Medicare Payments Need Last-Minute Fixing Before 2023

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Admittedly, when I was in school (and perhaps still today), I procrastinated. I was a “start the paper 24 hours, maybe 12 hours, before it was due” kind of student. Sometimes, the threat of a deadline focused my attention and I “thrived under pressure” as procrastinators like to say. But other times, probably more often than I’d care to admit, I produced a rushed piece of writing that could certainly have benefited from more drafts, more research, and more time.

Unfortunately, following a trend that no one really likes, or thinks is a good way to govern, Congress is procrastinating once again on their own set of deadlines. As is now typical, the lame-duck Congress has a massive to-do list before the end of the year. Chief among these priorities is funding the federal government beyond December 16th. Procrastinate too long on that priority and the federal government shuts down.

For healthcare, Congress’s “due-date” is December 31st, and if they miss it, Medicare providers face immediate reductions in reimbursement up to 9%. Specifically, under current law, on January 1st, 2023, all Medicare reimbursement is set to be reduced by 4%, and Medicare part B reimbursement on the physician fee schedule is scheduled to be slashed by an additional 4.42%.

For obvious reasons, averting these Medicare cuts has become the number one priority for the healthcare lobby heading into the end of year. And while an up-to-9% Medicare reimbursement cut may sound scary, there is bipartisan and widespread expectation that Congress will get their work done in time and alleviate the vast majority of these cuts.

Very few policymakers think that such a severe and sudden cut in Medicare reimbursement is good policy and as such, the 4% cut to all Medicare reimbursement, known as the PAYGO cut is expected to be fully waived by Congress. However, the 4.42% reduction in payment for those billing on the physician fee schedule, which originates from a reduction in the government’s “conversion factor” formula may not be completely alleviated. Instead, Congress is considering passing a 2-3% adjustment to the conversion factor, only partially offsetting the impact of the physician fee schedule cuts.

But even though Congress will likely get their work done on time, the bigger, complicated, and underlying issues driving these cuts will simply be pushed for another year. Any Congressional relief on Medicare cuts will be temporary, likely just for the calendar year of 2023, because paying for a one-year policy is a lot easier than finding ways to pay for permanent reforms.

This means that we will almost certainly find ourselves back here in this same position exactly one year from now, fighting, once again, to ward off massive reductions to Medicare reimbursement. In fact, this is not the first time we have gone through this cycle. Last year, facing almost the exact same dilemma regarding Medicare reimbursement cuts, Congress passed one-year solutions, solving the issue temporarily, but also putting us in the exact predicament we are in today.

I don’t think I have to go out too far on a limb to say that Medicare financing and payment policy is complicated, and if I am being fair, so is passing a law through Congress. While these short-term fixes are obviously not great, we simply do not have the consensus necessary, on or off Capitol Hill to pass permanent solutions to Medicare reimbursement policy. Sometimes, you have to tackle the urgent issues staring you in the face and live to fight another day. Eventually, a consensus will emerge, and permanent policies will be passed, but until then, temporary fixes will have to do.


Please visit AHRA Advocacy for more information on regulatory issues, legislation, AUC, and more! This information was provided by Nathan Baugh of Capitol Associates, AHRA’s advocacy partner in Washington, DC.

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