June 12, 2023

It’s just a feeling you have. You can’t put your finger on it, but you know something’s afoot; something’s in the wind; something significant could be coming your way. For those in the medical community who have been disappointed time and again with annual announcements of reduced Medicare payments, there is news coming out of our nation’s capital that may provide renewed hope.

Blowing Hot and Cold

Year after year, anesthesia, chronic pain and other specialty providers have had to wait with nervous anticipation to see whether the Medicare Physician Fee Schedule (PFS) and the anesthesia fee schedule conversion factors (CFs) were going to be raised or cut, knowing that any adjustment in the CFs could have significant ramifications for their practices’ overall revenues. Physician groups and medical societies have, for years, pleaded with the government to produce a workable and permanent solution to its payment system that has all too often left providers disappointed. Some years, there might be a slight increase in the CFs; in other years, the CFs would be lower, ultimately leading to a reduction in reimbursement.

As an example of the uncertainty with which providers have had to contend relative to their Medicare reimbursement rates, the 2023 PFS final rule, released in November of 2022, listed a general CF of $33.06, representing a decrease of $1.55 from the previous year. That same final rule had the 2023 anesthesia CF at $20.60, reflecting a decrease of over four percent when measured against the anesthesia CF of 2022. But then, on January 5, 2023, the Centers for Medicare and Medicaid Services (CMS) announced an updated 2023 PFS CF of $33.88. The change translated to a 2.5 percent positive adjustment from the initial 2023 CF. However, even with this revision of the numbers, the updated PFS CF still amounted to a 2.08 percent reduction in the national PFS CF rate over against the 2022 CF. Similarly, the January revision in the anesthesia CF ($21.12), while less draconian, still represented a two percent reduction from 2022’s anesthesia CF of $21.56.

All this leaves one with the mental image of a moistened finger stuck resolutely in the air in an attempt to see which way the wind might be blowing at any given time. The caprices of decisionmakers in the halls of government, however well intentioned, are legendary. But recent actions by certain lawmakers are attempting to remedy all this.

Summer Breeze

Back in April, a bipartisan bill was introduced into Congress by U.S. Representative and medical doctor Raul Ruiz (D-CA), along with other physician-legislators, with the aim of providing a more favorable formula for determining provider reimbursement—at least in the Medicare context. The Strengthening Medicare for Patients and Providers (SMPP) Act, H.R. 2474, seeks to tie the Medicare physician payment schedule to the Medicare Economic Index (MEI). According to the American Medical Association (AMA):

By instituting an annual inflation-based update, the legislation would put physicians on equal footing with virtually all other health professionals and organizations paid by Medicare. Physician payment rates have been subject to a six-year payment freeze that will last until 2026 and are seeing two percent across-the-board Medicare pay cuts that started in January. This Medicare payment policy failure came as physicians had to deal with inflation, COVID-19, burnout and the rising cost of running a practice. When the freeze ends, the statutory update for most physicians will be limited to 0.25 percent indefinitely, far below even normal rates of inflation.

The AMA goes on to point out that physician payments have dropped 26 percent from 2001 to 2023 when adjusted for inflation. The bill’s introduction comes on the heels of the Medicare Payment Advisory Commission (MedPAC) recommendation that Congress increase 2024 Medicare physician payments above current law by linking the payment update to the MEI. In addition, the AMA relates that the Medicare Trustees Report issued in late March said lawmakers should “expect access to Medicare-participating physicians to become a significant issue in the long term” unless Congress takes steps to bolster the payment system. It is hoped that the SMPP Act will serve to do just that.

According to SMPP’s lead sponsor, Rep. Ruiz:

I am deeply concerned about the impact the outdated Medicare physician payment rate is having on health care access for my constituents. That is why I am announcing legislation that will move us away from a system where every year seniors’ access to care is threatened due to uncertainty over potential cuts.

As stated previously, if the legislation becomes law, it would mean the creation of a single CF that would be equal to the percentage increase in the MEI, which attempts to calculate the impact of inflation on physician office costs and wage levels.

Upon checking the current status of the bill, it has yet to make it out of the U.S. House’s Health Subcommittee; and this summer could be crucial to the bill’s fortunes. We should note that, in addition to the support SMPP has received from the AMA and the Medical Group Management Association (MGMA), several professional medical societies—representing multiple specialties—have written statements backing the bill’s passage. This broad support from the medical community and the bill’s bipartisan sponsorship may augur well for the eventual passage of this new approach in determining reasonable reimbursement for Medicare providers.

The actual language of SMPP can be found here: Text - H.R.2474 - 118th Congress (2023-2024): Strengthening Medicare for Patients and Providers Act | Congress.gov | Library of Congress.

If you have questions on this topic, please reach out to your account executive.

With best wishes, 

Rita Astani
President—Anesthesia