CMS to Cut RVU Conversion in 2024
Barring Congressional intervention, the Center for Medicare and Medicaid Services (CMS) is set to reduce physician payments in 2024.
The 2024 Medicare Physician Fee Schedule Final Rule released by CMS in November 2023 sets the 2024 RVU conversion factor at $32.74, a decrease of $1.15, or 3.4%, from 2023. The conversion factor is the dollar amount CMS assigns to Relative Value Units (RVUs), which measure the volume and nature of the services physicians provide. The more knowledge and resources required to provide a particular service, the higher the RVU number assigned to that service. This number then is multiplied by the conversion factor to arrive at the payment amount received by physicians.
The projected 2024 reduction comes on top of a similar reduction in the 2023 conversion factor.
These cuts have been strongly protested by physician organizations such as the American Medical Association, which have pointed out that the Medicare Economic Index, which measures medical practice cost inflation, increased by 4.6% last year. The reduction therefore comes at a time when many healthcare organizations are challenged by higher costs.
Employed physicians, who generally receive a salary, will be unlikely to feel the reduction, but their employers, who bill for the services physicians provide, will be negatively affected. Independent physicians, who depend on direct reimbursement from CMS and other payors, also will feel the reduction. This could cause some physicians to limit the number of Medicare patients they see, eroding the access Medicare beneficiaries have to physician services.
There is some good news in CMS’ 2024 Fee Schedule Final Rule, including the fact that it maintains coverage and payment of telehealth services included on the Medicare Telehealth Services List through 2024. In general, however, the Final Rule is likely to cause healthcare organizations take a closer look at their payor mix, growth strategies, recruitment policies and other efforts that may be affected by reduced reimbursement for physician services.
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Phillip Miller is a Senior Principal, Thought Leadership at AMN Healthcare, the nation’s leading healthcare staffing company. He can be reached at phil.miller@amnhealthcare.com.