Fighting for fair Medicare reimbursement
Ask the Expert
By Victoria Houghton, Managing Editor, October 1, 2022
DermWorld spoke to Academy President Mark Kaufmann, MD, FAAD, about the American Academy of Dermatology Association’s (AADA) efforts to ensure physicians are positioned to succeed under Medicare reimbursement rules.
DermWorld: Fair reimbursement under the Medicare program has long been a key advocacy priority for the AADA. Why is this issue more important now than ever?
DermWorld: Tell us about the Academy’s significant advocacy win on Medicare payment in 2021.
Dr. Kaufmann: The threat of cuts has been an ongoing issue for physicians over the last several years, and we have had success getting short-term relief for practices. In 2022, the specialty was facing Medicare payment cuts of up to 10% due to the policy changes with the evaluation and management (E/M) codes, sequestration, and the budget rules associated with the Pay-As-You-Go Act of 2010 (PAYGO) — which requires that new legislation impacting tax and spending on entitlement programs does not increase the budget deficit.
The AADA successfully fought to avert the steep cuts resulting in the president signing a bill into law late last year that included a 3% increase in the Medicare physician payment schedule for 2022, reinstated the Medicare sequester in phases, and eliminated the 4% PAYGO budget rules and any further PAYGO cuts through 2022.
Of course, these fixes were temporary, and while we will be advocating for another short-term fix this year to stop the 8.5% cut, it does not account for the double-digit inflation that we are all now experiencing. We need Congress to work with the physician community to stabilize the Medicare payment system.
Take action
Find out how you can take action on Medicare payment and other important issues at https://takeaction.aad.org/.
DermWorld: Where does payment stand now with the fee schedule and the PAYGO rule moving forward?
Dr. Kaufmann: CMS has again released a proposed Medicare Physician Fee Schedule that would offset increased payments for E/M services with cuts to other sections of the fee schedule to maintain budget neutrality. The proposed fee schedule proposes a cut of about 4.5% in the Medicare conversion factor, which is the key component in determining Medicare physician payments.
In addition, as a result of the passage of the American Rescue Plan Act of 2021, physicians also face a 4% sequester cut to Medicare payments due to budget rules created by the 2010 PAYGO Act. In total, without congressional intervention, dermatologists could see their reimbursement for caring for Medicare patients cut by up to 8.5% or possibly more overall. The total impact could differ depending on the practice’s mix of services.
DermWorld: Can you explain how inflation has compounded the negative impact of Medicare payment cuts on dermatology practices?
Dr. Kaufmann: Since 2001, the cost of operating a medical practice has increased 39%, while inflation has risen 51%, as measured by the Consumer Price Index. During this time, Medicare physician reimbursement has risen just 11%, while Medicare hospital and nursing facility updates have increased by 60% and more in some cases, significantly outpacing physician reimbursement, as well as inflation.
This lopsided payment system is not sustainable for maintaining independent, physician-owned practices, which are patient-centered, more accessible, and more cost efficient. The current payment structure has contributed to consolidation and increased hospital-ownership of physician practices, which are more costly, reduce competition, and are less patient-centered.
Physicians rely on reimbursement to help cover a multitude of practice expenses. This includes staff salaries and benefits, the cost of federal and state regulatory compliance, and costs associated with insurance company mandated processes, such as step therapy and prior authorization protocols.
DermWorld: What is the Academy doing to prevent these significant cuts from taking place?
Dr. Kaufmann: This is the AADA’s number one priority right now. We are putting the full weight of our advocacy toward addressing this issue, working alone and in coalition with the house of medicine. The Academy is advocating for legislative action to provide a permanent fix to preserve patients’ access to care and mitigate the financial distress facing dermatology practices during these unprecedented times.
Specifically, the AADA and the entire physician community are urging Congress to:
Address the decrease in conversion factor resulting from budget neutrality requirements.
Waive the 4% PAYGO cuts.
Replace scheduled and anticipated cuts in Medicare physician payments with positive, inflation-based updates for at least two years while innovative models consistent with Medicare physician payment reform goals are developed and implemented.
Advocacy impact
Read more about how the Academy is making a dent on important advocacy priorities.
DermWorld: What can individual Academy members do to advocate on this issue?
Dr. Kaufmann: Addressing the Medicare crisis is one of our asks at the 2022 AADA Legislative Conference where dermatologists will meet with our members of Congress to advocate for these changes. It is critical that dermatologists participate and lend their voice. As grassroots advocacy continues, I encourage you all to respond to emails from the Academy urging you to reach out to your legislators on this issue.
Mark Kaufmann, MD, FAAD, is the president of the American Academy of Dermatology/Association.
