Medicare payment cut delayed

In a late-night vote on Thursday, Dec. 9, 2021, Senate passed a legislation that would prevent many statutory Medicare payment cuts in CY 2022. The legislation was introduced by Congress members Steven Horsford (D-NV-04) and Kim Schrier (D-WA-08) and cleared the House earlier this week.

The bill seeks to pause the 2% Medicare sequester cuts for 3 beginning Jan. 1, 2022, after which the rate will be reimposed at 1% through June 30, 2022. From July 1, 2022, the rate will return to 2%. The package also would stop the 4% Pay-As-You-Go sequester from taking effect in 2022.

The bill also mitigated the 3.75% payment cut in the Medicare Physician Fee Schedule (PFS) released by CMS last month. This will be achieved through a one-year increase in payment rate for services delivered under the Medicare PFS.

 

Delaying Statutory PAYGO Sequester for 2022

The bill would stop the 4% PAYGO sequester from taking effect in 2022, effectively delaying it until 2023. Any cuts mandated by a sequester order for the 2022 “PAYGO scorecard” would be delayed and added to the “2023 scorecard.”

This delay will help post-acute long-term care practices blunt the financial impacts of the COVID-19 pandemic. It’s important to note that the PAYGO sequester is not eliminated, but rather delayed. This means any further delays or relief beyond 2022 will require further actions from Congress.

The Congressional Budget Office has estimated that a PAYGO sequester in fiscal year 2022 resulting from passage of the American Rescue Plan Act of 2021 would cause a cuts of approximately $36 billion in Medicare spending.

 

Delayed, then phased-in 2% Medicare Sequester

The bill would also extend the delay on Medicare 2% sequestration for 3 months in 2022. The payment cut will take effect on April 1, 2022 instead of Jan. 1, 2022 as finalized in the Medicare PFS for CY 2022. On top of that, the cut will also be reduced from 2% to 1% for 3 months from April 1, 2022 through June 30, 2022.

The package would be paid for by increasing the sequester percentage in 2030. The payment reduction rate for the first 6 months of 2023 will be 2.5%, and for the second 6 months will be 3%.

 

Mitigating a 3.75% Physician Payment Cut

The bill would reduce the 3.75% payment cut for Medicare services to a 0.75% cut. This is achieved through a one-year increase of 3% to the conversion factor (CF), offsetting the expiration of the 3.75% CF increase under the Consolidated Appropriations Act of 2021.

Although the new funding will not fully eliminate reductions in the conversion factor, it does provide financial reliefs for long-term post-acute care practices.

 

 

Conclusion

Overall, the new legislation will prevent a 3% cut and delay another 6% cut in payment for services delivered under the Medicare Physician Fee Schedule. However, PALTC providers and practices will start to see an increased sequester in 2023 to compensate for this delay, which will negatively impact revenue. Don’t wait until 2023 to take action. Start an action plan now to plan ahead and protect your practice income.

 

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