Last week’s finalized 2.83% cut to the Physician Fee Schedule (PFS), which follows a series of payment reductions of recent years for rehab and therapy services for Medicare beneficiaries, is raising concerns about tightening access to such care in nursing homes, with physicians calling the situation unsustainable.

For physicians, this particular cut in the PFS is the fifth reduction physicians have received to funding, made worse by inflation as far back as 2001. Given these factors, physicians are being paid 29% less than they were in 2001.

Instead of cuts to payment, the Centers for Medicare & Medicaid Services (CMS) needs to recognize an inflation-based update to the PFS similar to what is already seen in the SNF final payment rule, said Dr. Bruce Scott, president of the American Medical Association (AMA). Due to these payment cuts, physicians are limiting appointments with Medicare beneficiaries, he said. Moreover, lower payments for physicians also translate to operational challenges for physician groups and therapy providers.

MedPAC is already estimating that next year, it’s going to cost 3.6% more to provide care to Medicare patients, Scott said.

“When you put it all together, it’s a 6.4% cut,” said Scott. “AMA has been successful over the last number of years in getting [CMS] to reduce the cut, but at some point when you keep getting cut, band aids don’t work anymore.”

Cynthia Morton, executive vice president of advocacy group ADVION, echoed some of these concerns. The cuts to therapy providers have affected nursing home care, putting further strains on services provided, she said. Ultimately it’s the beneficiaries who also suffer and miss out on the complete benefit of a therapy service, she added. Payment cuts to physicians also mean that patients have longer wait times for evaluations.

As a physician himself, Scott said that these payment cuts are unsustainable, already having large impacts on the quality of care and access to physicians in nursing homes, among other care settings.

“Physicians already are limiting the number of Medicare patients that they will take. In a lot of cases, they’re stopping intake of new Medicare patients, and in some cases, they’re dropping out of the system altogether,” Scott said.

Increasing payment to account for inflationary pressures should be the norm right now, he said. “We’re not talking about some radical reform. We’re talking about bringing physicians up to the same level,” Scott said.

That said, there are some positives to the final PFS released last week, Morton said, including a burden reduction policy that frees up therapy providers from having their hands tied up with paperwork.

CMS finalized the PFS and other Medicare Part B Policies on Nov. 1, effective Jan. 1. 2025. While average payment rates will be reduced by 2.93% in 2025, that percentage is reduced to 2.83% based on a conversion factor to adjust for changes in work relative to “value units” for some services, the agency said.

Strained access to care

The number of physicians who participate in Medicare has not gone down too much, Scott said, but that doesn’t mean that physicians will necessarily prioritize seeing such patients. In fact, it’s an “extreme challenge” to get a new patient to see a physician if they are a Medicare beneficiary due to the low reimbursement. 

Meanwhile, Scott said there will be a shortage of 86,000 physicians in a decade. And, it takes seven to 10 years to train a new physician.

“With Washington, sometimes they don’t seem to ever want to respond to anything until their feet are hanging over the cliff,” said Scott. “If you just look at that 86,000 shortage in 10 years, we have to begin fixing that today, or suddenly we’re going to wake up in 2035 and say, ‘oh my gosh, we need to fix this.’”

Ongoing legislative efforts

Several bills have been introduced to help reform the system but they “can’t come soon enough,” Morton said.

ADVION is asking Congress for a patch for the fifth year to help therapy providers and physicians some ease through this reduction.

“I feel like we have lobbied Congress on these reductions for many years and carried to them the message that labor costs are higher due to a shortage of clinicians and reimbursement is decreasing which is not sustainable,” Morton said of the compounding cuts to professionals paid through the PFS.

“Congress is taking steps to make more permanent reform to the Fee Schedule but it likely won’t be ready for the lame duck session starting in a couple of weeks,” noted Morton.

Scott added Congress needs to have a “very active” lame duck session. HR 2474, the Strengthening Medicare for Patients and Providers Act, already has 233 co-sponsors, Scott said. It’s more than a majority, and it’s bipartisan.

Wins for nursing homes in the PFS

One of the ways the federal government may get around the costs associated with physician involvement is to bypass their signature on a care plan.

Involving a burden reduction policy, the final PFS says that the therapy plan of care doesn’t need to be signed by the physician once it’s put into place. Now, rehabilitation therapists just need to document that they shared the plan of care with the ordering physician, she said.

This could be considered a positive for nursing homes, Morton said.

“Therapists spend time trying to get the physician to sign the plan of care before they can bill Medicare and often the signature is delayed. So this is a great win,” said Morton. “CMS’s new policy directly benefits patients because it decreases the time therapists and other clinicians have to spend obtaining a signature and that time can be devoted back to patients.”