The recently finalized Medicare Physician Fee Schedule (MPFS) prompted significant pushback from the healthcare organizations because of its potential to reduce and sequester Medicare reimbursement while providers are grappling with the effects of the COVID-19 pandemic.
In response to this pushback, last month President Biden signed into law S.610, the Protecting Medicare and American Farmers from Sequester Cuts Act, which halted many of the effects of sequestration and provided one year of relief from further reduction to the Medicare conversion factor.
Below are the impacts of the law.
- Increases the 2022 conversion factor of $33.59 by 3%, to $34.61
- This is still a reduction from the $34.89 for calendar year 2021, as 2021 included a 3.75% temporary increase to mitigate losses due to COVID-19. This increase has not been renewed, but a 3% allowance was created for further mitigation in 2022. This is a 0.75% reduction from the 2021 MPFS.
- Delays resumption of the 2% Medicare sequester for three months (January 1 through March 31, 2022), followed by a reduction to 1% for three months (April 1 through June 30)
- Delays cuts to the clinical laboratory payment schedule for one year
- Delays the Medicare radiation oncology demonstration for one year
- Erases the 4% Medicare pay-as-you-go (PAYGO) cut and prevents any additional PAYGO cuts through 2022
The remainder of the MPFS for 2022 is still being implemented as final.
What Now?
Your strategy for transitioning to the 2022 MPFS will depend on the compensation model(s) your organization is using. Here’s how you can prepare:
- Evaluate your current compensation methodologies for employed and integrated providers to assess the impact of the changes.
- Assess the impact on PSAs and other arrangements that are funded and/or distributed on a compensation per WRVU factor.
- Consider methodological adjustments, particularly to ensure financial sustainability, at the organizational level, and mitigate volatility at the individual provider compensation level.
- Determine best-fit scenarios and a strategic approach to utilizing benchmarks given the potential volatility in survey data.
- Because these changes might also impact the FMV determination of certain arrangements, review and audit your provider arrangements.
Published January 5, 2022