‘A Significant Cut’: CMS’ Latest Payment Proposal Is ‘Problematic’ for Nursing Homes

The Centers for Medicare & Medicaid Services (CMS) is proposing to reduce payment for physician services under the fee schedule compared to last year, the federal agency announced late Thursday.

The reductions would affect the provision of therapy in nursing homes. Indeed, the proposal represents a “significant cut” that will put nursing home “providers in a difficult position,” said Cynthia Morton, executive vice president at Advion, a trade association representing suppliers of ancillary services and providers to the long term and post-acute care sector.

CMS issued the calendar year 2024 Medicare Physician Fee Schedule (PFS) proposed rule to announce rate updates, advance health equity, and expand access to critical medical services including behavioral health, the federal agency said in a press release.


Overall proposed payment amounts under the PFS would be reduced by 1.25% compared to calendar year 2023, CMS said. CMS is also proposing increases in payment for many visit services, such as primary care, and these proposed increases require offsetting and budget neutrality adjustments to all other services paid under the PFS, by law. The proposed calendar year 2024 PFS conversion factor is $32.75, a decrease of $1.14, or 3.34%, from calendar year 2023.

Morton said that the timing of the payment cuts is off. CMS has moved forward with a complexity code that Congress had previously delayed for a couple of years to give providers a break, and CMS’ plans to move forward with it on Jan. 1 is “compounding the problem,” she said.

“This is problematic because this is during a time of inflation, when costs are high, labor costs are high. And CMS has proposed this, which is really untenable,” she said.


At this time, it is unclear as to the precise impact these proposed changes will have on therapy-based services, but they will be negatively affected from these proposed payment reductions, Morton said.

“So we’re parsing into the more specific impact to therapy, but what is called the conversion factor, which is essentially what CMS is saying they’re going to pay for physicians services under the fee schedule … is a problem, and we’ll be advocating on it,” Morton said,

On the other hand, not all the news is bad for therapy services, Morton said.

“On the positive side, it’s looking like CMS is clarifying some abilities for therapists to utilize telehealth in nursing facilities until the end of 2024,” Morton said. “We’ve been seeking that clarity from CMS, so that is a good thing.”

Also, CMS is also looking for comments on supervision authority with respect to therapy, which Morton deems as another good outcome.

This year’s proposal follows other payment cuts that have hit therapy providers in recent years. A 15% reduction in reimbursement for services rendered by physical therapy assistants (PTAs) and occupational therapy assistants (OTAs) took effect in Jan. 2022. And CMS finalized further cuts last fall.

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