Looming Payment Cuts Highlight Need to Stabilize Medicare
By Jarrod Fowler, MHA, FMA Director of Healthcare Policy and Innovation

The FMA considers Medicare system stabilization to be a top priority. Currently, a lack of payment updates that keep pace with inflation and a pile of looming cuts are threatening access to care for vulnerable Medicare beneficiaries by undermining medical practices’ economic viability. The FMA believes that these cuts must be stopped.

So far this year, physicians have incurred a 2.75% reduction to the Medicare physician fee schedule (MPFS) conversion factor because of the reinstatement of certain sequestration cuts (2%) and the partial expiration of relief that was enacted to offset the budget neutrality effects of the 2021 Medicare Physician Fee Schedule Final Rule (.75%).

More concerning yet is that several substantial cuts will take effect in 2023 unless Congress acts to prevent them. These include:

• A 4% sequestration cut to the conversion factor triggered by the American Rescue Plan Act.
• The expiration of the remaining relief granted to offset the budget neutrality effects of the 2021 MPFS Final Rule. This will result in a further 3% cut to the conversion factor if no action is taken.
• An additional cut of roughly 1.5% to the conversion factor due to changes that trigger “budget neutrality” included in the 2023 MPFS Proposed Rule.
• The expiration of a 5% Medicare bonus for Advanced Alternative Payment Model participants.
• The expiration of a $500 million dollar bonus pool for exceptional performance under the Merit-based Incentive Payment System (MIPS).
• A zero-percent statutory payment increase to the conversion factor at a time when inflation is soaring.