Assessing the 2024 Medicare Fee Changes: Impact on Physicians, Payers, and Value-Based Care

After reviewing the final rule of the 2024 Medicare physician fee schedule, we used the fee schedule look-up tool to determine winners and losers. We asked 2 experts to assess fee changes and the goal of achieving value-based care. The news is mixed for primary care physicians (PCPs) and could be better for specialists. Organized medicine is pushing back, but a deeply divided Congress will not likely respond.

For 2024, CMS reduced the amount Medicare pays per relative value unit (RVU)—the conversion factor (CF)—by 3.4%, from $33.89 to $32.74.¹ We used the Medicare Physician Fee Schedule Look-Up Tool to determine how the fee will change for a first-time Medicare wellness visit year over year.² Reimbursement is reduced by 1.8%, from $166.74 to $163.70. “These cuts coincide with the ongoing growth in the cost to practice medicine,” noted the American Medical Association (AMA) in a recent post,³ adding that the Medicare Economic Index, which measures practice cost inflation, is expected to grow 4.5% this year.

A new billing code is a bright spot for PCPs. The code facilitates an additional fee when the physician is the “continuing focal point for all needed services” or “ongoing care for a single, serious condition or a complex condition.”⁴

Specialists get no such relief. For example, reimbursement for bilateral mammography screening is reduced by 3.6%, from $130.48 to $125.72.2 “We have all this volume, and we are struggling with…capacity challenges, downward reimbursements…while inflation is going up," said Richard Heller, MD, national director of pediatric radiology at Radiology Partners, as reported in Radiology Business.⁵

One reason specialties are taking a steeper hit is the new billing code for more complex primary care procedures. As noted in auntminnie.com, “the utilization assumption for this new code led to a significant projected increase in spending, yielding an approximate 2% reduction to the CF to maintain budget neutrality.”⁶

The AMA assessed the impact of the fee changes, including legislative impact, to determine winners and losers.⁷ Interventional radiology took the largest hit (4.7% decrease), whereas addiction medicine fared best (3% increase). Family medicine was not far behind (2.1% increase).

Several medical groups, including the AMA, are pressuring Congress to pass HR 2474, the Strengthening Medicare for Patients and Providers Act of 2023, which would tie the fee schedule to the rate of inflation.⁸ The bill was introduced in April 2023 but has not gone further. If it were to become law, its impact would likely be felt beyond Medicare, said Gary Owens, MD, president, Gary Owens Associates. Since most insurers base their fee schedules on Medicare RVUs, “a significant increase in Medicare payment rates will pass through Medicare Advantage rates and put pressure on payers to negotiate higher commercial fees,” eroding payers’ margins.

Daniel Sontupe, associate partner and managing director, The Value Builders, explained that Medicare Advantage plans “manage their own reimbursement schedules, so physicians would need to be even more aware of their contracts and payer systems because there will be even more variability.”

The discussion is largely academic, however, as both Dr Owens and Mr Sontupe do not think the bill will advance in an election year.

Legislative paralysis in Washington is not stopping the AMA and others from pushing for a more ambitious overhaul. Modern Healthcare reported that the Merit-based Incentive Payment System (MIPS), designed to drive value-based care, is coming under renewed fire because it is cumbersome and does not accurately measure quality.⁹ National Quality Forum President Dana Gelb Safran said that MIPS rewards current performance, not improvement, which does not bode well for value-based care.

Our experts agree. MIPS and other value-based programs “are antiquated and not truly about creating value,” said Mr Sontupe. Dr Owens cited a 2022 JAMA study involving more than 80,000 PCPs, which found MIPS scores were not consistently tied to performance and outcomes.¹⁰ More complex cases and those involving socially compromised patients were more likely to be tied to lower MIPS scores even when high-quality care was delivered.

What to do? “Patient copays should be driven by adherence; drug coverage and copays should be influenced by cost-effectiveness and avoidance; and procedures should be reimbursed based on the outcomes they generate,” explained Mr Sontupe. “Everyone should be accountable and share in savings.”

References

1. Calendar year (CY) 2024 Medicare physician fee schedule final rule. New release. CMS.gov. Published November 2, 2023. Accessed February 2, 2024. https://www.cms.gov/newsroom/press-releases/calendar-year-cy-2024-medicare-physician-fee-schedule-final-rule
2. Medicare physician fee schedule look-up tool. CMS.gov. Accessed February 2, 2024. https://www.cms.gov/medicare/physician-fee-schedule/search
3. O’Reilly KB. Inside the proposed 2024 Medicare physician pay schedule. AMA News Wire. Published August 24, 2023. Accessed February 2, 2024. https://www.ama-assn.org/practice-management/medicare-medicaid/inside-proposed-2024-medicare-physician-pay-schedule
4. How to use the office & outpatient evaluation and management visit complexity add-on code G2211. CMS.gov. Published January 18, 2024. Accessed February 2, 2024. https://www.cms.gov/files/document/mm13473-how-use-office-and-outpatient-evaluation-and-management-visit-complexity-add-code-g2211.pdf
5. Fornell D. Putting US radiology reimbursement cuts in context and what comes next. Radiology Business. Published December 11, 2023. Accessed February 2, 2024. https://radiologybusiness.com/topics/healthcare-management/healthcare-economics/putting-us-radiology-reimbursement-cuts-context-and-what-comes-next
6. Coffta S. 2024 MPFS Final Rule includes payment reductions for radiology. Auntminnie.com. Published November 13, 2023. Accessed February 2, 2024. https://www.auntminnie.com/practice-management/administration/economics/article/15638373/2024-medicare-physician-fee-schedule-final-rule-includes-payment-reductions-for-radiology
7. Estimate specialty impact of CY 2024 final rule and reduction in temporary Medicare conversion factor increase from 2.5% to 1.25%. ama-assn.org. Published 2023. Accessed February 2, 2024. https://www.ama-assn.org/system/files/estimated-specialty-impact-analysis.pdf
8. HR 2474: Strengthening Medicare for Patients and Providers Act. Congress.gov. Accessed February 2, 2024. https://www.congress.gov/bill/118th-congress/house-bill/2474
9. Doctors facing Medicare cut seek new payment system. Modern Healthcare. Published January 22, 2024. Accessed February 2, 2024. https://www.modernhealthcare.com/politics-policy/medicare-physician-payment-MIPS-replacement-congress-cms
10. Bond A, Schpero W, Casalino L, Zhang M, Khullar D. Association between individual primary care physician Merit-Based Incentive Payment System score and measures of process and patient outcomes. JAMA. 2022;328(21):2136-2146. doi:10.1001/jama.2022.20619