Three 'Bad News' Payment Changes Coming Soon for Physicians

Elizabeth Woodcock, MBA, CPC


September 15, 2021

Physicians are bracing for upcoming changes in reimbursement that may start within a few months. As doctors gear up for another wave of COVID, payment trends may not be the top priority, but some "uh oh" announcements this fall could have far-reaching implications that could affect your future.

The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule this summer covering key aspects of physician payment. Although the rule contained some small bright lights, the most important changes proposed were far from welcome.

Here's what could be in store:

1. The highly anticipated Medicare Physician Fee Schedule ruling confirmed a sweeping payment cut. The drive to maintain budget neutrality forced the federal agency to reduce Medicare payments, on average, by nearly 4%. Many physicians are outraged at the proposed cut.

2. More bad news for next year: Sequestration will be back. Sequestration is the mandatory, pesky, negative 2% adjustment on all Medicare payments. It had been put on hold and is set to return at the beginning of 2022.

Essentially, sequestration reduces what Medicare pays its providers for health services, but Medicare beneficiaries bear no responsibility for the cost difference. To prevent further debt, CMS imposes financially on hospitals, physicians, and other healthcare providers.

The Health Resources and Services Administration (HRSA) has funds remaining to reimburse for all COVID-related testing, treatment, and vaccines provided to uninsured individuals. You can apply and be reimbursed at Medicare rates for these services when COVID is the primary diagnosis (or secondary in the case of pregnancy). Patients need not be American citizens for you to get paid.

3. Down to a nail-biter: The final ruling is expected in early November. The situation smacks of earlier days when physicians clung to a precipice, waiting in anticipation for a legislative body to save them from the dreaded income plunge. Indeed, we are slipping back to the decade-long period when Congress kept coming to the rescue simply to maintain the status quo.

Many anticipate a last-minute Congressional intervention to save the day, particularly in the midst of another COVID spike. The promises of a stable reimbursement system made possible by the Medicare Access and CHIP Reauthorization Act (MACRA) have been far from realized, and there are signs that the payment landscape is in the midst of a fundamental transformation.

Other changes proposed in the 1747-page ruling include:


  • More telehealth services will be covered by Medicare, including home visits.

  • Tele–mental health services got a big boost; many restrictions were removed so that now the patient's home is considered a permissible originating site. It also allows for audio-only (no visual required) encounters; the audio-only allowance will extend to opioid use disorder treatment services. Phone treatment is covered.

  • Permanent adoption of G2252: The 11- to 20-minute virtual check-in code wasn't just a one-time payment but will be reimbursed in perpetuity.

  • Boosts in reimbursement for chronic care and principal care management codes, which range on the basis of service but indicate a commitment to pay for care coordination.

  • Clarification of roles and billing opportunities for split/shared visits, which occur if a physician and advanced practice provider see the same patient on a particular day. Prepare for new coding rules to include a modifier. Previously, the rules for billing were muddled, so transparency helps guide payment opportunities.

  • Delay of the appropriate use criteria (AUC) for advanced imaging for one (more) year, a welcome postponement of the ruling that carries a significant administrative burden.

  • Physician assistants will be able to bill Medicare directly, and referrals to be made to medical nutrition therapy by a nontreating physician.

  • A new approach to patient cost-sharing for colorectal cancer screenings will be phased in. This area has caused problems in the past when the physician identifies a need for additional services (eg, polyp removal by a gastroenterologist during routine colonoscopy).

Not positive:

  • Which specialties benefit and which get zapped? The anticipated impact by specialty ranges from hits to interventional radiologists (-9%) and vascular surgeons (-8%), to increases for family practitioners, hand surgeons, endocrinologists, and geriatricians, each estimated to gain a modest 2%. (The exception is portable x-ray supplier, with an estimated increase of 10%.) All other specialties fall in between.

  • The proposed conversion factor for 2022 is $33.58, a 3.75% drop from the 2021 conversion factor of $34.89.

The proposed ruling also covered the Quality Payment Program (QPP), the overarching program of which the Merit-based Incentive Payment System (MIPS) is the main track for participation. The proposal incorporates additional episode-based cost measures as well as updates to quality indicators and improvement activities.

