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Scheduled pay cuts, nearing 10%, could derail physician practices: Survey

The payment cuts that are on track to hit physician practices Jan. 1 could have sweeping implications for the health care industry. Compensation levels for physicians, a potential hiring freeze and staff layoffs and population health initiatives are all at stake, a new survey from AMGA reveals.
A confluence of pending regulations and other payment factors is on pace to cut total Medicare Part B reimbursement levels by as much as 10% in 2022. That includes a near 4% reduction to the conversion factor that CMS announced in July, as well as a 4% Pay-As-You-Go, or PAYGO, decrease and the return of the 2% sequester cuts.
AMGA, along with other groups representing physician practices, is lobbying Congress to intervene on the scheduled pay cuts, calling them unsustainable for medical groups still grappling with a spate of issues stemming from the ongoing COVID-19 pandemic and workforce challenges.
The results of a survey that AMGA released Oct. 13 found that a portion of medical groups and integrated health systems would respond to the payment reductions with cost-cutting moves. How, specifically, would they cut costs? Here are the top five responses:
  • Redesign physician compensation (47%).
  • Hiring freeze or delay hires (43%).
  • Delay population health initiatives (43%).
  • Delay delivery system improvements or the implementation of care model changes (38%).
  • Eliminate services (37%).
In addition to the cost-saving measures above, the survey also found that nearly a quarter of practices (22%) who responded said they would no longer accept Medicare patients; and the same number said they would "require existing patients who age into Medicare to switch to Medicare Advantage."
The Medicare conversion factor is on track to fall to $33.58 in 2022, down from the stimulus-driven level of $34.89 in 2021 when Congress temporarily increased the conversion factor amount by 3.75%.
The PAYGO cuts, meanwhile, are set to occur as a result of the federal spending increases that were a result of the American Rescue Plan Act of 2021, which President Biden signed into law in March. Because the law boosted federal spending levels without offsets to other programs, the result is automatic cuts to spending that would otherwise increase the national deficit, according to AMGA. The 4% PAYGO cut alone could eliminate $36 billion in payments to Medicare providers next year.
The final fee schedule is expected out in early November. Stay tuned to Part B News for additional updates on payments and the fee schedule.
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