Federal legislation that seeks to protect the financial viability of physician practices by addressing long-standing Medicare reimbursement challenges has been introduced, and has the backing of ambulatory surgery center advocates.
The proposed legislation comes as the Centers for Medicare & Medicaid Services’ (CMS) 2.93% cut in physician Medicare reimbursement rates is set to take effect in January 2025.
“This amounts to a finalized CY 2025 PFS conversion factor of $32.35, a decrease of $0.94 (or 2.83%) from the current CY 2024 conversion factor of $33.29,” CMS wrote in the final rule on the payment rate.
The Medicare Patient Access and Practice Stabilization Act, introduced by Congressman Greg Murphy, M.D., has garnered bipartisan support, including endorsements from numerous medical associations, including the Ambulatory Surgery Center Association (ASCA), American Medical Association and American Academy of Ophthalmology, among other organizations.
When combined with an expected 3.6% rise in practice costs next year, these reductions could mean an effective 6.4% pay cut for operators.
For ASCs, which are typically structured to operate efficiently with limited resources, the cuts could lead to closures or force sales of the business to larger corporations. Independent ASCs are typically reimbursed at even lower rates than hospital outpatient departments (HOPD), Woodrow Moore, founder of the Texas ASC Society and Ker Leader Medical, an organization that advocates for physician ownership, told ASC News.
“There are physicians who are surgeons closely watching this trend of conversion – converting independent ASCs to HOPD – which is putting them in conflict with their patients,” Moore said.
As ASC operators understand, the balance between cost-effective care and sustainability is increasingly tenuous. Lower Medicare reimbursement rates may force ASCs in rural and underserved areas to reduce services or close, exacerbating access issues for older adults and the medically vulnerable.
“As an emergency medicine physician, I know how important it is for families and individuals I serve to have access to the necessary health care services they rely on,” Congressman Raul Ruiz M.D. said in a press release about the new bill’s introduction. “I am deeply concerned about the impact the outdated Medicare reimbursement rate has on health care access for my constituents.”
And it’s not just smaller, rural ASC operations that stand to be affected by Medicare cuts. Low Medicare reimbursements were cited in Tenet Healthcare Corporation’s (NYSE: THC) recent earnings call as a challenge for the organization, which has ownership interests in 520 ASCs in 37 states.
The Two-Midnight Rule in Medicare Advantage is adding to the cost pressures for ASCs. The application of the rule which considers a hospital stay as inpatient if a physician expects the patient to need hospital care spanning at least two midnights, and has limited admissions growth by about 50 to 100 basis points, Tenet CEO Saum Sutaria said during the call.
There is a mounting administrative burden from managed care disputes and denials, Sutaria said, which has significantly raised costs for both payers and providers.
“At some point, there has to be a solution to this because it’s really just wasted administrative time and cost,” he said.
