With substantial Medicare payment cuts pending, medical groups call for Congress to act

• Separate payment cuts scheduled for 2022 would amount to a 9.75% reduction in Medicare revenue for medical groups.
• Groups are calling on Congress to pass legislation to reverse all or some of the cuts, but the prospects for action are uncertain.
• Executives say the payment cuts would affect staffing, care delivery and innovation.

Looming Medicare payment cuts would “sink morale” for clinicians and “cause significant financial strife” for medical groups amid the uncertainty of the COVID-19 pandemic, an advocate said in a plea for Congress to offer relief.

“To be quite frank, we’re exhausted,” said Scott Hines, MD, a physician-owner of Middletown, N.Y.-based Crystal Run Healthcare and chair of the American Medical Group Association’s (AMGA’s) Public Policy Committee.

Without congressional action, medical groups and physician practices would lose almost 10% of Medicare reimbursement starting Jan. 1. The cumulative cut includes:

• Restoration of the 2% Medicare sequester, which has been frozen during the public health emergency (PHE)
• Implementation of a statutory 4% cut as a pay-for triggered by the 2021 COVID-19 relief legislation
• Application of a 3.75% decrease to the Medicare Physician Fee Schedule rate, which was increased by the same amount for 2021 as an accommodation during the PHE

The first two cuts also would mean a 6% decrease in Medicare revenue for hospitals, and groups such as the American Hospital Association are pushing for those reductions to be negated.

During an Oct. 12 press event hosted by AMGA, Hines said the prospective decrease in physician payments “rivals cuts that we felt were unimaginable in the early 2000s due to the sustainable growth rate [formula]. And that was part of what led to the creation of MACRA and the abolition of the sustainable growth rate, because it was just not something that was seen to be sustainable for medical practices to continue to provide high-quality care for Medicare beneficiaries.”

The timing of the cuts would be especially problematic, he noted. The pandemic has adversely affected the finances of medical groups by hampering the provision of preventive and elective services while increasing costs.

The picture on Capitol Hill

The prospects for getting any of the cuts reversed are murky. The ongoing negotiations and debate in the Democratic caucus over the budget reconciliation bill and the bipartisan infrastructure bill are limiting the window for including additional provisions in subsequent legislation to fund the government and raise the debt limit.

“Frankly, given how reconciliation is moving farther [ahead] in time, toward December, it’s not quite as clear,” said Chet Speed, chief policy officer with AMGA.

The 2% sequester appears the least likely to be overturned because the bipartisan infrastructure bill includes language extending the cut by a year, through 2031, and codifying that it would be reinstated in 2022.

Hines noted that Reps. Amy Bera (D-Calif.) and Larry Buchson, MD (R-Ind.), have circulated a letter to House leadership in an effort to address the payment cuts. More than 200 members of the chamber have pledged support.

Without relief, “The profound exhaustion from the pandemic combined with the stress of uncertainty in payments may lead to further retirements, office closures or reduced staffing, ultimately limiting patient access to care,” Bera and Buchson wrote.

The implications on the ground

AMGA released findings from a survey of 92 representatives of medical groups and integrated health systems. Among respondents, 43% said they would freeze or delay hiring and 37% expected to eliminate services if the cuts go through as scheduled.

“The thought of having to make very difficult decisions like we did during COVID and having to do that again in a non-pandemic world — and to know that it’s Medicare cuts that are bringing that kind of significance — is hard to swallow,” said Carol Brockmiller, CEO of Quincy Medical Group in Illinois. “It’s hard to plan for.”

In addition, 43% of respondents said their organization would delay population health initiatives and 38% anticipated delays in delivery system improvements or care model changes.

“When you have to decide between moving something forward — innovation, lower-cost settings — versus maintaining all your staff, those are really difficult positions to be in,” said Brockmiller, whose organization’s payer mix is about 55% Medicare.

As an example, she said, the launch of a hospital-at-home program has been delayed by reimbursement concerns.

Luis Garcia, MD, president of Sanford Health Clinic, part of a large rural health system headquartered in South Dakota, said the payment cuts would be detrimental to his integrated delivery organization just as they would be for Brockmiller’s independent group. Sanford would have to decide how to mitigate the impact in various settings, including the system’s tertiary care hospitals, critical access hospitals, clinics and long-term care facilities.

The revenue reduction will add to “an already very challenging time in healthcare, and it will negatively impact our ability to enhance that access to care, [which is] much-needed, to continue the quality of care that we’re giving, to impact healthcare in rural communities,” Garcia said.

Given the exodus of clinical staff throughout the industry, Hines said, any policies that hamper an organization’s ability to offer competitive salaries will have consequences.

“It’s going to be very difficult to hold on to [employees], and it’s going to be very difficult to continue to care for the populations that we care for,” Hines said.

“When it comes to drugs, salaries, equipment, all of that stuff, the cost is skyrocketing,” he added. “Yet revenue is in no way, shape or form keeping up with that. We’re spending today talking about preventing cuts, but really what we should be talking about is how to remain competitive.”