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Providers Dodged Major Medicare Payment Cuts But More Work To Be Done

Healthcare providers are still up against significant Medicare payment cuts, including ones postponed by Congress, as well as financial losses from the pandemic.

Jacqueline LaPointe
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Published: 20 Dec 2021

Healthcare providers have evaded a nearly 10 percent reduction to their Medicare payments in 2022 thanks to swift Congressional action. However, more work still needs to be done to support physicians and hospitals as they navigate a post-pandemic world.

“This bill is a band aid,” says Patricia L. Turner, MD, MBA, FACS, incoming executive director of the American College of Surgeons (ACS), regarding the expansion of moratoriums on the Medicare sequestration and statutory Pay-As-You-Go cuts in early 2022 and most of a 3.75 percent reduction to the Medicare Physician Fee Schedule rates.

Industry groups, including ASC and fellow members of the Surgical Care Coalition, are happy with the legislation saving physician and hospital Medicare payments, especially as these providers encounter a new variant of COVID-19.  

However, the legislation only stops a 2 percent Medicare sequester cut until April 2022, when providers will face a 1 percent cut through June and the full cut after. The PAYGO cuts are also slated to resume at the start of 2023, and Congress failed to delay the Medicare Physician Fee Schedule cuts entirely.

“Providers are still at risk and it’s because of the temporary nature,” Darryl Drevna, MA, senior director of Regulatory and Public Policy at AMGA, recently told RevCycleIntelligence.

AMGA and others have already said they will lobby to extend relief from statutory Medicare payment cuts as experts predict continued financial struggles for providers in 2022. But there are bigger issues at play here, adds Jamie Miller, MBA, senior director of Government Relations at AMGA.

“Although this is a victory, we can't give up because this is going to be a constant issue for our members every year until we can work with Congress to do something more permanent,” Miller states.

Making support permanent for providers

Industry groups are lacing up their boots to get on the ground for when the temporary pauses on Medicare payment cuts expire later this year. But they are also seeking more permanent fixes for other flexibilities granted during the COVID-19 pandemic, which would help stabilize provider bottom lines in the face of this crisis.

“The big deadline is in July with the sequestration,” Miller states. “But also when the public health emergency began, all these waivers were passed to help deliver of care. Many of those waivers dealt with Medicare covering telehealth services.”

The waivers, which include geographic and site of service flexibilities, payment parity, and an expanded list of covered telehealth services, are set to expire with the public health emergency. But when that period ends is still up in the air.

“We’re basically on it every three months,” Miller explains, referring to the public health emergency period, which must be renewed by HHS every couple of months. “Every three months, we hold our breath and hope the public health emergency gets extended.”

The public health emergency could very well end as soon as March, if not by July, according to Miller. So groups like AMGA are backing bills that would permanently implement some of the telehealth waivers granted during the pandemic to ensure continued access to virtual care.

“When telehealth came out during the pandemic, it opened the floodgates and we’re not able to close it because our patients are used to it. They’re not going back to just going to the doctor’s office,” Miller says.

Providers, however, are saying they need payment parity or at least higher reimbursement for telehealth services to sustain virtual care options.

Next steps

The legislation preventing significant Medicare payment cuts is “a good first step,” according to Christian Shalgian. However, the payment system is broken, requiring more extensive reform, the director of the Division of Advocacy and Health Policy at ACS, said in an interview with RevCycleIntelligence.

Top of the list of reforms for Shalgian is MACRA, or the Medicare Access and CHIP Reauthorization Act of 2015 that implemented a value-based reimbursement system for most clinicians participating in Medicare. Roll-out of MACRA’s largest track, the Merit-Based Incentive Payment System (MIPS), though has been shaky since the start, encountering delayed full implementation over the years. The COVID-19 pandemic also did not help the issue.

“It brings no stability to the system,” Shalgian explains. “And we need that stability for the system so that surgeons can continue to treat Medicare patients and know what the payment system is going to look like going forward.”

Shalgian qualified the statement, saying that the ACS believes quality needs to be part of the Medicare payment system. But the group does not see that happening via MACRA or MIPS, as the programs currently stand.

AMGA is also seeking MACRA reform to ensure providers can deliver value-based care as the program wants. The group is focused on MACRA’s other track though, the Advanced Alternative Payment Model (APM).

“The last APM bonus is coming up,” Drevna states. For providers, that means a 5 percent incentive payment will no longer be available for transitioning to more risk-heavy, accountable alternative payment models compared to MIPS, which is one of MACRA’s top objectives.

The lack of incentive payment for Advanced APM participation is concerning, Drevna continues. Providers have invested millions of dollars to transition to CMS-approved APMs not only for MACRA’s sake, but to improve care quality and lower total cost of care.

“That 5 percent bonus is really important, especially if you look how MACRA has been implemented over the past several years,” Drevna says. “If you’re on the MIPS side of the ledger, the payment adjustments have been negligible for the top performers.”

Without the bonus, the shift to Advanced APMs may stall as payment adjustments are scheduled to stabilize in the coming years. AMGA has sponsored the Value in Health Care Act of 2021 that would extend the Advanced APM bonus payments, as well as implement reforms to Medicare accountable care organizations (ACOs). The bill’s ultimate goal is to advance value-based care according to provider needs.

Healthcare policy that supports value-based care for providers is key. Reform centered on this goal can help providers improve quality of care, lower costs, and address issues that arose during the pandemic, like securing access to telehealth. Research also shows that providers in alternative payment models during the pandemic had more stable revenue and could provide more comprehensive services when in-person stopped.

As industry groups celebrate a short-term win, they are now setting their sights on more permanent policy reforms to stabilize provider finances and advance the delivery of care in a post-pandemic world.

Next Steps

Dig Deeper on Claims reimbursement