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Three ‘bad news’ payment changes coming soon for physicians


Not positive:

  • Which specialties benefit and which get zapped? The anticipated impact by specialty ranges from hits to interventional radiologists (–9%) and vascular surgeons (–8%), to increases for family practitioners, hand surgeons, endocrinologists, and geriatricians, each estimated to gain a modest 2%. (The exception is portable x-ray supplier, with an estimated increase of 10%.) All other specialties fall in between.
  • The proposed conversion factor for 2022 is $33.58, a 3.75% drop from the 2021 conversion factor of $34.89.

The proposed ruling also covered the Quality Payment Program, the overarching program of which the Merit-based Incentive Payment System (MIPS) is the main track for participation. The proposal incorporates additional episode-based cost measures as well as updates to quality indicators and improvement activities.

MIPS penalties. The stakes are higher now, with 9% penalties on the table for nonparticipants. The government offers physicians the ability to officially get out of the program in 2021 because of the COVID-19 pandemic, thereby staving off the steep penalty. The option, which is available through the end of the year, requires a simple application that can be completed on behalf of the entire practice. If you want out, now is the time to find and fill out that application.

Exempt from technology requirements. If the proposal is accepted, small practices – defined by CMS as 15 eligible clinicians or fewer – won’t have to file an annual application to reweight the “promoting interoperability” portion of the program. If acknowledged, small practices will automatically be exempt from the program’s technology section. That’s a big plus, as one of the many chief complaints from small practices is the onus of meeting the technology requirements, which include a security risk analysis, bi-directional health information exchange, public health reporting, and patient access to health information. Meeting the requirements is no small feat. That will only affect future years, so be sure to apply in 2021 if applicable for your practice.

Changes in MIPS. MIPS Value Pathways (MVPs) are anticipated for 2023, with the government releasing details about proposed models for heart disease, rheumatology, joint repair, and more. The MVPs are slated to take over the traditional MIPS by 2027.

The program will shift to 30% of your score coming from the “cost” category, which is based on the government’s analysis of a physician’s claims – and, if attributed, the claims of the patients for whom you care. This area is tricky to manage, but recognize that the costs under scrutiny are the expenses paid by Medicare on behalf of its patients.

In essence, Medicare is measuring the cost of your patients as compared with your colleagues’ costs (in the form of specialty-based benchmarks). Therefore, if you’re referring, or ordering, a more costly set of diagnostic tests, assessments, or interventions than your peers, you’ll be dinged.

However, physicians are more likely this year to flat out reject participation in the federal payment program. Payouts have been paltry and dismal to date, and the buzz is that physicians just don’t consider it worth the effort. Of course, clearing the threshold (which is proposed at 70 points next year) is a must to avoid the penalty, but don’t go crazy to get a perfect score as it won’t count for much. 2022 is the final year that there are any monies for exceptional performance.

Considering that the payouts for exceptional performance have been less than 2% for several years now, it’s hard to justify dedicating resources to achieve perfection. Experts believe that even exceptional performance will only be worth pennies in bonus payments.

The fear of the stick, therefore, may be the only motivation. And that is subjective, as physicians weigh the effort required versus just taking the hit on the penalty. But the penalty is substantial, and so even without the incentive, it’s important to participate at least at the threshold.

Fewer cost-sharing waivers. While the federal government’s payment policies have a major impact on reimbursement, other forces may have broader implications. Commercial payers have rolled back cost-sharing waivers, bringing to light the significant financial responsibility that patients have for their health care in the form of deductibles, coinsurance, and so forth.

More than a third of Americans had trouble paying their health care bills before the pandemic; as patients catch up with services that were postponed or delayed because of the pandemic, this may expose challenges for you. Patients with unpaid bills translate into your financial burden.

Virtual-first health plans. Patients may be seeking alternatives to avoid the frustrating cycle of unpaid medical bills. This may be a factor propelling another trend: Lower-cost virtual-first health plans such as Alignment Health have taken hold in the market. As the name implies, insurance coverage features telehealth that extends to in-person services if necessary.

These disruptors may have their hands at least somewhat tied, however. The market may not be able to fully embrace telemedicine until state licensure is addressed. Despite the federal regulatory relaxations, states still control the distribution of medical care through licensure requirements. Many are rolling back their pandemic-based emergency orders and only allowing licensed physicians to see patients in their state, even over telemedicine.

While seemingly frustrating for physicians who want to see patients over state lines, the delays imposed by states may actually have a welcome effect. If licensure migrates to the federal level, there are many implications. For the purposes of this article, the competitive landscape will become incredibly aggressive. You will need to compete with Amazon Care, Walmart, Cigna, and many other well-funded national players that would love nothing more than to launch a campaign to target the entire nation. Investors are eager to capture part of the nearly quarter-trillion-dollar market, with telemedicine at 38 times prepandemic levels and no signs of abating.

Increased competition for insurers. While the proposed drop in Medicare reimbursement is frustrating, keep a pulse on the fact that your patients may soon be lured by vendors like Amazon and others eager to gain access to physician payments. Instead of analyzing Federal Registers in the future, we may be assessing stock prices.

Consider, therefore, how to ensure that your digital front door is at least available, if not wide open, in the meantime. The nature of physician payments is surely changing.

Ms. Woodcock is president of Woodcock & Associates, Atlanta. She has disclosed no relevant financial relationships. A version of this article first appeared on


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