Congress and President Biden intervene in Medicare payment cuts    

Last week President Biden signed S. 610, the Protecting Medicare & American Farmers from Sequester Cuts Act, completing a last-minute Congressional effort to stave off Medicare cuts. The law will impact 2022 Medicare payments for family physicians in several ways:

• Increases the 2022 Medicare conversion factor (i.e., the amount Medicare pays per relative value unit under its physician fee schedule), by 3%. For 2021, Congress increased the conversion factor by 3.75%. Because the boost for 2022 is slightly less than that, the conversion factor for 2022 is still likely to be less than 2021, but not as much less as it would have been if Congress and Biden had not acted. Most 2022 Medicare payment allowances should remain similar to those in 2021.
• Defers until 2023 cuts of 4% that were otherwise scheduled to be implemented in 2022. Mandated by the Pay-As-You-Go Act of 2010, these cuts were meant to offset increases in the federal deficit.
• Exempts Medicare programs from Budget Control Act sequestration cuts through March 31, 2022. The sequestration reductions will then be 1% from April 1, 2022, through June 30, 2022, and 2% for the rest of 2022. Sequestration reductions apply to actual payments from Medicare administrative contractors (MACs). They’re calculated after beneficiary cost-sharing and apply to only what Medicare pays.
• Delays cuts in Medicare fees for clinical laboratory services due to the Protecting Access to Medicare Act.

Additionally, the law retains an update to clinical labor pricing included in the 2022 Medicare physician fee schedule final rule. Clinical labor pricing is used to calculate the practice expense portion of Medicare physician payment rates to account for the cost of staff salaries and benefits. The Centers for Medicare & Medicaid Services (CMS) has not updated the Bureau of Labor data factored into those calculations since 2002. CMS will update clinical labor pricing over four years to account for significant increases in the cost of employing clinical staff, which will benefit family medicine.

CMS and its MACs will be implementing the new law over the next few weeks to pay 2022 Medicare claims correctly.

— Kent Moore, senior strategist for physician payment, American Academy of Family Physicians

Posted on Dec. 17, 2021 by Kent Moore