Industry Groups, Legislators Hope to Reduce Impact of Medicare Budget Neutrality for 2021

A growing contingent of both industry groups and legislators are working to help physicians and other healthcare providers avoid large cuts to their Medicare revenue in 2021.

At issue is the budget neutrality requirement, which works to limit changes to the Medicare Physician Fee Schedule from dramatically increasing Medicare payouts from year to year. For 2021, with significant alterations and revaluations of office/outpatient evaluation and management (E&M) codes, budget neutrality adjustments would be devastating to non-patient-facing and other hospital-based practices, particularly during 2021 when healthcare providers will still be dealing with COVID-19 and its effects.

Who’s Most Affected

The most affected specialities include the following, along with their estimated Medicare decreases:

Anesthesiology: -8%
Cardiac Surgery: -9%
Chiropractic: -10%
Emergency Medicine: -6%
Interventional Radiology: -9%
Nurse Anesthetists/Anesthesiologist Assistants: -11%
Pathology: -9%
Physical Therapists/Occupational Therapists: -9%
Radiology: -11%

“Payment reductions of this magnitude would be a major problem at any time, but to impose cuts of this magnitude during or immediately after the COVID-19 pandemic, including steep cuts to many of the specialties that have been on the front lines in efforts to treat patients in places with widespread infection, is unconscionable,” said the American Medical Association in a comment letter to CMS.

Congressional Responses

At least two letters and two bills are circulating through the House of Representatives attempting to address budget neutrality in a sustainable way for healthcare providers. An August letter signed by Bobby L. Rush (D-Ill.) and more than 90 other bi-partisan members of Congress specifically recommended suspending the budget neutrality requirement for two years. A subsequent letter on October 19, 2020, was signed by Ami Bera, M.D. (D-Calif.) and Larry Bucshon, M.D. (R-Ind.), along with more than 200 bi-partisan members of Congress, including several other physicians. The request in that letter was more general, asking Congressional leaders to “examine possible bipartisan solutions to address excessively steep cuts.”

In addition, two bills hav been introduced in the House in an attempt to offer relief to physicians.

H.R. 8505 was introduced in the House on October 2, 2020, by Rep. Burgess, Michael C. (R-Tx) and 7 bipartisan cosponsors. The bill seeks a “one-year waiver of budget neutrality adjustments under the Medicare physician fee schedule” and was referred to the Committee on Energy and Commerce and the Committee on Ways and Means, and Appropriations.

H.R. 8702 Holding Providers Harmless From Medicare Cuts During COVID-19 Act of 2020 was introduced in the House on October 30, 2020, by Congress members Bera and Bucshon following their earlier letter to House leadership. H.R. 8702 seeks to offset the significant budget neutrality cuts for physicians in 2021 and 2022 by paying them at minimum according to the 2020 Medicare Physician Fee Schedule payment rates.

Industry Responses

Professional groups across the healthcare industry also have come out in strong opposition to the planned cuts in a letter signed by 47 of the country’s top medical societies, including the American College of Emergency Physicians (ACEP), the American Society of Anesthesiologists (ASA), and others.

In that letter, the provider groups asked the Centers for Medicare and Medicaid Services (CMS) to consider a 5-step plan to help protect them from significant financial losses in the coming year. Those steps include

Exercising its PHE authority to eliminate or mitigate the impact of the proposed budget neutrality reduction.
Eliminating the new E/M add‐on code (GPC1X).
Considering the negative impact of COVID‐19 on 2021 E/M visit utilization projections to calculate the budget neutrality adjustment.
Reviewing its budget neutrality calculations to ensure that it accurately reflects the E/M billing policies that will become effective in 2021.
Utilizing previous over‐estimated spending to reduce the budget neutrality adjustment.

Both ACEP and ASA also have thrown their support behind H.R. 8702.

“Without congressional intervention, these planned cuts will come at a time when many emergency physicians are under unprecedented financial strain as they risk their lives to protect people from this public health crisis,” said Mark Rosenberg, DO, MBA, FACEP, president of ACEP, in a prepared statement. “This bill would provide some much-needed stability for those on the frontlines while the fight against COVID-19 continues.”

ASA released a similar statement, concluding that the proposed cuts could “destabilize health system financing, and drastically diminish the opportunity for hospital and physician practices to recover financially from COVID-19.” Medicare payments for anesthesiology services already are less than a third of commercial payer reimbursement.

“Physician anesthesiologists are at the forefront of the pandemic. With their medical expertise in anesthesiology and critical care – specifically intubation and ventilation – they are taking care of critically ill patients and putting themselves at risk by working inches away from patients’ airways, where the virus is transmitted,” said ASA President Mary Dale Peterson, M.D., MSHCA, FACHE, FASA in a prepared statement. “These proposed payment reductions will hurt practices already weakened by the economy. Now is not the time for payment cuts to frontline physicians.”

In addition, ACEP submitted comments to CMS in response to the 2021 Proposed Medicare Physician Fee Schedule asking for changes to the proposed fee schedule that would minimize the losses to its members and other physicians. Namely, ACEP recommends the following policy changes:

To account for the additional expenses that hospital-based clinicians must absorb when treating patients during the COVID-19 PHE, ACEP strongly urges CMS to implement a 20 percent COVID-19 professional services claims-based payment adjustment.
ACEP urges CMS to delay the implementation of the add-on code for complexity to CY 2022 or later or consider eliminating the code altogether.
ACEP recommends that CMS and the Department of Health and Human Services (HHS) utilize its special “1135” waiver authority under the COVID-19 PHE to waive the budget neutrality requirement for all of CY 2021.

The Final Rule

As for the Medicare Physician Fee Schedule, comments on the proposed rule were due by October 5, 2020. Normally, the final rule would have been released by now, but according to an article on Policy & Medicine, CMS indicated it would waive the 60-day publication requirement for the Final Rule and replace it with a 30-day notification.

“This means that the Final Rule will be effective January 1, 2021, even though it may not be published until December 1, 2020, instead of the typical November 1 target publication date,” writes Thomas Sullivan.