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Stethoscope on the Cardiogram

Frequently Asked Questions

  • What is the Centers for Medicare & Medicaid Services (CMS)?
    Centers for Medicare & Medicaid Services (CMS) is the federal agency that administers the Medicare program and is responsible for the policies within the Medicare PFS. However, CMS also must operate under the requirements set by Congress under the law. USPA and other aligned stakeholders are taking our message both to CMS and the Congress to advocate for permanent relief from the cuts that have been so devastating to office-based specialties for years.
  • What is the Medicare Physician Fee Schedule (PFS)?
    The Medicare Physician Fee Schedule (PFS) is one of several annual Medicare reimbursement regulations. In general, the PFS regulation reimburses physicians, therapists, and other practitioners for the care they provide to Medicare patients under the Traditional Fee-For-Service Medicare program. It's important to note that while the HOPPS and ASC Fee Schedules include only technical payments (e.g., the high-technology equipment, supplies and other interventions that have been a hallmark of the U.S. healthcare system) for HOPDs and ASCS, the PFS includes technical payments for office-based providers plus professional payments for physicians in all settings (e.g. HOPD, ASC and office). As a result, PFS technical payments currently “budget-neutralize” office-based supplies and equipment to dissimilar items such as professional payments for physician work in the hospital. These non-sensical reimbursement streams are one of many reasons why the so-called PFS budget-neutrality provision is a significant concern. When the PFS “budget-neutralizes” it does not do so for all professional and technical services in the PFS, HOPPS, and ASC settings. Rather, the PFS only budget-neutralizes for physician work and office-based technical resources, while leaving HOPPS and ASC reimbursement outside of PFS budget-neutrality effects. This dynamic contributes to the significant payment volatility within the PFS. Included in PFS Budget Neutrality • Office Technical Component • Office Professional Component • Hospital Professional Component • ASC Professional Component Not Included in PFS Budget Neutrality • Hospital Technical Component • ASC Technical Component Rationalizing ambulatory payment systems could involve ambulatory (HOPD/ASC/Office) technical payments being paid within a single ambulatory technical fee schedule outside of the PFS and reserving the PFS strictly for reimbursement of professional payments.
  • When is the Medicare Physician Fee regulation issued?
    There are actually two regulations to keep on your radar. The first is the “proposed” PFS regulation, which is usually issued in the summer and proposes regulations for the following calendar year. The “final” PFS regulation is usually issued on or around November 1.
  • What is the cause of this year’s drastic cuts to office-based specialists?
    In short, the cause is due to the Physician Fee Schedule that: Has not kept up with practice cost increases overall and Budget-neutralizes office-based technical reimbursement with unlike reimbursements such as reimbursement for the physician’s professional services in all sites of service. While some characterize the PFS “budget-neutrality” provision as a “sometimes you win, sometimes you lose” policy, in fact, over the last decade, cumulative PFS redistributions clearly have negatively impact certain providers. For example, high-technology equipment and supply providers have endured cumulative cuts over the last decade in the PFS of 20-40% and more (1). Other times, the PFS “budget-neutrality” provision is characterized as rebalancing the PFS away from higher-paid providers and towards lower paid providers. In fact, however, in the 2021 PFS, the lowest paid providers – physical therapists – received a 9% cut which was redistributed to other PFS providers making at least 171% more (2 and 3). In the 2024 PFS Final Rule, CMS states continued interest in promoting “stability and predictability” in the PFS. We urge CMS and Congress to follow through on this statement and stop ongoing clinical labor and EM cuts to office-based specialists in end-of-year Medicare legislation as Congress looks to undertake the serious work of fundamental reform to the Physician Fee Schedule. It’s well past time for Congress to implement fundamental reform of the PFS for office-based specialists to ensure that wild swings in payments are a thing of the past. -------------------------------------- Health Management Associates, Significant Speciality Variation in Estimated Payment Changes Since 2006 Urban Institute and SullivanCotter, Analysis of Physician Compensation, January 2019. Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Physical Therapists. 2021
  • How has MedPAC contributed to ongoing cuts to office-based specialists?
