House Members Urge CMS Not to Finalize CY 2022 Physician Fee Schedule Due to Cuts in Reimbursement for Critical Services

King & Spalding

Last week, over seventy bipartisan members of the U.S. House of Representatives signed a letter urging CMS to reverse proposed cuts in the CY 2022 Medicare Physician Fee Schedule (PFS) proposed rule (the PFS Proposed Rule) that would decrease reimbursement for certain critical services by approximately 20 percent. The cuts would impact services furnished under the PFS on or after January 1, 2022. House members are concerned the cuts will cause the closure of PFS providers’ practices, weaken the national healthcare system’s response to the pandemic, and undermine the Biden administration’s other health equity efforts.

The lawmakers assert that the main driver of these cuts is the budget-neutrality requirement of a CMS proposal to update clinical labor data. The budget neutrality provision requires that pay increases in the PFS be offset by payment reductions of equal amounts elsewhere. With the incorporation of new clinical labor data, the PFS budget neutrality requirement would result in cuts of 15 to 23 percent in reimbursement rates for certain radiation oncology, kidney failure, uterine fibroid, peripheral artery disease, and venous ulcer treatments. The letter urges CMS not to finalize the 2022 PFS.

The legislators said in the letter that President Biden’s FY 2022 budget contained provisions to address health inequity through the elimination of disparities in healthcare, but there is concern that the 2022 PFS Proposed Rule may undermine some of the initiatives. For example, legislators are concerned these cuts would conflict with HHS’s efforts to promote health equity by directly impacting specialists who treat cancer, kidney failure and artery disease—diseases that disproportionately impact communities of color. In addition, they emphasize that the lower rates could lead to the closure of independent physician practices. The legislators stated that since reimbursement is already higher in vertically integrated health systems than in solo practices, they are concerned that this change will further exacerbate increased consolidation in the healthcare market. The lawmakers also highlight the potential impact of the lower reimbursement rates on the nation’s ongoing pandemic response. The lower rates, they emphasize, could ultimately lead to an increase in hospitalization for non-COVID-19-related diseases at the same time hospitals are dealing with a virus surge. Legislators stated that office-based care under the PFS provides services to the sickest patients—including those with cancer, end-stage renal disease, coronary disease, and other post-acute issues—that are critical to keeping these patients alive and out of the hospital.

The letter from members of Congress to Dr. Meena Seshamani, Deputy Administrator and Director of the Center for Medicare, is available here. The PFS Proposed Rule is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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