On July 13, Medicare released its Proposed Rule, which outlined changes to different Medicare programmes including as quality programmes, MIPS, rural employment, telemedicine, and others. This comprehensive yearly document of 2,033 pages covers the planned programme adjustments for fiscal year 2024. Between the release of the Draft Rule and the publishing of the Final Rule in the autumn, stakeholders were given the chance to submit comment on the proposals. On July 13, Medicare released its Proposed Rule, which outlined changes to different Medicare programmes including as quality programmes, MIPS, rural employment, telemedicine, and others. This comprehensive yearly document of 2,033 pages covers the planned programme adjustments for fiscal year 2024. Between the release of the Draft Rule and the publishing of the Final Rule in the autumn, stakeholders were given the chance to submit comment on the proposals.
The Final Rule (FR) was issued in early November 2023. Despite concerns expressed by various professional medical associations and others about the CY 2024 conversion factor (CF) reduction from $33.89 to $32.74 (a $1.15 or 3.4% reduction), there is a widespread misconception within the healthcare industry that this 3.4% reduction directly translates to a 3.4% decrease in their overall reimbursements for 2024. However, this assumption is not consistent with the actual impact.
Conversion Factor
For those unfamiliar with Medicare reimbursement calculations, it entails a series of computations integrating Relative Value Units (RVUs), which include labour (wRVU), malpractice (mRVU), and practice expenditure (peRVU). While these values can alter on an annual basis, once calculated, the RVU values stay consistent across the whole United States. These separate RVU components are multiplied by Geographic Practice Cost Indices (GPCIs), and the sum of these products is then multiplied by the CF to obtain a regionally adjusted reimbursement rate for a specific CPT code. GPCIs are used to account for cost differences in healthcare delivery throughout the country.
We analyze the reimbursement for a 99203, a Level 3 New Patient Visit, in Atlanta, Georgia, and Richmond, Virginia, for both fiscal years 2023 and 2024, taking into account the FR’s stated change in CF for 2024.
The “work value” of the 99203 remains constant between 2023 and 2024, showing a steady degree of labour needed in delivering a 99203 visit. However, there have been changes to the wGPCI for Richmond, while the practice expenditures (peGPCI) for a 99203 in Richmond have potentially reduced. Furthermore, the potential malpractice cost exposure (mGPCI) fell in Richmond between 2023 and 2024 but climbed in Atlanta.
After accounting for regional differences and the new CF, the reimbursement for a 99203 in Atlanta has dropped by about $2, while it has dropped by much over $3.50 in Richmond.
The Sky Is Falling
Perhaps, however this isn’t a definitive answer. The effect varies based on your patient’s specialization, demography, and other things. This discussion will center on Atlanta and the variations in established patient (EP) and new patient (NP) visit reimbursement that will occur between 2023 and 2024. In the US, a sizable amount of yearly billing submissions are composed of Evaluation and Management (E&M) codes, particularly EP and NP visits.
The permitted decrease ranges from 0.96% to 1.90% for EP visits. Similarly, the decrease for NP visits varies between 1.32% and 2.32% for each CPT code. The analysis of these particular codes so indicates that the reimbursement drop is not consistent with the 3.4% decrease, even though the CF is down 3.4%.
Essentially, the total effect of the decrease depends on the particular CPT codes that are billed, the composition of your patient base, and the relevant demographic and geographic variables.
In our fictitious outpatient clinic situation, 100 99202 office visits and 100 99205 office visits were invoiced by Dr. X in 2023. After the FR was released, data was analyzed, and based just on billing from the previous year, Dr. X would lose $154 on 99202s and $305 on 99205s, for a total loss of $459, or around 1.5%, even though he would be working the same amount of hours. Even though this example is fictitious, it highlights an important point: not all practices may see the same impact from the projected 3.4% decrease in payment. Furthermore, the real financial effect may not be well represented by percentages; rather, it is the vanishing physical monetary values.
But I’m not saying that in order to maximize profits or minimize losses, physicians should bill for the same services or change the way they bill. The services that are being provided determine the medical coding and medical billing Guidelines. This exercise provides a straightforward example of what the Medicare changes for CY ’24 would mean for clinic finances, assuming a constant situation.
Furthermore, it is imperative that outpatient clinics comprehend their payer contracts well. Understanding these contract dynamics is crucial since many contracts are tied to Medicare allowances, which implies that if Medicare decreases allowances, there may also be comparable cutbacks in commercial allowances.
