Last week, the Medicare Payment Advisory Commission (MedPAC) released its March Report to Congress recommending an update to the Medicare base payment rate for physician and other health professional services by 50% of the projected increase in the Medicare Economic Index (MEI) effective January 1, 2024. ASTRO joined physician groups in a letter to Congress supporting the full MEI update, not just half.

Why it matters: The MEI measures the average annual price change for the market basket of inputs used by clinicians to furnish services. MedPAC typically doesn’t recommend an increase of any kind, and under current law, the update for 2024 is set to be 1.25%. Based on the indicators the Commission analyzes, it believes current payments are adequate, but acknowledges that inflationary cost increases will be hard for clinicians to bear. According to the report, practice expense makes up about half of the MEI, justifying 50% of the projected increase in the MEI.

For 2024, this methodology will equal an update recommendation of 1.45%, which is slightly more than the 1.25% specified under current law. What’s more, this recommendation would be permanent (each year, the update to the base payment amount would be half of the projected MEI increase).

State of play: Per the Report, clinicians’ input costs (measured by the MEI) grew by 2.6% in 2021, and it’s estimated that they will have grown 4.7% in 2022—much higher than the recent historical norm of 1-2% per year. In 2023 and 2024, it is expected that input cost growth will remain high (3.9% and 2.9%, respectively).

Next steps: If Congress does not adopt MedPAC’s recommendation for an increase, current law will continue to apply. ASTRO joined the American Medical Association and other medical specialty societies in submitting a letter to Congress stating that implementing an inflation-based update of only half of the MEI growth rate “would be a missed opportunity to meaningfully address this perennial issue of Medicare physician underpayment that threatens stable access to care for millions of Medicare beneficiaries.”

Other Takeaways

• MedPAC also is recommending that Congress enact a non-budget-neutral add-on payment under the Fee Schedule for services provided to low-income Medicare beneficiaries. The payment would equal a clinician’s allowed charges for these beneficiaries multiplied by:
  • 15% for primary care clinicians; and
  • 5% for specialists.
• MedPAC still is pursuing site-neutral payments by identifying the circumstances when it is reasonable to align payment rates for the same service provided at different sites of care. ASTRO expects more on site-neutral payments in MedPAC’s June 2023 Report.
• MedPAC recommends updating hospital payment rates by adding 1% to what is provided under current law, which, although not finalized for 2024, is forecasted to be 2.9% for both Inpatient and Outpatient Prospective Payment Systems.
• Medicare Advantage (MA) Plans
  • All indications suggest that in 2023, a majority of eligible Medicare beneficiaries will be enrolled in an MA plan.
  • Medicare payments to MA plans in 2023 are projected to be $27 billion higher than if MA enrollees were enrolled in traditional Medicare.