Medicare Budget Neutrality Reductions Would Harm CV Care
The ACC and several other medical societies in a joint letter to the Centers for Medicare and Medicaid Services (CMS) commented on the negative effects of budget-neutral reductions in the proposed 2022 Medicare Physician Fee Schedule (PFS), which recommends updates to the payment formula to account for increased wages paid to clinical staff. Clinical staff labor inputs were last updated in 2002, using data from the Bureau of Labor Statistics. The costs for clinical staff labor, supplies and equipment comprise the direct practice expense costs attributed to individual services.
These practice expense components must be budget neutral by law, which means increased payment for one component results in a proportional decrease elsewhere in other components. These updates follow others that were made to update the pricing for more than 1,400 supply and equipment inputs that beginning in 2019.
As a result of the budget-neutral nature of both the overall PFS and the practice expense formula within the PFS, services with more direct practice costs from supplies and equipment than clinical labor costs see reductions to practice expense relative value units (RVUs) after the rebalancing that is necessary to achieve budget neutrality. This translates to practice expense decreases ranging from 5% to 20% for services such as echocardiography, advanced imaging and office-based vein therapies.
The ACC and others have communicated with CMS officials, policymakers and members of Congress about the negative impacts of such a proposal, most recently through the joint letter to the agency. In recognition that wages have increased since the last update 20 years ago, the letter urges the agency to make several technical changes that would make the proposal more accurate and less disruptive, including delaying implementation beyond 2022 while assembling an updated proposal. The letter also recommends that future updates are phased over a four-year period, as the agency has done with other large updates in the past two decades.
These practice expense budget neutrality reductions are compounded by other statutory reductions medicine faces outside the PFS.
- The current reprieve from the 2% sequester included in the Budget Control Act of 2011 will expire without congressional intervention.
- A 4% reduction from statutory pay-as-you-go rules resulting from the American Rescue Plan Act will begin in 2022.
- The 3.75% temporary increase to the fee schedule conversion factor that Congress approved last year to offset fee schedule policy changes will expire on Dec. 31.
- Fee schedule updates are frozen until 2026 under the Medicare Access and CHIP Reauthorization Act.
The ACC and the entire House of Medicine has already communicated to congressional leadership that Congress must avoid these cuts, and the ACC and other organizations will continue to do so until action is taken. This financial uncertainty when practices are still recovering from, and responding to, the COVID-19 public health emergency would certainly impact access to care.
Keywords: ACC Advocacy, Centers for Medicare and Medicaid Services, U.S., Public Health, COVID-19, SARS-CoV-2, Medicare, Fee Schedules, Physicians, Workforce, Policy, Echocardiography, Health Services Accessibility
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