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What Do New CMS Changes Mean for Doctors?

On November 01, 2022, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that includes updates and policy changes for Medicare payments under the Physician Fee Schedule (PFS) and other Medicare Part B issues, effective on or after January 1, 2023. So what do these new CMS changes mean for doctors?

CMS changes doctors

But first…

Why doctors should care about these CMS changes?

The formula for wealth is simple: Create and grow the margin between what you make and what you spend.

And as I’ve pointed out over and over, what you spend is always 100% in your control. So this is the variable in the equation that we can use to our advantage the most. That is what makes budgeting, international spending, and the like so important.

However, we shouldn’t ignore the “what you make” portion of the equation totally. There are key times and factors that can significantly impact our income. So we need to understand them.

Regardless of available physician side gigs, the majority of doctors will generate the vast proportion of their income from clinical work.

Well, these CMS changes will certainly impact how and how much doctors get paid. So this is very important for our “what you make” side of the equation.

With that said…

What is going on with the current CMS changes?

Contract Diagnostics, one of our key sponsors at PPS and a service I use to help negotiate my contract and know my value using their Compensation Rx tool (highly recommend!), recently shared a blog post summarizing these changes.

And I’ve asked them to share here as well. They certainly understand the importance of maximizing clinical compensation as they help doctors negotiate the best contracts by using the best data. So they are very well positioned to comment on these changes and what to do about them.

Some background…

For 30 years, Medicare payments have been made under PFS for the services of physicians and other billing professionals. These are the benchmarks used for most physician payments for services.

Unfortunately, CMS will cut the payment conversion factor for 2023 as compared to 2022, which reflects the expiration of the temporary 3% statutory payment increase. CMS also announced it will delay for one year (until 2024) implementing its policy to define the substantive portion of a split or shared visit.

Although it is impossible to predict fully, the trend will be toward CMS lowering rates in the future.

Highlights included:

  • A decrease in rates of -4.47% ( and -4.42% for anesthesia) over 2022 rates
  • Revised Evaluation and Management (E/M visits), including revised interpretive guidelines for levels of medical decision-making and elimination of the use of history and physical to determine code level (instead being replaced by medically appropriate history and exam)
  • Updated Telehealth Services are available here
  • Improved access to behavioral health services to make greater use of behavioral health professionals, such as licensed professional counselors and licensed marriage and family therapists
  • Maintains the MIPS (Merit-based performance) thresholds at 75 points
  • Adds five new MIPs Value Pathways related to nephrology, oncology, neurological conditions, and promoting wellness
  • Creates an advanced incentive payment pathway for low-revenue, new entrants
  • Chronic pain management services
  • Opioid treatment services
  • Audiology services
  • Dental and oral health
  • Skin substitute products
  • Colorectal cancer screening updates
  • Rebasing and revising the 2017-based Medicare Economic Index (MEI). The update is 3.8%

All of these changes will directly or indirectly impact all physicians in the US

The negative impact will primarily be reducing patientsā€™ access to certain services.

All physicians should take heed to decreased reimbursement after two years of financial pressure due to the ongoing COVID-19 pandemic, explosive inflation, rising staff costs, and other non-labor supply costs. The only positive is CMS delaying its split or shared visit policy, which would have made the physician revenue reductions even steeper.

There was a positive development in that CMS modified the Medicare Shared Savings Program (MSSP) quality scoring by adopting a sliding scale for shared-savings eligibility and adding a new health equity adjustment. The purpose of MSSP is to sustain long-term participation and reduce costs.

Key Takeaways

  • Physician payments for services are declining
  • Regulations and bureaucracy are increasing
  • The US government is responsible for physician and hospital reimbursement and is now the largest payor
  • Labor costs are the most vulnerable
  • Physicians must remain vigilant in negotiating their compensation and benefits more than ever

What can you do?

What do you think? How does these CMS changes affect doctors? What should we do about it? Let me know in the comments below!

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    Jordan Frey MD, a plastic surgeon in Buffalo, NY, is one of the fastest-growing physician finance bloggers in the world. See how he went from financially clueless to increasing his net worth by $1M in 1 year and how you can do the same! Feel free to send Jordan a message at [email protected].

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