04/12/2024

Congress Enacts Medicare Payment Increase for Physicians

The conversion factor is up, but payments are still down from last year.
Healthcare practitioners will see a slight upward adjustment in their Medicare payments beginning March 9 following President Biden’s signing of the Consolidated Appropriations Act (CAA), 2024. Unfortunately, although the CAA, 2024 increases the conversion factor (CF) finalized for calendar year (CY) 2024, Medicare payments to practitioners remain lower than in 2023.

What Is the 2024 Conversion Factor?
The Medicare conversion factor ultimately determines the payment amounts made to physicians and other practitioners who are eligible to bill Medicare for medical services furnished to Medicare beneficiaries.

For CY 2024, the Centers for Medicare & Medicaid Services (CMS) finalized the CF at $32.74 in the 2024 Medicare Physician Fee Schedule (MPFS) final rule, effective Jan. 1. This figure is based on the CY 2023 CF without the one-year 2.50 percent payment increase provided by the CAA, 2023 ($33.06) multiplied by the budget neutrality adjustment of -2.18 percent, a 0.00 percent update, and a 1.25 percent payment increase, also provided in the CAA, 2023 for CY 2024.

The final CY 2024 CF of $32.74 amounted to a decrease of $1.15 or -3.4 percent from the final CY 2023 CF of $33.89, per a CMS Fact Sheet.

How Does the CAA, 2024 Affect Payments?
According to healthcare compliance firm PYA, “The CAA 2024 reduces this cut by half, increasing the conversion factor to $33.32 for services …” thanks to a 2.93 percent payment increase. However, the CAA, 2024 provision at Division G—Other Matters, Title I—Health and Human Services, Subtitle C—Medicare, Sec. 305 is only good through the end of the year.

These are the conversion factors CMS will use to calculate Medicare payments going forward:

• Original CF – $32.74 (for services furnished Jan. 1 – March 8)
• Adjusted CF – $33.32 (for services furnished March 9 – Dec. 31)

What Other CAA, 2024 Provisions Affect Medicare?
The work Geographic Practice Cost Index floor of 1.0 is also extended through Dec. 31, 2024, and incentive payments for participation in the Quality Payment Program are extended. “For performance year 2023, the bonus equals 3.5% of Medicare Part B payments for personally performed services,” according to PYA. “For performance year 2024, the bonus will be 1.8%.”

The CAA, 2024 also extends many Medicare programs including funding for community health centers, National Health Service Corps, teaching health centers that operate GME programs, special diabetes programs for type 1 diabetes and Indians, and national health security programs.

There are also provisions affecting hospitals and other public healthcare programs such as Medicaid. There was nothing in the CAA, 2024, however, addressing the extension of telehealth flexibilities beyond the end of the year.

Refer to CAA, 2024 (HR 4366) for the complete text.