With passage of the Consolidated Appropriations Act, 2024 (CAA 24), we finally learned the rates physicians will be paid for Medicare services during the remainder of 2024. Effective when it was signed by the President on March 9, 2024 the CAA 24 contained several provisions that benefitted physician reimbursement:

• The conversion factor (CF) that set the overall rate for the Medicare Physician Fee Schedule (MPFS) was adjusted upward by 1.66% from where it has been since January 1, 2024, to a final rate of $33.2875 per RVU. This makes the Medicare payment rate 1.77% lower than it was in 2023, rather than the 3.37% cut that was contained in the 2024 MPFS Final Rule.
  
  
• The fee schedule adjustment for labor cost was maintained through the end of 2024 at a factor of no less than 1.0 (the “GPCI Work Floor”). This is good news for certain localities, as explained below under Geographic Adjustment.
  
  
• Incentive payments for practices participating in the Quality Payment Program’s Alternative Payment Models were increased from 0.75% to 2.63% for performance year 2024 (payment year 2026).

Medicare reimbursement for 2024 will be paid under two fee schedules. For services provided from January 1 through March 8, 2024, the rate will be determined using the CF of $32.7442 per RVU as published in the Final Rule. From March 9 to December 31, 2024, the rate will be determined by the final CF of $33.2875 as adjusted by the CAA 24. Note that all of these provisions are temporary, limited time adjustments. Several bills are pending in Congress that would make more permanent corrections to the Medicare pricing formula, but as of this writing none are in active discussion.

Geographic Adjustment

The national Medicare fee schedule is further modified for regional cost differences, using a measure called the Geographic Practice Cost Index (GPCI). The GPCI assigned to physician work (wGPCI) historically had a floor value of 1.0, but that floor was scheduled to be eliminated for 2024 with the result that many localities could see much lower reimbursement. This effect would be on top of the cut to the CF and any RVU valuation adjustments. Had the CAA 24 not averted this reduction, 51 of the 109 geographic localities in the Medicare system would have seen a work GPCI factor of less than 1.0, resulting in even lower payments. The most severe reduction would have been in Mississippi, where the wGPCI was calculated to be 0.95.

Using the high-volume single-view chest x-ray professional component (71045-26) as an example, here is the potential impact in Mississippi that was averted by the CAA 24:

The actual final result for this procedure is a 4.8% decrease from 2023 in Mississippi, but it could have been an 8.5% decrease (3.9% lower) if the wGPCI floor had not been sustained.

Overall Effect on Global Reimbursement

Breast Tomosynthesis G0279 was cut 11.72% for 2024, from 1.58 to 1.42 RVUs. Many of the highest volume procedures have been lowered by more than the 1.77% general reduction due to RVU adjustments, including:

The only significant increase in global reimbursement was the limited extremity ultrasound 76882, with a 48.13% increase. The reduction for the bilateral mammogram 77066 was 1.36%, reflecting an increase in RVU valuation that somewhat offsets the conversion factor cut. In a similar manner, DEXA 77080 edged upward by 0.82% rather than being reduced by the 1.77% CF cut.

Overall Effect on Professional Component Reimbursement

The single-view chest x-ray 71045 professional fee was cut 5.55%. Reductions to the PC for other high-volume procedures included:

Although very few procedures will receive increased reimbursement, many were reduced by less than the 1.77% across-the-board cut. These include duplex Doppler scan 93979, increased by 1.12%, along with several other duplex Doppler scans.

Our Volume-Weighted Analysis

We performed a volume-weighted analysis^[i] using a composite from our database. Overall, the professional component reimbursement is estimated to decrease 2.7% while global reimbursement will decrease 2.5% from 2023 levels, based on the same volume of services.

This is what a typical full-service practice might find after performing its volume-weighted analysis:

* A national fee schedule for PET global billing is not available since the pricing of those procedures is a local carrier determination. We calculated an estimated amount using one regional fee schedule (NJ-99). The pricing and resulting variance in other states will be different from this presentation.

Our composite includes all modalities, but the mix of modalities performed by a particular practice will affect its overall result. For example, an imaging center with all the listed modalities except for PET would see a decrease of 2.6% rather than 2.5% because it would not benefit from the relatively lower reduction in PET reimbursement. Note also that we include only those codes that are paid by Medicare. Other codes, such as 77062 and 77063 for mammography tomosynthesis, that are covered by some payers are not factored in to this analysis.

Conclusion

Understanding the annual changes in Medicare’s fee schedules is useful when analyzing areas where the practice’s revenue might be increasing or decreasing. Many commercial payers base their fees on the Medicare table, although not all of them make the same changes, or at the same time, as Medicare does. The same volume-weighted analysis technique can be applied to commercial fee schedules, as well.

Healthcare Administrative Partners will continue to keep you abreast of the Medicare payment system and subscribing to this blog is the best way to get the most current information available.

[i] The process used to perform a volume-weighted analysis involves gathering data from the previous year that shows the number of times each procedure code was billed for Medicare patients. The procedure volumes are multiplied by the 2023 Medicare fee schedule rates in one column, and again by the 2024 Medicare fee schedule rates in another column. Totaling each column will reveal the total practice revenue for the previous year and the reimbursement that the practice could expect in the current year assuming the volume of each procedure is unchanged.   The percentage increase or decrease can then be calculated.

Sandy Coffta is the Vice President of Client Services at Healthcare Administrative Partners.

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