    For years, the Medicare Payment and Advisory Commission (MedPAC) has suggested that the PFS is balanced away from primary care providers (1). To support these claims, MedPAC often cites the SullivanCotter Survey which shows physician compensation differentials. However, there are several flaws with the SullivanCotter Survey and MedPAC’s inferences from the survey, which include: • MEDPAC PROMOTES TAKING FROM LOWER PAID PROVIDERS TO PAY HIGHER PAID PROVIDERS MORE. While the SullivanCotter Survey asserts that primary care physicians have the lowest median compensation, in fact, physical therapists are the lowest paid PFS provider and primary care physicians are paid 170% more (2 and 3). o As a result, MedPAC’s strong promotion of the 2021 PFS policy to provide more funds to evaluation and management services in a budget neutral basis cut physical therapists by 9% to pay for providers who already were paid 170% more (4). • MEDPAC USES PHYSICIAN COMPENSATION DIFFERENTIALS TO SUPPORT CUTTING HIGHER PAID PROVIDERS, BUT DOES NOT KNOW WHAT APPROPRIATE COMPENSATION DIFFERENTIALS SHOULD BE. While the SullivanCotter survey explicitly notes that there should be physician compensation differentials (5), MedPAC acknowledges that it does not know what appropriate physician compensation differentials are, nor does it think that such appropriate differentials are knowable. • MEDPAC PROMOTES THE USE OF PFS NEUTRALITY TO ADDRESS ALLEGED IMBALANCES IN THE PFS, BUT ALSO ACKNOWLEDGES THAT SIGNIFICANT PHYSICIAN COMPENSATION OCCURS OUTSIDE OF THE PFS. Specialty differentials highlighted in the SullivanCotter survey assert that other providers are compensated more than primary care driven when measured by differentials in total cash compensation [TCC] (6). o But the SullivanCotter report also notes that TCC includes significant payments that flow outside PFS RVUs, such as: (1) facility based technical payments in the IPPS and OPPS fee schedules (which MedPAC acknowledges often are paid at higher rates than the office) and (2) Part B drugs (which are not paid on the basis of RVUs). o As a result, PFS budget-neutrality policy is not an appropriate means for addressing asserted TCC differentials. • MEDPAC POLICIES HAVE BEEN DRIVING SIGNIFICANT CUTS TO OFFICE-BASED SPECIALISTS, BUT ITS OWN DATA DOES NOT INCLUDE SUFFICIENT INFORMATION FROM OFFICE-BASED SPECIALISTS. Independent physician practices are not even a significant source of SullivanCotter Survey data, which is extremely problematic given that the survey is being used by MedPAC to support ongoing cuts to office-based specialists. ----------------------------------------------- 1. MedPAC, Rebalancing Medicare’s physician fee schedule toward ambulatory evaluation and management services, June 2018. 2. Urban Institute and SullivanCotter, Analysis of Physician Compensation, January 2019. The report states that primary care provider compensation is $241,687 on average. 3. Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook , Physical Therapists. The report states that physical therapist compensation is $89,440 4. MedPAC Comment to the 2021 PFS Final Rule (available here: ) 5. Urban Institute and SullivanCotter, Analysis of Physician Compensation, January 2019. 6. Total cash compensation includes base salary, incentive compensation, and other cash compensation ( e.g. honoraria, longevity bonuses, retention bonuses, profit sharing, sign on bonuses, long term incentive payments).
  • How does PFS budget-neutrality drive health system consolidation?
    While President Biden’s Executive Order on Promoting Competition in the American Economy makes it clear that this Administration is concerned with health system consolidation, the final 2024 PFS Rule serves to undercut this initiative. According to the American Medical Association, the share of physicians working for a hospital increased from 29.0 percent in 2012 to 40.9 percent in 2022 (1). The ongoing pandemic also accelerated these trends with hospitals and acquiring 58,200 additional physicians over the last three years (2). Given that the reimbursement for all specialists is, on average, more than $100,000 in a vertically integrated health system than in a physician's office, the incentive is clear for beleaguered PFS providers who may no longer be able to sustain cuts in the final 2022 PFS Rule to simply close their centers and continue the migration to large health systems (3). ----------------------- American Medical Association, Recent Changes in Physician Practice Arrangements: Shifts Away from Private Practice and Towards Larger Practice Size Continue Through 2022, Carol K. Kane, PhD, 2023 Physicians Advocacy Institute, Covid-19’s Impact on Acquisitions of Physician Practices and Physician Employment, April 2022 [Prepared by Avalere, see link here.] Post, Brady PhD et al., Hospital physician integration and Medicare’s site-based outpatient payments, Health Serv Res. 2021;56:7 15
  • How does PFS budget-neutrality drive health inequities?
    While the 2021 PFS budget-neutrality effect was due to the CMS policy of putting more money into evaluation and management (E/M) services and subsequent cuts to the conversion factor, the main driver of provider cuts in the 2022 PFS Rule relates to budget-neutrality effects of a CMS proposal to update clinical labor data and subsequent to relative value units (physician payments equal RVUs * conversion factor). Like the 2021 PFS year’s E/M proposal, on its face, updating clinical labor data in the CMS database made sense. However, because of aforementioned PFS “budget-neutrality,” the incorporation of new clinical labor data actually resulted in massive cuts of up to 20% to critical services in the PFS (1). The impacts of the 2022 PFS will have profoundly negative effects on health equity. While the Biden Administration continues to advocate for policies to address health inequity, the 2022 PFS Rule actually undermined these initiatives in areas throughout the PFS as exemplified with several examples in the table below (note: these cuts are phased in through 2025). The 2024 PFS Proposed Rule continues this trend with further implementation of the 2021 EM cuts (3.4%) and the 2022 clinical labor cuts (up to 4%). --------------------- These cuts currently are being phased-in over the 2022 – 2025 timeframe. Vascular and Endovascular Surgery, Advanced Chronic Venous Insufficiency: Does Race Matter?, 26 December 2016 Racial/Ethnic Disparities Associated With Initial Hemodialysis Access. JAMA Surg.2015 Jun;150(6):529-36. doi: 10.1001/jamasurg.2015.0287 Cure, Cancer Sees Color: Investigating Racial Disparities in Cancer Care, Katherine Malmo, 16 February 2021
  • What does PFS budget-neutrality mean for pandemic resilience?
    In a health crisis such as the COVID-19 Pandemic, it’s critical that hospitals focus on our sickest pandemic patients. However, many other issues such as cancer, dialysis vascular access for ESRD patients, cardiac patients with symptoms, the need for physical therapy, etc. still must be addressed. Office-based care provides a critical site-of-service outside of the hospital to deal with non-COVID cases so hospitals can focus on the pandemic. Reducing access to office-based care during a pandemic is a key second-order negative outcome that isn’t considered by ongoing indiscriminate PFS cuts to office-based specialists, such as the 10% cut to the “conversion factor” (2021 PFS) and the 24% cut to the “direct adjustment factor” (2022 PFS). Devasting cuts from these policies are being phased-in through 2025.
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