisan basis to address these imminent payment cuts,” or risk “reduced staffing levels and office closures, jeopardizing patient access to care.”

And in the House, H.R. 8800, introduced by Reps. Ami Bera (D-Calif.) and Larry Bucshon (R-Ind.), would also stop the cuts from taking effect on Jan. 1, 2023.

On Wednesday, the College of American Pathologists called on Congress to include the bill in its year-end omnibus spending package. The legislation “comes at a time when margins are extremely thin as inflationary pressures have increased costs in all sectors of the economy, including health care and physician practices,” the group’s statement said.

Those calls are resonating with Congress, where “there’s enough support on both sides of the aisle to block” the 4.5% cut, said Duane Wright, a senior research analyst at Bloomberg Intelligence. In addition to overall medical inflation, Wright said physicians are also weathering the July 1 resumption of the full 2% Medicare sequestration cut, which had been waived due to the public health emergency. The cut was originally required by the Budget Control Act of 2011.

Calming ‘Payment Headwinds’

“So, there’s enough going on, in terms of payment headwinds, that Congress is not going to let another payment headwind come into play,” Wright said.

That’s also why Congress is likely to waive a separate 4%, or $36 billion, “pay-as-you-go” sequester cut in Medicare spending required under the American Rescue Plan Act, Wright said.

“That’s 4% across the board. That’s not just physicians. That’s hospitals and everybody else. So we need that cut to stop,” said Christian Shalgian, director of the division of advocacy and health policy at the American College of Surgeons. The fee schedule cut and pay-go cut would combine for an 8.5% cut in Medicare payments, which would devastate providers, Shalgian said.

But Wright expects language to block both the pay-go cut and the 4.5% Medicare fee schedule cut to be tacked onto a year-end spending package that Congress develops.

Extend Bonus?

Forty-four bipartisan House members also want that spending package to extend an expiring 5% bonus for providers that participate in advanced alternative payment models under Medicare’s Quality Payment Program.

“Specifically, we ask that Congress include Section 4 of the Value in Health Care Act (H.R. 4587) in an end-of-year legislative package,” the lawmakers said in a recent letter to House leadership. This “would extend the 5% APM incentive payments and allow CMS to adjust qualifying thresholds to achievable levels in the coming years.”

House members made their appeal to extend the 5% bonus one day after it was called for by a new coalition of health-care organizations, the Alliance for Value-Based Patient Care. The alliance includes the American Medical Association, American Medical Group Association, America’s Physician Groups, Health Care Transformation Task Force, the National Association of ACOs, and Premier Inc.

The bonus helps providers pay for care coordinators, data analytics, quality measurement systems and other tools needed to participate in Medicare payment models. Many of the roughly 300,000 physicians who rely on the bonus could withdraw from CMS’ value-based care payment models if the incentive is allowed to expire, the group said.

Home Health Cut

Home health agencies are also reeling from a new Medicare final rule (RIN 0938–AU77) that increased payments by just 0.7%, or $125 million next year, after the Biden administration finalized a permanent cut of over 3.9%, or $635 million, on the assumption that agencies altered their billing and coding activity to maximize reimbursements in previous years. The CMS final rule indicates the agency will also begin efforts in 2024 to recoup $2.1 billion in apparent overpayments from 2020 and 2021.

While federal budget neutrality requirements prompted the scheduled payment cuts, the National Association for Home Care & Hospice said the CMS uses flawed methodology to calculate payment rates.

“We wholeheartedly disagree with the budget neutrality methodology that CMS employed to arrive at the rate adjustments. In no way are these adjustments consistent with logic or the Medicare law on budget neutrality,” said a statement from William A. Dombi, president of the National Association for Home Care & Hospice.

“It feels like we’re getting punched in the face. That’s really kind of what we feel like,” said Jennifer Sheets, president and CEO of Interim HealthCare, one of the nation’s largest home health organizations with more than 330 locations across 42 states.

Interim provides 25 million hours of home care to 200,000 people each year in the US. But the pending pay cut will likely result in reduced access to care, particularly for underserved rural populations, Sheets said.

“Because if I can buy a bus pass and be able to treat 100 patients,” in urban areas “versus an hour-and-a-half one-way commute for a nurse, paying gas, and paying windshield time,” to reach rural patients, “that’s where I’m going to have to make those decisions,” Sheets said.

“We now turn to Congress to correct what CMS has done and prevent the impending harm to the 3.2 million highly vulnerable home health patients that depend on this essential Medicare benefit annually,” Dombi’s statement said.

The Preserving Access to Home Health Act of 2022, (H.R. 8581) and its Senate companion legislation, (S. 4605), have bipartisan backing. The measures would delay the 2023 payment cut and the $2 billion recovery efforts to allow for more negotiations between the CMS and the home health operators.

“Even with the limited phase-in of the rate cut, with significantly rising costs for staff, transportation, and more, home health agencies across the country cannot withstand the impact of rate cuts,” Dombi’s statement added.

To contact the reporter on this story: Tony Pugh in Washington at tpugh@bloomberglaw.com

To contact the editors responsible for this story: Karl Hardy at khardy@bloomberglaw.com; Cheryl Saenz at csaenz@bloombergindustry.com