Skip to main content

Strengthening Medicare for Patients and Providers Act of 2023

The Medicare Physician Fee Schedule (MPFS) Conversion Factor has played a significant role in shaping the reimbursement rates for healthcare services provided by physicians under the Medicare program in the United States. The conversion factor is a crucial component of the MPFS, determining the dollar value assigned to the relative value units (RVUs) assigned to each medical service. This factor has undergone several changes over the years in response to evolving healthcare policies and financial considerations.

The history of the conversion factor dates back to the implementation of the Resource-Based Relative Value Scale (RBRVS) in 1992. The RBRVS system aimed to standardize physician payments based on the complexity and resource utilization of services provided. Over time, the conversion factor has seen several adjustments such as the creation (and elimination) of the sustainable growth rate formula and the more recent shift to quality payment programs and accountable care.

Under current law, beginning in 2026, the Medicare Physician Fee Schedule will be subject to two separate conversion factors depending on whether the physician participates in an alternative payment model (APM). For physicians who participate in an APM, the conversion factor is increased by 0.75% while for physicians not participating in an APM the conversion factor is increased by only 0.25%.

In addition, the current law does not allow for an inflation update to the Medicare payments for physician services. The SMPPA, if passed would normalize the increases across these two cohorts of physicians by applying an increase to the conversion factor equal to the MEI.

On April 3rd, Mr. Raul Ruiz (D-CA-25) and 13 cosponsors introduced yet another adjustment to the CF via the Strengthening Medicare for Patients and Providers Act of 2023 (SMPPA). This bill would replace the separate conversion factors for qualifying APM participants and other physicians with a single conversion factor and provides for an update that is equal to the annual percentage increase in the Medicare Economic Index, beginning in 2024. (The Medicare Economic Index is a specialized index that is generally used to determine allowed charges for physician services based on annual price changes.)


A number of stakeholders, including the AMA, American Academy of Neurology, American Academy of Family Physicians, American Academy of Cardiology, American College of Emergency Physicians, American College of Physicians, and the American Psychiatric Association co-signed a letter of support applauding the bill's efforts to “advances the ongoing need to provide financial stability to physician practices in order to preserve access to care for Medicare beneficiaries.”

While the Congressional Budget Office has yet to formally score this bill, and it is difficult to accurately estimate what impact this change could make, the AMA demonstrated that compared to inflation, Medicare payments to physicians decreased 26% since 2001. 

Legislators have struggled for decades to develop new tools that can be used to control growth in spending under the Physician Fee Schedule. This latest alternative has the potential to increase spending on physician-provided services. However with total spending on physician and clinical services approaching $865 billion in 2020, a 1% increase could drain Medicare coffers by an additional $8.6 billion -- without taking into account organic growth in service utilization and enrollment.



Comments

Popular posts from this blog

The Problem of Limited-Supply Agreements for Medicare Price Negotiation

A recent JAMA Viewpoint article discusses how limited-supply agreements between brand name and generic drug makers could impact Medicare price negotiation under the Inflation Reduction Act (IRA). These agreements allow brand manufacturers to maintain some market exclusivity by limiting the supply of generic competitors. The article suggests these deals may increase as the Centers for Medicare and Medicaid Services (CMS) implements the IRA's price negotiation provisions. From a business perspective, it's understandable why brand manufacturers might find limited-supply agreements preferable to having their drugs subject to Medicare negotiation. Maintaining even partial exclusivity is likely better for revenue than triggering government-dictated price reductions. However, policymakers and patients are increasingly concerned that these deals keep prices high despite generic availability. The use of limited supply agreements could also produce unintended consequences.  Balancing som...

FDA Green Light Inches Genetic Screening Forward

The FDA recently granted authorization for the first multi-gene test for assessing hereditary cancer risk, marking a significant advancement in genetic screening capabilities. Developed by Invitae Corporation, the Invitae Common Hereditary Cancers Panel analyzes variants in 47 genes associated with increased cancer risk. Using next-generation sequencing on DNA from blood samples, the test looks at BRCA1 and BRCA2 variants linked to breast and ovarian cancer, as well as other cancer-related genes.  (image source: Adobe Stock Images) The FDA’s approval provides a regulatory framework giving labs a clearer roadmap for developing similar multi-gene panels. With an authorized model in place, labs can proceed more confidently in navigating FDA submissions. Specifically, the de novo classification created for Invitae’s test allows future lab-developed panels to gain regulatory clearance through the expedited 510(k) pathway by demonstrating substantial equivalence. This streamlined validat...

The Future of Liquid Biopsies: Endless Possibilities for Cancer Testing

Liquid biopsies are poised to disrupt cancer testing as we know it. These novel blood tests analyze circulating tumor DNA (ctDNA) and other molecules released by cancer cells, providing a non-invasive option for detection, diagnosis, and monitoring. The promise of liquid biopsies has generated tremendous excitement, along with over $1 billion in investments and acquisitions in recent years. But how close are we to realizing their full potential?  A recent review article sounds a note of caution amidst the hype. While liquid biopsies show ability to detect cancer, evidence that they improve patient outcomes is still lacking. Randomized trials with survival endpoints are needed to prove clinical utility. However, this provides the perfect opportunity for innovative diagnostics companies. Rather than dampening enthusiasm, these evidence gaps highlight major growth possibilities if companies can demonstrate real-world value.   We envision liquid biopsies transforming oncology...