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AAO weighs in on Congress passing Medicare Physician Payment adjustment

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5 min read

The American Academy of Ophthalmology (AAO) has responded to a decision by Congress earlier this month to pass a partial government funding bill containing policies pertaining to recent cuts to the Medicare Physician Fee Schedule (MPFS) at the beginning of the year.

Let’s start with the MPFS.

The Medicare Physician Fee Schedule is the primary method of payment for healthcare providers (HCP) enrolled in Medicare. This includes:

  • Professional services of physicians and other HCPs in private practice
  • Services covered incident to physicians’ services (other than certain drugs covered as incident to services)
  • Diagnostic services (aside from clinical laboratory tests)
  • Radiology services

Note: “Incident to” refers to a Medicare billing mechanism, allowing services furnished in an outpatient setting to be provided by auxiliary personnel and billed under the provider's national provider identification (NPI) number.

So what happened at the beginning of 2024?

Congress made across-the-board cuts to Medicare payment rates, reducing the 2024 conversion factor (the amount Medicare pays per relative value unit [RVU]) to $32.74 (from $33.88).

This was a 3.37% reduction from the previous year.

Go on…

The cut was made despite the AAO and almost 120 state medical associations and national medical societies sending a joint letter to Congress that urged them to cancel the decision.

Per the letter, the associations stated that “when adjusted for inflation in practice costs, Medicare physician pay has declined 26% from 2001 to 2023.”

They added that the CMS had already acknowledged that the cost of running a medical practice would increase 4.6% in 2024, “yet physicians are being subject to a 3.37% cut next year.”

So why cut?

Per the Centers for Medicare and Medicaid Services (CMS), the cut was necessary to offset increases in payment for other specific types of services (such as primary and longitudinal care visits).

Now let’s talk about this new (partial) funding bill.

Passed on March 8, 2024, the Consolidated Appropriations Act 2024 adjusted the original cut of -3.37% to the Physician Fee Schedule (PFS) to -1.69%.

This change is effective March 9 through December 31, 2024.

I’m sensing a but…

Yup. Despite the cut, per the AAO: It does not provide for retroactive claims processing.

“We are deeply disappointed that lawmakers did not eliminate the full cut to physician payment and that much needed, long-term physician payment reforms remain unaddressed,” the Academy wrote.

…such as?

The AAO noted two pieces of legislation that it believes Congress should enact in order to support long-term solutions for the Medicare physician payment system:

  • The Strengthening Medicare for Patients and Providers Act (HR 2474)
    • Provides annual physician payment updates tied to the Medicare Economic Index (MEI), which measures practice cost inflation

Comparison to current legislation: Current law provides for separate conversion factors for physicians that are qualifying participants in advanced alternative payment (AAP) models and for other physicians.

  • The Provider Reimbursement Stability Act of 2023 (HR 6371)
    • Would provide for certain adjustments to the MPFS budget neutrality policies:
      • Require CMS to resolve inaccurate utilization projections based on actual claims and (potentially) revise the conversion factor accordingly
      • Raise budget neutrality adjustment threshold from $20 million to $53 million, increasing every 5 years by the MEI cumulative increase
      • Require direct inputs of practice expense RVU (such as clinical wages and equipment prices) to be reviewed simultaneously—at a minimum starting in 2030 and every 5 years thereafter
      • Require CMS to limit positive/negative budget neutrality adjustments to the conversion factor to 2.5% each year

Lastly… switching over to ODs for a moment: What other 2024 changes took effect?

On the optometric side, the American Optometric Association (AOA) responded to the CMS’s final ruling on MPFS by providing optometrists (ODs) with a summary of the changes (viewable here).

This included (aside from the conversation factor reduction):

  • A new add-on code for primary care (G2211)
  • Maintained performance threshold to avoid penalization within Merit-based Incentive Payment System (MIPS) of 75 points
  • Increased MIPS Promoting Interoperability (PI) category performance period to a minimum of any continuous 180-day period with in 2024
    • Note: The AOA was opposed to this.
  • Medicare/Medicaid revalidation of enrollment change
  • Delayed mandatory electronic Clinical Quality Measure (eCQM) adoption
  • No change in public reporting on cost measures
  • New quality measures to optometry/ophthalmology set

In total, ODs garnered a total of over $1.29 billion in allowed charges for 2024 (compared to the estimated $1.3 billion for 2023), according to the AOA.