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Physicians Face a 9.75% Medicare Pay Cut Unless Congress Intervenes

Physicians Face a 9.75% Medicare Pay Cut Unless Congress Intervenes

While physicians and other providers wait to see if the proposed 3.75 percent fee reductions make it into the final rule of the 2022 Medicare Physician Fee Schedule, two other looming cuts to Medicare payments have them facing down a 9.75 percent pay cut beginning January 1, 2022. 

Medicare Physician Fee Schedule

The final rule of the Medicare Physician Fee Schedule is expected to be released in late November. The 3.75 percent decrease is the result of an expiring 3.75 percent payment increase provided for 2021 by the Consolidated Appropriations Act (CAA). That means the 2022 conversion factor would be $33.58, a $1.31 (or 3.75 percent) decrease from the final 2021 PFS conversion factor of $34.89.


Also expiring at the end of 2021 is a temporary freeze of the 2 percent sequestration cut that Congress provided to physicians during the COVID-19 public health emergency. The sequestration cuts were originally suspended for claims dated May 1 through December 31, 2020, under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Consolidated Appropriations Act, 2021, further extended the suspension period to March 31, 2021, and an Act to Prevent Across-the-Board Direct Spending Cuts, and for Other Purposes, signed into law on April 14, 2021, extended the suspension period through December 31, 2021. 

According to Robert King in a recent Fierce Healthcare article, resuming the sequestration cuts in 2022 was included to help pay for the $1 trillion bipartisan infrastructure package that passed in the Senate this past summer.


Another 4 percent of Medicare cuts are expected to go into effect under the Statutory Pay-As-You-Go (PAYGO) Act. The current version of PAYGO was signed into law on February 12, 2010, and requires Congress to implement a series of cuts across the federal government if new legislation increases the federal budget deficit or reduces the surplus. The PAYGO Medicare cuts facing physicians in 2022 were triggered by the American Rescue Plan Act of 2021, the $1.9 trillion COVID-19 relief package passed last March. According to the Congressional Budget Office, the PAYGO law limits reductions in Medicare spending to four percentage points (or an estimated $36 billion).

Provider Response

Physician and provider groups are looking to Congress for additional relief from the looming cuts. In a letter signed by more than 140 federal, state, and local medical organizations (including the American Society of Anesthesiologists, the American College of Emergency Physicians, and Emergency Department Practice Management Association), along with more than 100 Congress members, signatories are asking Congress to “extend the 3.75% payment adjustment, and provide continued stability for physicians and other health care professionals.”

“Otherwise, 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,” the letter says.

It remains unclear what lawmakers will do, though according to King, they “have delayed PAYGO cuts from going into effect before, including acting to forestall cuts that were triggered by the 2017 tax reform law.” Less likely to be delayed again are the 2 percent sequester payment cuts, which are integral to the bipartisan infrastructure package awaiting passage in the House.

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Charity Singleton Craig

Charity Singleton Craig is a freelance writer and editor who provides communications and marketing services for CIPROMS. She is responsible for creating, editing, and managing all content, design, and interaction on the company website and social media channels in order to promote CIPROMS as a thought leader in healthcare billing and management.

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