CMS Releases Proposed Rule for 2024 Medicare Physician Fee Schedule, AMA Provides Analysis

July 19, 2023

On July 13, the Centers for Medicare and Medicaid Services (CMS) released the proposed rule for the 2024 Medicare Physician Fee Schedule (MPFS), that includes a decrease in the Medicare conversion factor.   

While that decrease will result in more pressure on physicians participating in the Medicare program, the AMA was able to avoid further cuts through its advocacy.  

The AMA will host a webinar - "Fix Medicare Now August Recess Campaign" - on July 27 at 7 pm Central. During the webinar, Jason Marino, AMA director of Congressional affairs, will provide an update on the current state of Medicare legislation and what lies ahead during the 118th Congress. Register here.  

The AMA is working on a formal summary of the 2,000-page rule, but here is an informal overview they have provided in the meantime. Some highlights include: 

1. CMS proposes a 3.36% decrease in the Medicare conversion factor. CMS has proposed a 3.36% decrease in the MPFS conversion factor (CF) from $33.8872 in calendar year (CY) 2023 to $32.7476 in CY 2024. Of this 3.36% cut, 2.17 percentage points are attributable to a budget neutrality adjustment. The other 1.19 percentage points are attributable to a reduction in a temporary increase in CF authorized by Congress under the Consolidated Appropriations Act of 2023 (CAA). To be clear, although the CAA authorized a 1.5% increase in the CF for CY 2024, that 1.5% is applied to the initial CF for CY 2023 ($33.0607), not the adjusted CF for 2023 after the CAA authorized a 2.5% increase ($33.8872). This calculation results in a net decrease between the adjusted CF for CY 2023 and the proposed CF for CY 2024. The AMA is fighting this cut to physician payments and is pursuing legislation that would provide a permanent, annual update to Medicare physician payment that reflects rising practice costs and inflation.  

2. The AMA limited further cuts to the Medicare conversion factor by lowering CMS’ estimated utilization assumption for a new E/M add-on code. This year, a new evaluation and management (E/M) add-on code, G2211, goes into effect. This code captures resource costs associated with longitudinal care of complex patients. CMS’ original estimated utilization assumption for G2211 was 90%. This high estimate would have led to further cuts to the Medicare conversion factor due to budget neutrality requirements. However, the AMA shared with CMS that the ambiguity of the code, its documentation requirements, and its effects on patient cost-sharing would result in a much lower utilization. This advocacy led CMS to adjust its estimated utilization assumption for G2211 to 38% for 2024 and 54% thereafter and, by extension, limited further cuts to the CF for CY 2024.  

3. The AMA has persuaded CMS to postpone the implementation of updated MPFS inflation adjustments until an AMA study on practice costs is completed in 2025. In 1972, Congress created the Medicare Economic Index (MEI) to measure annual changes in physicians’ operating costs and to provide appropriate updates to Medicare physician payments. A series of legislation and rule changes have since rendered the MEI obsolete. In 2022, CMS proposed to revamp the implementation of MEI weights to Medicare physician payments, but the weights referenced faulty data. The AMA has persuaded CMS to postpone the implementation of updated MEI weights until after the AMA Physician Practice Information (PPI) Survey is completed in 2025. While inflationary relief in Medicare payment is overdue, the AMA wants CMS to get it right. 

4. CMS proposes to raise the MIPS performance threshold necessary to avoid a penalty. Under the proposal, the threshold to avoid a penalty under the Merit-based Incentive Payment System (MIPS) would increase from 75 to 82 points. This higher threshold would result in an increase in the number of physicians who receive up to a 9 percent penalty in payment. The AMA is fighting the increase, citing research that MIPS is “unduly burdensome, disproportionately harmful to small, rural, and independent practices; exacerbating health inequities; and divorced from meaningful clinical outcomes.” 

5. The AMA has persuaded CMS to delay its requirement that Medicare Shared Savings Programs (MSSP) participants report their quality measures through EHR-integrated electronic clinical quality measures (eCQMs). The AMA argued that to implement this mandate in 2024 would be to impose a hasty timeline that does not recognize the lift required to calibrate EHRs for eCQM reporting. MSSP participants may still use the CMS Web Interface through 2024.  

The MMA will continue to monitor AMA analyses of the CMS proposed rule and share findings with MMA members. The MMA is also working with the AMA to lobby Congress to fix the many errors in the Medicare payment system to provide ongoing payment updates going forward. 

In the meantime, please contact Adrian Uphoff, health policy analyst, with any questions.