by Mark Spurlin, CPA
CMS recently unveiled a series of proposals for Calendar Year 2024, including the 2024 Physician Fee Schedule Proposed Rule (CMS-1784-P) and the 2024 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Proposed Rule (CMS 1786-P). In this edition of FMV Friday, we focus on four key proposals released on July 13th, which hold significant implications for healthcare providers and entities. These proposals will shape the future of medical services and prompt essential discussions within the industry. 
Decrease in the Physician Fee Schedule Conversion Factor
The proposed rule for the 2024 Physician Fee Schedule which again includes a decrease in the conversion factor of $1.14 or 3.34%, from $33.89 in 2023 to $32.75 in 2024. The adjustment was primarily driven by the Budget Neutrality Adjustment of negative 2.17 and the Consolidated Appropriations Act of 2023, which included a 2.5% increase to the 2023 conversion factor and a 1.25% increase to the 2024 conversion factor.
The budget neutrality adjustment, which is required when increases or decreases in RVUs cause the amount of Medicare Part B expenditures for the year to differ by more than $20 million from that expenditures would have been in the absence of these changes. The 2024 adjustment was driven in large part by the proposed add-on code (HCPCS) G2211, discussed below.
While the total combined impact of 2024 proposed rates are minimal, primary care specialties are expected to come out ahead once again with projected increases of 1% to 3%, while most surgical and medical specialties are projected to decline by 1% to 3%.
Introduction of HCPCS Add-On Code G2211
Introduction has been floated around for years and was originally included in the CY 2021 final rule. This add-on code is meant to “better recognize the resource costs associated with evaluation and management visits for primary care and longitudinal care of complex patients.” CMS estimates that this code will be billed with 38% of all outpatient office E&M visits initially and up to 54% when fully adopted.
Delay of Implementation of Split/Shared Billing Proposal
Hospital based physicians and their employers can take a sigh of relief as CMS is proposing to once again delay the implementation of their previously proposed changes to billing for split/shared E&M visits provided by both a physician and APP in facility settings by maintaining the current definition of “Substantive Portion” which enables billing based on either the total time spent or one of the three key components (history, exam, or medical decision making). The proposal to delay implementation “through at least December 31, 2024“ is not entirely surprising as the proposal has faced significant pushback all along due the lack of clarity, impact to revenue, challenges in setting up systems/processes for capturing the information needed to appropriately bill for services, impact to wRVUs and production based compensation models which would have caused major disruptions to team based care delivery models.
Increase to OPPS and ASC Payment Rates
Nearly 3,500 hospitals and approximately 6,000 ASCs across the nation can expect a 2.8% increase in the payments they receive under the Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center (ASC) payment system, so long as they meet applicable quality reporting requirements. The proposal also included extending the policy to update the ASC payment system using the hospital market basket update for an additional two years “in light of the impact of the COVID-19 PHE on healthcare utilization” which These rates are expected to result in an additional $170 million in payments to ASCs and nearly $6 billion for hospitals.
Changes in CMS policies can have an enormous impact on the operations and economics of healthcare providers. Fortunately, CMS usually gives a little notice to allow those affected to voice their concerns and sometimes they even listen. That said, it’s hard to predict if these proposals will be accepted, modified, or even included in the Final Rule.
At Root Valuation, we strive to stay on top of the constantly evolving landscape in order to help our clients successfully plan and navigate changes such as these. If you have any questions about the implications the CY 2024 Proposed Rules and what may mean for you or your organization contact Mark Spurlin at 720.458.3766 or mspurlin@rootvaluation.com.