MIPS penalties. The stakes are higher now, with 9% penalties on the table for nonparticipants. The government offers physicians the ability to officially get out of the program in 2021 due to the COVID-19 pandemic, thereby staving off the steep penalty. The option, which is available through the end of the year, requires a simple application that can be completed on behalf of the entire practice. If you want out, now is the time to find and fill out that application.

Exempt from technology requirements. If the proposal is accepted, small practices — defined by CMS as 15 eligible clinicians or fewer — won't have to file an annual application to reweight the "promoting interoperability" portion of the program. If acknowledged, small practices will automatically be exempt from the program's technology section. That's a big plus, as one of the many chief complaints from small practices is the onus of meeting the technology requirements, which include a security risk analysis, bi-directional health information exchange, public health reporting, and patient access to health information. Meeting the requirements is no small feat. That will only affect future years, so be sure to apply in 2021 if applicable for your practice.

Changes in MIPS. MIPS Value Pathways (MVPs) are anticipated for 2023, with the government releasing details about proposed models for heart disease, rheumatology, joint repair, and more. The MVPs are slated to take over the traditional MIPS by 2027.

The program will shift to 30% of your score coming from the "cost" category, which is based on the government's analysis of a physician's claims — and, if attributed, the claims of the patients for whom you care. This area is tricky to manage, but recognize that the costs under scrutiny are the expenses paid by Medicare on behalf of its patients.

In essence, Medicare is measuring the cost of your patients as compared to your colleagues' costs (in the form of specialty-based benchmarks). Therefore, if you're referring, or ordering, a more costly set of diagnostic tests, assessments, or interventions than your peers, you'll be dinged.

However, physicians are more likely this year to flat out reject participation in the federal payment program. Payouts have been paltry and dismal to date, and the buzz is that physicians just don't consider it worth the effort. Of course, clearing the threshold (which is proposed at 70 points next year) is a must to avoid the penalty, but don't go crazy to get a perfect score as it won't count for much. 2022 is the final year that there are any monies for exceptional performance.

Considering that the payouts for exceptional performance have been less than 2% for several years now, it's hard to justify dedicating resources to achieve perfection. Experts believe that even exceptional performance will only be worth pennies in bonus payments.

The fear of the stick, therefore, may be the only motivation. And that is subjective, as physicians weigh the effort required vs just taking the hit on the penalty. But the penalty is substantial, and so even without the incentive, it's important to participate at least at the threshold.

Fewer cost-sharing waivers. While the federal government's payment policies have a major impact on reimbursement, other forces may have broader implications. Commercial payers have rolled back cost-sharing waivers, bringing to light the significant financial responsibility that patients have for their healthcare in the form of deductibles, coinsurance, and so forth.

More than a third of Americans had trouble paying their healthcare bills before the pandemic; as patients catch up with services that were postponed or delayed because of the pandemic, this may expose challenges for you. Patients with unpaid bills translate into your financial burden.

Virtual-first health plans. Patients may be seeking alternatives to avoid the frustrating cycle of unpaid medical bills. This may be a factor propelling another trend: Lower-cost virtual-first health plans such as Alignment Health have taken hold in the market. As the name implies, insurance coverage features telehealth that extends to in-person services if necessary.

These disruptors may have their hands at least somewhat tied, however. The market may not be able to fully embrace telemedicine until state licensure is addressed. Despite the federal regulatory relaxations, states still control the distribution of medical care through licensure requirements. Many are rolling back their pandemic-based emergency orders and only allowing licensed physicians to see patients in their state, even over telemedicine.

While seemingly frustrating for physicians who want to see patients over state lines, the delays imposed by states may actually have a welcome effect. If licensure migrates to the federal level, there are many implications. For the purposes of this article, the competitive landscape will become incredibly aggressive. You will need to compete with Amazon Care, Walmart, Cigna, and many other well-funded national players that would love nothing more than to launch a campaign to target the entire nation. Investors are eager to capture part of the nearly quarter-trillion-dollar market, with telemedicine at 38 times pre-pandemic levels and no signs of abating.

Increased competition for insurers. While the proposed drop in Medicare reimbursement is frustrating, keep a pulse on the fact that your patients may soon be lured by vendors like Amazon and others eager to gain access to physician payments. Instead of analyzing Federal Registers in the future, we may be assessing stock prices.

Consider, therefore, how to ensure that your digital front door is at least available, if not wide open, in the meantime. The nature of physician payments is surely changing.

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