Physician fee cuts and policy updates: What's at stake for practices in 2023
The Inflation Reduction Act
On August 16, President Biden signed into law the Inflation Reduction Act of 2022 (IRA), culminating some two decades of Democratic efforts to enact Medicare prescription drug price negotiation. Key provisions include:
- The Medicare drug price negotiation requirements for drugs in Part D and Part B (will take effect in 2026 and 2028, respectively, though implementing rulemaking/guidance could come out as early as this year).
- A redesign of Medicare Part D, including a new $2,000 annual cap on beneficiary out-of-pocket (OOP) costs, as well as a redistribution of the financial responsibilities for the Part D benefit among the drug manufacturers, Part D plans, and Medicare.
- A $35 patient OOP cap on insulin in Medicare.
- A 3-year extension of the previously passed temporary enhancements to the Affordable Care Act (ACA) premium subsidies, which significantly reduces premiums in ACA Marketplace plans, particularly for low-income and rural residents in areas with high insurance costs.
For qualifying biosimilar biological products with an average sales price (ASP) lower than their reference biological product’s ASP, the IRA authorized the United States Department of Health and Human Services to increase the Part B add-on payment temporarily for 5 years—from 6 percent to 8 percent of the reference product’s ASP—starting October 1, 2022.
The proposed Medicare fee schedule
The physician reimbursement cuts outlined in the proposed Medicare fee schedule could create significant challenges for community practices in the new year and beyond. As it stands, the changes outlined in the proposed schedule would cause physician practices to absorb over 9 percent in cuts to Medicare reimbursements in 2023—a substantial difference when compared to the rates in effect as late as March 31, 2022. Unless Congress delays or retracts the proposed changes to Medicare reimbursements, these cuts could take a significant toll on community practice budgets.
With the new year just weeks away, it’s important for physicians and community practices to prepare for what’s coming. Without a plan to address budgetary needs, practices run the risk of long-term financial instability. These financial concerns for practices could greatly impact or reduce patients’ access to care—especially for vulnerable populations.
What’s at stake
Aside from the potential cost to community practices’ bottom lines, it’s important to look at how physician fee cuts may impact the patient population. The nation’s most vulnerable seniors often require highly specialized medicines to address chronic conditions and diseases. Community physician practices care for many elderly patients, and their locations enable Medicare patients to receive care where they are—without the need to travel potentially long distances to a hospital or health system. Maintaining that level of support is a critical need for community practices and the individuals they serve.
Without Congressional action, the reimbursement changes set to launch in the new year are significant.
Those cuts consist of implementation of the following Congressional actions:
- A 4 percent cut to Medicare payments due to the pay-as-you-go (PAYGO) sequestration that was triggered by the American Rescue Plan Act of 2021. PAYGO was designed to require Congress to offset the cost of legislation that increases mandatory spending on programs as required by law. The offset was mandated to prevent expansion of the national deficit). Because the American Rescue Plan Act was not fully offset, the 4 percent PAYGO sequester was triggered.
- A one-time 3 percent conversion factor increase for all of Medicare, which Congress passed last December as part of an appropriation package that will expire on December 31, 2022.
In addition, these changes follow the reintroduction of the 2 percent Medicare sequestration in the first half of 2022. This annual 2 percent reduction in payments for all of Medicare will continue through calendar year (CY) ‘31.
Finally, the Centers for Medicare and Medicaid Services (CMS) announced in its CY ‘23 Medicare physician fee payments final rule that January 1, 2023 will be the start of implementation of the 4.48 percent cut in the conversion factor (3 percent of which represents the expiring conversion factor bump up)—a slightly higher cut than was listed in the proposed rule. The Specialty Physician Services division of AmerisourceBergen projects that if the proposed rule is implemented as written, specialty practices could be negatively impacted by an average of 2 percent to 6 percent per practice type. AmerisourceBergen opposed those cuts in its September 6 comments to the July 7 proposed rule.
AmerisourceBergen strongly believes in protecting the vibrancy and accessibility of community-based care for all patients nationwide. These healthcare destinations offer patients affordable and accessible high-quality care in their own communities. Preserving community physician practices is essential for patients, caregivers, the U.S. healthcare system, and the nation overall. Safeguarding these sites of care starts by allowing physician practices to operate in a stable, sustainable marketplace—one where they can keep their doors open and continue to treat patients.
For these reasons, the AmerisourceBergen U.S. Public Policy and Advocacy team:
- Supports the bipartisan Medicare Providers Act of 2022 (H.R. 8800), introduced on September 23, 2022, and already had 85 bipartisan cosponsors as of November 7, 2022. The bill prevents the 4.48 percent cut to the conversion factor from going into effect in 2023 and is timely, as CMS published its final Physician Fee Schedule rule on November 1. This public policy to address Medicare Part B reimbursement has support in Congress, as evidenced by a bipartisan letter to Senate Democratic and Republican leaders signed by nearly half the U.S. Senate discussing the need to address the cuts and in particular identifying the expiring 3 percent relief and the recent CMS final physician fee schedule rule.
- Is actively educating Members of Congress and their staff about the 9 percent cuts that Congress could prevent from taking place on January 1.
- Will continue to actively engage and educate policymakers during the implementation of any changes to Part B and D drug pricing, with the aim of preventing decreased access to community physicians, especially in underserved communities.