The Senate Finance Committee has released a white paper titled “Bolstering Chronic Care through Physician Payment: Current Challenges and Policy Options in Medicare Part B.” This paper comes at the heels of the April 11thhearing “Bolstering Chronic Care through Medicare Physician Reimbursement” and furthers many of the topics discussed during the hearing. While the paper does not make specific policy recommendations, it explains the policy issues the Committee has identified and its views on possible solutions to these issues. 

This robust paper begins by exploring the background of the Medicare Physician Fee Schedule (PFS), including an overview of the PFS, its rate-setting methodology, the relative value units (RVUs) system, and the PFS conversion factor (CF). It successfully integrates the various factors influencing physician reimbursement and sets the stage for exploring future changes in how providers are compensated for treating chronic conditions. 

The main portion of the white paper looks ahead to the policy challenges in treating chronic conditions and explores potential reforms to address these hurdles. It lists questions related to a wide range of policy proposals under consideration, which fall into several main categories: 

  • Alternative Payment Models – The white paper points towards more effectively incentivizing participation in alternative payment models and rethinking MIPS and its associated burdensome reporting requirements. 
  • Improving Primary and Chronic Care – This includes ideas to manage chronic conditions more effectively in the primary care setting. One proposal being considered is creating a hybrid payment model in fee-for-service (FFS) that would allow for a per-beneficiary, per-month (PBPM) payment provided in advance to independent primary care physicians. According to the paper, this would reduce administrative burden while more appropriately compensating primary care. 
  • Telehealth – The white paper discusses the importance of ensuring Medicare beneficiaries have continued access to telehealth. Congress is expected to extend Covid-era telehealth guidance for two years later this year. 
  • Changes to the calculation of the Medicare Physician Fee Schedule (PFS) Conversion Factor (CF) – The white paper discusses ideas such as more closely monitoring CF fluctuations and constraints, addressing payment update adequacy and sustainability, and the struggles of being limited to budget neutral adjustments to the CF. 

Changes to the CF is a targeted area where change could be afforded. Physician reimbursement is being substantially outpaced by inflation and according to the paper, there is a risk that more physicians will stop accepting Medicare soon. Many stakeholders have proposed an adjustment schedule for the PFS payments that accounts for shifts in cost inputs over time. Furthermore, there is limited flexibility to increase the CF due to budget neutrality. As the paper explains:

“The PFS statute requires CMS to make budget neutrality adjustments for policy updates that the agency’s actuaries project will result in outlay changes exceeding a statutory threshold of $20 million in a calendar year. Congress has never increased this threshold, which receives no automatic updates under current law.” 

The paper also describes challenges to increasing Medicare payments. In addition to the cost to the government, increasing Medicare reimbursements to physicians will also increase beneficiary cost-sharing amounts. Cost considerations will make it more difficult for Congress to embrace large reimbursement increases to physicians.  

Overall, this paper is the most comprehensive outline of Medicare reimbursement reforms to come from a Congressional Committee in many years. It is not yet clear if any of these recommendations will be included in legislation that is considered by the Senate this year.  

ADVOCATE will share additional information with clients and friends as it becomes available on this and other Federal Health Policies.  

Kirk Reinitz, President