2024 CMS Physician Fee Schedule Rewards Health Promotion

On November 2, CMS issued its 2024 Medicare Physician’s Fee Schedule (PFS), which sets the payment benchmark for most health plans in the United States. Where Medicare goes, employer-sponsored health plans tend to follow (though it is not always with clear why, since an employer’s population of beneficiaries is very different than a population predominantly of retirees). 

For those of us working in health promotion, disease prevention / reversal, lifestyle medicine or primary care, there are a slew of uplifting – though some are controversial – additions to the 2024 PFS. I’ll outline them, but first a primer on how Medicare pays for services, so you’ll understand the controversy when you hear about it in the news. 

Adding covered benefits has consequences because, under current Medicare law, any increases in expenses must be offset by matching decreases. For any new health promotion benefits, the disease-care services have to take an equal pay cut. Given that the vast majority of US physicians specialize in disease-care, the 2024 PFS has caused an uproar in organized medicine. 

How has CMS stayed “cost neutral” while giving primary care physicians (PCPs) a raise? They will cut pay to all physicians, and then add new payments to PCPs. It’s complicated, to understand it you need to know a little about how our payment system works.

Every physician service, from counseling to removing a splinter to heart transplantation, is equated with a certain amount of resources needed to provide that service, which is measured in Resource Value Units (RVU). CMS also decides on the dollar value of an RVU, which is called the Conversion Factor. CMS pays a doctor an amount that equals the number of RVU for a particular service multiplied by the Conversion Factor.

Payment = RVU x (Conv. Factor)

Services that require extra training, specialized tools and staff, etc., get assigned more RVUs than services that only require thinking, simple diagnostic tests or counseling. Each region has local tweaks for real estate costs, etc., but we’ll ignore those. Bottom line: the RVU system rewards specialists who do disease-care procedures more than it rewards primary care physicians for chronic care, and much more than for counseling on staying healthy - which is to say helping patients make lifestyle changes for preventing and reversing chronic disease. 

In 2024, CMS will reduce payments to all physicians by reducing the Conversion Factor. It’s a significant reduction, 3.4%, which has to feel like a gut punch - doctors, nurses, everyone providing health care services worked their buns off during COVID…only to be rewarded with a pay cut? This on top of a 2% cut in 2023, and with health care inflation running at 4.6%? Recall that, in private practices, everyone on the practice staff gets paid out of the physician’s fee payments. A 3.4% pay cut in the face of about 4.6% inflation rate – a total of 8% – really hurts, especially when the news headlines are about unions and other workers who are getting raises. The American Medical Association calculates that, after adjusting for health care inflation, physician payment has declined 26% since 2001. [AMA] 

For PCPs, CMS says that the new health promotion codes that should help offset the Conversion Factor pay cut. PCPs contend that they’ve been underpaid and undervalued for years, which is why primary care organizations are thrilled with these new rules. [AAFP, ACP] Specialists, however, are only going to get the pay cut. Primary care societies love the new rules, specialist societies hate it. [ACS] Thanks, Congress, for sowing discord among medical colleagues.

So what are these new health promoting services? Basically, services designed to help patients self-manage chronic conditions, with a goal of improving health and well-being. This will include a mix of guiding patients to (and collaborating with) community-based organizations, addressing ‘social determinants of health’ and allowing practices to bill for the services of health and wellness coaches. CMS is also making it easier to do chronic care management, for patients to qualify for and receive pre-diabetes and diabetes interventions and to see nutritionists.

This is a lot of new stuff, so be patient is your PCP's implementation on incorporating all of them is a little bit slow. Changes in the Standard Operationg Procedure are difficult for practices to make. But, imagine it,...America has a system that actually covers services designed to improve health and well-being!! 

One possibly ill-advised plan will force pharmaceutical manufacturers to give practices a rebate if all of an injectable drug isn’t used up from a multi-dose vial. Some injectables come in vials designed for multiple doses (e.g., numbing medications like lidocaine, used in painful procedures), less packaging makes multi-dose vials much cheaper. But can one keep the red-tape and hassle of qualifying for rebates (proof of non-use, shipping back to the manufacturer, etc.) from outweighing the value of the rebate? I won’t be surprised if pharmaceutical manufacturers just stop making multi-dose vials. This well-intended rule seems likely to inadvertently increase overall costs.  

All in all, 2024 has very positive changes in store for PCPs and advocates of promoting health and well-being. And, for the first time I can recall, meaningful steps toward improving the pay parity between primary care and specialists. If America is ever going to improve our abysmal cost/quality ratio among the world’s health systems, America must invest in primary care, in putting our emphasis on avoiding the need for expensive disease care services in the first place. 

Kudos to CMS for some steps in the right direction. It’s about time.