On December 20, 2022, the U.S. Congress announced its deal to fund the federal government through 2023, averting an imminent government shutdown. The 4,155-page, $1.7 trillion spending bill spans a vast array of funding initiatives and other bipartisan measures, including a number of noteworthy healthcare provisions. Perhaps most significantly, Congress intervened in the impending cuts to the Medicare Physician Fee Schedule (MPFS), overriding some, but not all, of the payment reductions. This Health Capital Topics article will discuss the congressional measures to ameliorate the payment cuts to physicians in 2023, as well as the other healthcare provisions included in the omnibus spending bill.

MPFS Payment Cuts Reduced

For 2023, the Centers for Medicare & Medicaid Services (CMS) reduced the MPFS conversion factor by 4.48% (to $33.06),¹ a second straight year of conversion factor decreases.² This decrease emanates from MACRA’s statutory update of 0%, the end of the temporary 3% payment rate bump for 2022 pursuant to the Protecting Medicare and American Farmers from Sequester Cuts Act, and budget neutrality adjustments.³ CMS stated the conversion factor decrease is due to the expiration of the Protecting Medicare and American Farmers From Sequester Cuts Act’s 3% increase in physician fee schedule payments for 2022, as well as the budget neutrality adjustment for changes in relative value units (RVUs).⁴

Physicians facing the threat of a 4.48% cut in Medicare funding have pleaded with Congress to cancel the cuts outright, and lawmakers ultimately met them in the middle. Section 4112 of the bill, Extension of Support for Physicians and Other Professionals in Adjusting to Medicare Payment Changes, dictates that physicians will see a 2% payment cut in 2023, and a 1.25% cut in 2024.⁵

Other Healthcare Provisions

As a result of the COVID-19 public health emergency (PHE), state Medicaid programs were prohibited from removing individuals from Medicaid enrollment, even if they were no longer eligible. This resulted in a record-high number of Medicaid enrollees.⁶ States had agreed (by accepting additional federal funding) to hold off reviewing their Medicaid rolls, and removing ineligible enrollees, until the end of the PHE.⁷ However, the spending bill accelerates that timeline, disassociating the Medicaid enrollment pause from the PHE (so that states may take these actions any time after April 1, 2023).⁸ The process would not be instantaneous, so all ineligible enrollees will not be kicked off of Medicaid at once; instead, ineligible enrollees would be bumped off over a one-year period.⁹

The spending bill also extends current Medicare telehealth flexibilities, which were put in place as part of the 2020 CARES Act, for an additional two years, to December 31, 2024.¹⁰ Previously, the flexibilities would have expired 151 days after the end of the PHE.¹¹ Some of those flexibilities include a relaxation of the requirement that patients and treating physicians be located in the sane state, which types of providers who can provide telehealth, and prohibitions on audio-only telehealth services.¹²

Stakeholder Responses

Physicians and their professional trade associations have been lobbying furiously over the past few months to educate lawmakers on what is at stake should Medicare physician payments be cut amid “rising costs, staff shortages and record inflation.”¹³ To provide “a unique perspective into the real-world consequences such dramatic physician payment cuts would have on physician practices’ ability to treat patients,” MGMA surveyed its members, which “offer[ed] an alarming look into the projected impact.”¹⁴ Of the 517 medical group respondents, 92% reported that in 2022 (before the cuts even occur), Medicare reimbursement has not adequately covered the cost of care provided.¹⁵ According to the survey, providers are considering a number of options to offset the payment reductions:

• “58% are considering limiting the number of new Medicare patients;
• 66% are considering reducing charity care;
• 58% are considering reducing the number of clinical staff; and
• 29% are considering closing satellite locations.”¹⁶

While the spending bill does not alleviate all of providers’ concerns, the reduced cuts are an improvement over the 2023 MPFS final rule and serves as a compromise. Jack Resneck, Jr., MD, President of the American Medical Association (AMA), expressed disappointment and disapproval with Congress, as they only partially allayed concerns of physicians. He also raised the prospect that some practices may cease any enrollment of new Medicare patients due to this legislation.¹⁷ Anders Gilberg, Senior Vice President of Government Affairs at the Medical Group Management Association (MGMA), expressed concern over the physician cuts as well, calling the spending bill a failure in its treatment of payment cuts, and asserting that medical practices are not immune to economic impacts.¹⁸

Lawmakers have a strict deadline of December 23, 2022, to ensure the 2023 Omnibus Appropriations Bill is cleared.¹⁹ Without this package, consisting of twelve annual appropriation bills, federal funding will run out, and key federal agencies and programs would be forced to cease operations.