cover story one

CMS Reimbursement Cuts

Congress wants your money

BY Christopher Crancer and Zachary Brunnert

Setting the Stage

Providers have seen unprecedented challenges through the COVID-19 pandemic, including executive orders prohibiting elective procedures and restrictions on their ability to diagnose and treat patients. These government-mandated restrictions caused patient volumes to severely drop, mammography screenings nearly ceased at a 90% reduction, providers were forced to furlough large numbers of employees, and in many cases, close facilities entirely. It is estimated that over 10 million breast, colorectal and prostate cancer screenings were canceled or delayed over the past year. These delays in care have continued to contribute to disparities in health care equity. As providers are now working to see patients whose care has been delayed, they are again facing nearly 13% reductions to reimbursement.



Each year CMS issues their MPFS, which provides for the payment of over 10,000 physician services and sets the Relative Value Units (RVU). In formulating reimbursement, CMS calculates a geographical practice cost index (GPCI) for every payment locality, the Resource-Based Relative Value Scale (RBRVS) and the Conversion Factor. The RBRVS is calculated for each CPT code based on physician work, practice experience and malpractice insurance costs. Using the geographically adjusted RVU, the Conversion Factor is used as a multiplier to determine the Medicare-allowed reimbursement rate. These annual calculations are bound by budget neutrality requirements, meaning increases in certain codes must be offset by reductions in others.

Delays in care can be a matter of life or death.

In July, CMS issued the calendar year (CY) 2022 MPFS proposed rule, which is set to become effective on January 1, 2022. Contained in this rule is the finalization of provisions previously outlined in the CY2020 and the conversion factor set at $33.58, a $1.30 decrease from the previous fee schedule. The latest iteration of the MPFS is not the only threat to reimbursement coming into the new year; the potential for double digit cuts is essentially made up of four different reduction mechanisms. In addition to the 2% stemming from the 2022 MPFS, the expiration of last year’s Congressional relief and statutory pay-as-you-go (PAYGO) requirements portend a drastic cut to essential components of the nation’s health care delivery system.

As a result of direct clinician engagement, Congress infused nearly $3 billion into last year’s MPFS, increasing the conversion factor by 3.75%. This assistance is set to expire at the end of this calendar year, and advocacy groups are asking Congress to extend this relief through 2022 or 2023.

Additionally, stemming from the 2013 Budget Control Act, providers have been subjected to a 2% across the board reduction to Medicare rates each year. These reductions were delayed by Congress in an effort to help providers through the end of 2021. This assistance is also set to expire at the end of this calendar year, and advocacy groups are asking Congress to extend this relief through 2022 or 2023. If Congress does renew the so-called “moratorium on sequestration,” these mandatory spending restrictions will go back into effect at the beginning of 2022 and will only further compound the financial stress clinicians face.

Furthermore, other budgetary rules threaten an automatic 4% reduction to certain agencies, including the Medicare program. PAYGO outlines that new legislation must “pay for” increases in spending over 5-year and 10-year windows; otherwise mandatory spending must be sequestered. In the Medicare program, that spending is set at 4% across the board reductions. Unfortunately, when Congress passed COVID relief bills, they did so without dedicated funding and Medicare became the default program for borrowing.



This myriad of factors all culminate in representing a significant cliff effect in payment for essential health services, totaling a minimum cut of 9.75%.

Impacts to Providers and Patients

It’s important to remember that decreased Medicare rates will not be the only form of payment to providers that will be impacted. Many states use these CMS rates as a factor in determining their fee-for-service Medicaid rates; some even directly set rates to a specific percentage of the MPFS. These forces exacerbate issues around health care equity and threaten access to record numbers of Americans covered by Medicaid, topping out at almost 75 million lives, of which nearly an additional 10 million lives were added during the pandemic.

Additionally, many states utilize a managed care delivery system for their Medicaid beneficiaries, which operates on capitated per member per month payments. These rates are required to be actuarially sound and are often set by just a handful of large actuary firms, most of whom heavily weigh Medicare rates in making their determinations. These proposed reductions will result in continued downward pressure on provider contracts with private payers as insurers consider government reimbursement rates in contract negotiations.

Proposed reductions threaten timely access to vital health services.

Slashing payments to vulnerable specialty providers will also threaten access for patients, including those who are not direct Medicare beneficiaries. These reductions perpetuate the climate in which small providers increasingly struggle to keep their doors open. Market forces, paired with a pandemic, and decreased reimbursement have all resulted in some community-based providers closing up shop. Many outpatient imaging centers and radiology groups have been forced to consolidate operations, leaving many patients in regions lacking a proximity to care. Further reductions to reimbursement will only worsen this problem.

As we have seen in the nursing home industry, reduced reimbursement has led to the limiting of government payer exposure by providers. As rates fall, and providers face increasing employment costs, they often have no choice but to limit their contact with payers that do not reimburse at cost. This risks a growing segment of the population facing fewer options when seeking health care services. As it pertains to diagnostic imaging, when patients are often seeking timely answers to their health, delays in care can be a matter of life or death.

A New Vision for Advocacy Based on a Winning Formula

The Radiology Business Management Association (RBMA) and RAYUS Radiology have newly organized a consortium of radiology practices and organizations. This group advocates on federal and state legislative and regulatory policy to advance clinical and business initiatives on behalf of radiology patients, practices and physicians. As a result of the 2020 success at mitigating large scale payment reductions, the Radiology Patient Advocacy Network (RPAN) is set to formalize a broad advocacy structure to address the immediate crisis of proposed 11.75% cuts to radiology. Furthermore, this group also aims to change the conversation around payment with the goal of leading efforts to move out of the cycle of working to prevent disruptive cuts. RPAN will do this through deploying a full scale public affairs strategy that changes the conversation to position groups able to achieve growth and success through innovative public policy. Last year, the coalition behind these efforts set up a forum for clinicians to directly contact policy makers. Through a sign-on, the DontCutDocs.com website had over 5,000 signatures. Providers and patients of all types are welcome to engage via this format.

This new facilitator’s success will be driven by a highly active and engaged membership, whose grassroots strategies, which have already proven successful, will be the fuel that drives the organization’s influence. As an agile and impactful network, the RPAN will meld traditional lobbying strategies with a campaign-like public affairs arm to amplify messaging from its members to directly engage policy makers.

In Closing

This discussion sets up more than support for clinicians pertaining to payment for services rendered. Potential double-digit cuts to providers and a Congress that continually borrows against our most vital safety net programs mean that public engagement is more important than ever. Please visit the website, www.DontCutDocs.com, now to add your name to the growing list of clinicians and patients opposing drastic rate reductions. Ask Congress to act now to extend the 3.75% conversion factor relief and extend the sequestration moratorium (PAYGO & sequester relief) to prevent over $5 billion in payment reductions for vital health services.

Christopher Crancer, is SVP of Radiologist Partnerships & Policy, also the Executive Director of the RAYUS Quality Institute.

Zachary Brunnert, is the Director of State Legeslative Policy for RAYUS Radiology.



This article is excerpted from a report published by Coverys—Care Transitions: Through the Lens of Malpractice Claims. You can access the full report online from the Coverys Knowledge Center at Coverys.com/KnowledgeCenter or link to: https://www.coverys.com/knowledge-center/a-dose-of-insight-care-transitions