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Medicare’s 2024 Proposed Payment Rules: What Physicians and Hospitals Need to Know

Updated: Sep 19, 2023

The Centers for Medicare & Medicaid Services (CMS) has recently unveiled a number of proposed changes to its payment rules for 2024. As the healthcare sector grapples with the ongoing impacts of the pandemic, the proposed Medicare rules for the next calendar year will have significant ramifications for both physicians and hospitals. This article will provide a high-level overview of the proposed changes and how they are likely to impact the industry.

Key Trends in Proposed Rules

Focus on Health Equity: One of the main pillars of the proposed changes involves an enhanced focus on health equity, in line with the current administration's goals.

Expansion of Behavioral Health Services: CMS is taking steps to offer more comprehensive coverage and payment options for behavioral health services.

Shift Toward Value-Based Care: The regulations suggest a long-term trend toward value-based care, moving away from a fee-for-service model.

Enhanced Reimbursement for Telehealth Services: Telehealth has been a critical service during the pandemic, and CMS aims to make these services more accessible and financially sustainable.

Transparency and Broadening of Care Providers: The proposed rules emphasize the need for price transparency and offer pathways for a broader range of healthcare providers.

Financial Implications

For Physicians

Decline in Conversion Factor: The proposed Physician Fee Schedule indicates a decrease in the conversion factor, which determines how much Medicare pays per relative value unit (RVU). This could lead to a financial squeeze for many physicians, particularly those in specialized fields.

Add-on Codes for Complex Cases: On the upside, CMS proposes to make add-on codes for complex cases separately payable, which could increase payments for services that family physicians, in particular, provide most often.

For Hospitals

Increase in Outpatient Payments: The Hospital Outpatient Prospective Payment System (OPPS) would see a 2.8% increase in payments for outpatient and Ambulatory Surgical Center (ASC) services.

Retrospective Payments for 340B Hospitals: After extensive litigation, CMS proposes to correct past underpayments to 340B hospitals, a change that will have a significant financial impact on these institutions.

Additional Considerations

Enhanced Telehealth Services: Telehealth services are proposed to be more robustly reimbursed, allowing for greater flexibility in where these services can originate, including patients' homes.

Social Determinants of Health (SDOH): CMS also proposes an optional SDOH risk assessment to be included in the Medicare Annual Wellness Visit, which could lead to more comprehensive care.

What This Means for the Industry

The proposed rules signify a complex mix of opportunities and challenges. While the increased focus on health equity and value-based care is positive, the financial implications can be concerning for some. Providers must thoroughly examine these proposals and prepare for the eventual changes that will be implemented.

Whether these changes signify progress or problems will depend on a variety of factors, including the specifics of the healthcare services provided and the populations served. Nevertheless, the proposed changes are a significant step in a long journey towards a more equitable, efficient, and effective healthcare system.

To navigate these changes effectively, it is crucial for healthcare providers to stay informed and consider the long-term strategic implications.

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