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Why the Medicare 2024 Base Pay Cut Announcement Is a Joke

More justified outcry about Medicare's approach to clinician payment after Medicare last week formally announced an expected drop in the base rate used in the physician fee schedule for next year. Overall payment rates under the physician fee schedule are to be reduced by 1.25% in 2024 compared to this year, owing to dictates already set in law, the Centers for Medicare & Medicaid Services (CMS) said. CMS said it expects a drop in a base rate known as the conversion factor by $1.14 to $32.75, or 3.34%, for the physician fee schedule.

This cut comes at a time when CMS' own estimates show that physicians face a sharp increase in inflation, the AMA said in a statement. The Medicare Economic Index (MEI) may rise by 4.5% in 2024, after an expected gain of 3.8% this year.

"This is almost biblical in its impact," said Jesse M. Ehrenfeld, MD, MPH, AMA's president, in a statement, adding that physicians have already faced 7 "lean years that include a pandemic and rampaging inflation.... Physicians need relief from this unsustainable journey."

AMA and other physician groups have asked Congress to return to permanently including a broader inflation adjuster in the Medicare physician fee schedule. Medicare already includes some automatic inflation adjusters in other payment rules, including ones for hospitals. But Congress removed this feature for the physician fee schedule through the enactment of the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015. Strengthening Medicare for Patients and Providers Acts would peg increases in the base rate for the physician fee to the MEI rate. Introduced in April, the bill now has 26 sponsors in the House, evenly split among Democrats and Republicans. In a Thursday statement, Tochi Iroku-Malize, MD, MPH, MBA, president of the American Academy of Family Physicians (AAFP), called on Congress to enact an annual inflationary update.


"Sweeping reform will help protect Medicare beneficiaries' access to primary care in their own communities — but physicians can't do this alone," Iroku-Malize said in a statement.


Douglas White, MD, PhD, president of the American College of Rheumatology, said in a statement that he is "gravely concerned that the proposed rule's physician payment cuts contained in CMS' conversion factor would add to physicians' uncertainty about their continued ability to provide the highest quality of care to Medicare patients."


Proposed Policy Changes


Despite criticizing Medicare's pay cuts, physician groups still praised some of the proposals contained within the draft 2024 physician fee schedule, which runs to about 1920 pages. AAFP's statement called CMS' plans to update coding and payment regulations for primary care and behavioral health integration "a meaningful step forward."

"Family physicians appreciate CMS's actions to better account for important services we provide to keep our patients healthy between office visits," AAFP's Iroku-Malize said. ACR's White said his group appreciates the "recognition of the value of complex care provided by rheumatologists and other cognitive care specialists by continuing to operationalize the Evaluation and Management (E/M) coding changes."

Policy changes in the draft 2024 Medicare physician fee schedule include the following:

Separate add-on payment to better recognize the resource costs associated with evaluation and management visits for primary care and longitudinal care of patients with complex health concerns, CMS said.


Separate coding and payment for community health integration services. These would include "person-centered planning, health system coordination, promoting patient self-advocacy, and facilitating access to community-based resources to address unmet social needs that interfere with the practitioner's diagnosis and treatment of the patient," CMS said. The agency described this as the first time the Medicare physician fee schedule would include care involving community health workers.


Payment for practitioners to train and involve caregivers in support of patients with certain diseases or illnesses, such as dementia, in conducting a treatment plan.

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