‘Band-Aid’ Approach to Fixing Cuts to Physician Reimbursement Needs Rethink

With a temporary reprieve in Medicare reimbursement cuts set to expire this Friday, some physicians say the system in which the annual Physician Fee Schedule (PFS) is determined needs an overhaul.

Reimbursement cuts to the Centers for Medicare & Medicaid Services (CMS) Medicare PFS have concerned physicians and medical societies for years now, but they’ve been especially worrisome in conjunction with the added resources needed to address COVID-19, as well as staffing shortages.

The 2022 proposed Medicare PFS included a reduction of about 10% in reimbursements through three different cuts. In December 2021, Congress approved legislation that eliminated the 2% reduction in Medicare sequester cuts from January 1 until March 31 of 2022 and includes a 1% reduction through the end of June.

For Joseph C. Cleveland Jr, MD (University of Colorado Anschutz Medical Center, Denver), who serves as director-at-large on the Society of Thoracic Surgery (STS) Board of Directors, this bill—called the Protecting Medicare and American Farmers from Sequester Cuts Act—was more of a “Band-Aid approach” than any sort of complete fix.

We need to get past just putting out the fires and worrying about these next cuts, but really get into more of a long-term reform [to achieve] true value-based care. Samuel Jones

“It was kind of a reprieve until March, and action will have to be taken to prevent [further cuts],” he told TCTMD. But with world events as they are, “there's a lot of attention on other things than the Medicare physician fee scale, so likely it will be that these cuts just become as part of the budgetary process . . . . This right now is obviously way down [on Congress’] priority list and probably, hate to say, but appropriately so.”

Effect on Patients

From a big-picture perspective, Samuel Jones, MD, MPH (The Chattanooga Heart Institute, TN), chair of the American College of Cardiology (ACC) Health Affairs Committee, told TCTMD that his biggest concerns lie with the effects that decreased revenue coming into the healthcare facilities will have on patients. “That ends up leading to decreased access,” he said. “This isn't about physician salaries. This is about making sure that we provide access to patients. And that's what we're all worried about: what this will do to making sure patients are able to get the care that they need at the time that they need it.”

But also, he said, medical practices are businesses and can’t run optimally with constant uncertainty. Jones also emphasized the amount of energy that’s wasted with lobbying Congress year after year for short-term fixes. “There are so many other things that we could focus on for really improving patient care, for looking at social determinants of health,” he said.

Last month, the ACC co-signed a letter to Congress along with the Federation of American Hospitals and other medical professional societies urging the full 2% Medicare sequester moratorium for the duration of the COVID-19 Public Health Emergency.

While they have not yet received a response, Jones acknowledged that even aside from the direct effects of the pandemic, the medical community is facing a slew of other financial problems like staffing shortages, rising supply costs, and inflation. “Anytime we have revenues that are going to be going down and costs that are going up, it's still the same problem for us,” he said.

“We're still going to be dealing with some variants of COVID for a while,” Jones continued. “If we're still going to be under a public health emergency, there's a recognition that the pandemic's going on. Even after that, we're going to be in endemic aspects, and that's going to be rearing its head.”

It will take a bit of time to fully appreciate the financial effects of the 3-month moratorium on Medicare cuts, he said, but “I know that our hospital and our practice feels like this is going to be an ongoing issue.”

Long-term Sustainability

Looking forward, Cleveland said it’s likely that the same process will repeat at the end of this year going into 2023. “The strategy of just trying to kind of hang on for these small reprieves, unfortunately, seems to be the way that we're dealing with this, but it's probably not an effective long-term strategy,” he said. “The way the budgetary process works, these are things that are automatically in written as statute, and so in some ways, it takes again direct action to reverse them.” With midterm elections slated for this November, Cleveland said it is unlikely that there will be enough focus in Congress to have said action with regard to changes in Medicare funding.

The strategy of just trying to kind of hang on for these small reprieves, unfortunately, seems to be the way that we're dealing with this, but it's probably not an effective long-term strategy. Joseph C. Cleveland Jr

Without change, he predicts more and more physicians will be driven to join larger healthcare systems, which “commercializes healthcare and really erodes the professional aspect of medicine.” Moreover, physicians won’t be able to self-regulate and have autonomy “if you continue to face an 8-10% over time loss of your revenue stream,” Cleveland predicted. “So it really is about the broader spectrum of improving the healthcare system for the patient such that we can work as autonomous units.”

Jones also expects to see a continuation of the current cycle of cuts and requests for short-term delays on those cuts. To have any sort of change, he said, “we've got to get all clinicians to be aware of what's going on, engage with their policy makers, and make sure they really understand the impact that these [cuts] can have on patients.

“I think Congress realizes that this isn't good,” he continued. “But it's just the way that the system is being developed, and it's a system that nobody really wants. . . . We need to get past just putting out the fires and worrying about these next cuts, but really get into more of a long-term reform [to achieve] true value-based care.”