Saved by the Bell: Update on Proposed Medicare Payment Cuts

And we’re safe—ish. The close to 10 percent cuts to Medicare payment that I ominously warned readers about in the December 2021 issue of Practical Dermatology® magazine have been narrowly averted.

At very close to the eleventh hour, President Biden signed the Protecting Medicare and American Farmers from Sequester Cuts Act, which suspended the majority of these cuts. For now.

Before the last-minute save, doctors were looking at Medicare payment cuts totaling 9.75 percent in January 2022 including a four percent cut due to PAYGO, a rule requiring Congress to fully fund any legislation it passes; a 3.75 percent cut in the Medicare Physician Fee Schedule “conversion factor;” and a two percent across-the-board cut to federal programs.

Here’s what we can expect as a result of the Protecting Medicare and American Farmers from Sequester Cuts Act:

• The four percent PAYGO cut will be delayed until 2023.
• The 3.75 percent fee schedule cut was dropped to a 0.75 percent cut.
• The two percent sequester cut was delayed until April 2022, when it will start at one percent before increasing to two percent in July 2022.

This means we will see a 0.75 percent cut from January through March, a 1.75 percent cut from April through June, and a 2.75 percent cut from July through December 31, 2022, which is a far better scenario than the 9.75 percent reductions that we were anticipating.

But why did we have to sweat it out in the first place?

“Temporary payment fixes at the eleventh hour to address cuts that are largely the result of fiscal spending decisions unrelated to Medicare cause unnecessary disruptions to the nation’s health care system,” says Anders Gilberg, Senior Vice President, Government Affairs at Medical Group Management Association (MGMA) in response to the news. “MGMA believes Congress should refocus its attention on reforming current policies, such as the longstanding Medicare sequester, that penalize physician practices and the millions of beneficiaries they treat. MGMA looks forward to working with Congress to create permanent workable solutions rather than annual legislative workarounds.”

The American Academy of Dermatology Association (AADA) worked tirelessly to avoid the projected Medicare cuts. But there’s more work to be done. We need a long-term fix to the Medicare program, and this may involve going back to the drawing board…again.

There’s no time to spare.

Inflation impacts everyone, including physicians. It is now the greatest threat our practices face. It is time we stop asking to be spared reimbursement cuts and instead reform the payment system so that we, at the very least, keep up with inflation.