The President has signed a $1.7 trillion year-end spending (omnibus) bill that includes several changes to federal healthcare policy for the upcoming fiscal year. The bill includes several provisions impacting healthcare providers, most notably in the form of partial relief to Medicare reimbursement cuts initially set to begin January 1st.
Conversion Factor Bump:
The package includes an increase to the Medicare Physician Fee Schedule conversion factor to partially offset reductions planned for 2023 and 2024. The conversion factor, originally finalized as a -4.5% decrease, will be padded with an additional +2.5% which results in an overall cut of -2% reimbursement from 2022 to 2023. The Omnibus bill also includes an increase of +1.25% to the 2024 conversion factor to soften additional cuts expected for that year.
PAYGO Cuts Delayed:
The Omnibus legislation averts a -4% statutory Pay-As-You-Go reduction, which would have amounted to cuts of approximately $36 billion, from taking effect in 2023. This ‘PAYGO’ cut was the result of spending included in the American Rescue Plan, which triggered a budget control mechanism to apply automatic reductions in order to achieve budget neutrality. These PAYGO cuts are now delayed until the 2025 calendar year.
As a reminder, PAYGO cuts triggered by the American Rescue Plan would have been applied in addition to the -2% Medicare sequester reduction which resumed in July of 2022.
Other Healthcare Wins:
- For those participating in the Advanced Alternative Payment Model (AAPM) track of the Quality Payment Program (QPP), the bill extends incentives which were set to expire this year. While the bill preserves the ‘lump sum’ AAPM for one additional year, the bill reduces the amount from 5% to 3.5% of Medicare payments for 2023. The incentive is designed to offset losses in revenue that physicians may incur as they move from fee-for-service to participation in value-based care models. Beginning 2024, the ‘lump sum’ incentive will be replaced with an increase to the Medicare conversion factor for eligible QPP participants.
- Telehealth flexibilities allowed under the COVID-19 public health emergency will be extended to December 31st, 2024 which updates previously passed legislation which kept these flexibilities in place for 151 days following the end of the PHE declaration.
As always, ADVOCATE will keep you up to date on this and all issues impacting medical groups as they become available.
Manager, Regulatory Affairs