On January 1st, a 3.37 percent reduction to the Medicare Physician Fee Schedule (PFS) Conversion Factor (CF) took effect, as finalized by the Centers for Medicare and Medicaid Services (CMS) in the 2024 Medicare PFS final rule.

This reduction to the CF is largely due to budget neutrality adjustments which were predominantly caused by CMS beginning to cover add-on CPT code G2211. G2211 is an add-on code that may be reported with new and established patient office/outpatient evaluation and management (E/M) services. CMS had to offset the anticipated cost for covering this code with reductions elsewhere in the PFS.

The 2024 CF reduction also includes a 1.25 percent reduction compared to 2023 as specified in legislation passed by Congress at the end of 2022, which instituted a 2.5 percent increase to the CF in 2023 and a 1.25 percent increase to the CF in 2024.

Several bills have been introduced in Congress to mitigate some or all of the 3.37 percent CF reduction for 2024. There is growing momentum for Congress to include one of these bills as part of a government funding bill that must pass by January 19th.

Before the end of the year, Congress passed two Continuing Resolutions (CR) to fund different parts of the federal government. One CR goes through January 19th and the other into February. As must-pass legislation, each CR is an opportunity to attach provisions such as a PFS CF increase. However, the January CR is far more desirable because of the urgency behind fixing this issue.

Assuming Congress does include a CF increase in the January 19th funding bill, CMS would automatically adjust payments to providers for claims with dates of services on or after January 1, 2024, retroactively. In the past, CMS has announced it would hold payment for claims if legislation to increase the CF was likely to pass soon after a CF reduction took effect. However, CMS is not expected to hold claims like it has in the past.

While Congress is expected to pass legislation extending funding for the parts of the federal government currently operating under the January CR, there are several complicating political factors that could result in Congress failing to pass a funding bill by this date. Failure to do so would result in a partial government shutdown. This would not disrupt Medicare reimbursements to physicians, but it would delay, and possibly prevent, Congress from mitigating some or all of the 3.37 percent CF reduction.

As an entitlement, Medicare payments to physicians is mandatory spending. This means Medicare payments are not funded by the appropriations bills that fund the federal government and would therefore not be impacted by a shutdown. Further, the Department of Health and Human Services (HHS) and CMS are funded by the CR that expires in February.

ADVOCATE, through its industry trade association, the Healthcare Business Management Association (HBMA) Government Relations Committee is strongly advocating for Congress to not allow the full 3.37 percent CF reduction from remaining in place.

ADVOCATE will share additional information with clients and friends as we learn more about Congress’ intentions regarding legislation to mitigate the CF reduction.


Kirk Reinitz, President