By: Ronda Polansky, MS, CCC-SLP, TSHA Business Management Committee Co-Chair

This four-part series will discuss the vulnerability of healthcare, insurance contracts, data collection, government contacts, and contract negotiation.

The U.S. healthcare industry faced onerous conditions in 2023, including increasing inflation rates, ongoing labor shortages, and the endemic nature of COVID-19. As 2024 arrived, we were confronted with more imposing challenges, including upcoming political elections, a healthcare clearinghouse cyber attack, and diminishing reimbursement rates across the board, again. The impact of these on practice revenue demands strategic planning as well as unified voices. Strategic planning can create a direction toward a goal for your practice; without it, you likely will take action only to address immediate problems, which is a crisis management approach. This will be part one of a four-part series addressing smart business skills for better care when revenue is vanishing.

When compared to current inflation, medical reimbursement has continued to experience a consistent decline. Most insurance payors are now currently below the Medicare allowable rates as a standard. This is a trend that raises concerns about the sustainability of all medical practices. Although most employee wages increased in 2023 as the job market fought to hire and sustain employees, the reimbursement for services continued to decrease. As we look ahead, the growth of the managed care population who qualify for both Medicaid and Medicare presents a substantial opportunity for the payers but only if they are able to meet the needs of the providers.

“Physician fee schedule cuts…again.” This statement is not a question of if it will happen but rather a matter of by how much. Everyone in healthcare—and Congress—knows that cuts to the fee schedule are devasting and threaten the viability of many practices, especially if they stop taking Medicare patients. In a polarized government, a change of this magnitude becomes more difficult to accomplish. On March 9, 2024, President Biden signed the Consolidated Appropriations Act of 2024, which included a 2.93-percent update to the CY 2024 Physician Fee Schedule (PFS) Conversion Factor (CF) for dates of service March 9 through December 31, 2024 (KFF, 2023). This replaces the 1.25-percent update provided by the Consolidated Appropriations Act of 2023. As just one example to the monumental effect of declining reimbursement, since 2004, the Modified Barium Swallow Study CPT code 92611 has declined from $141 to $90 and has been as low as $81 in 2009 and $83.45 in 2013. This amount is lower than a cognitive evaluation yet requires a controlled substance and a physician present in most states.

Many specialized clinics that do not take Medicare are often not as concerned about Medicare reimbursement rates, not realizing that it actually is very important to their daily practice. All insurance payors base their rates off the current year Medicare rates. Simply put, if Medicare rates do not increase, no other payor rate will increase. Medicaid rates are historically well below Medicare rates, which are themselves also well below commercial rates, up to 30 percent lower (Mann, 2022) Private insurers currently play a dominant role in U.S. healthcare, with more than 40 percent of the expenditures on healthcare services (Mann, 2022). Providers make significantly less for the care delivered to Medicare Advantage Plan (MAP) enrollees than to those covered under other commercial insurance and traditional Medicare as they are paying less than the Medicare allowable. The most common reasons are numerous payor denials and required prior authorizations that lead to longer lengths of stay and readmissions, but there has been no reciprocal increase in reimbursement, just the additional expense of providing healthcare services longer. The small amount of good news in 2024 is that the Merit-Based Incentive Payment System (MIPS) will be fully in force for all eligible clinicians across all specialties, but Centers for Medicare and Medicaid Services (CMS) did not implement an increase to the performance threshold in the MIPS from 75 points to 82 points.

In 2021, providers submitted more than 35 million prior authorization requests to Medicare Advantage (MA) alone. Today, 43 percent of seniors are enrolled in Medicare Advantage (KFF, 2023). By 2030, that proportion is expected to rise to about 60 percent as more Baby Boomers reach Medicare eligibility age, with the Medicare Advantage market growing by almost $200 billion (KFF, 2023). As that happens, high-performing payers can profit by 5 percent on average for an approximately $12,000 top-line premium per Medicare Advantage enrollee per year (KFF, 2023). As healthcare providers, we must strengthen our network strategy and advance our professional affiliations and other partnerships to get a fair rate under MAPs. Additionally, with the rise in consumer choices for multi-channel care, rethinking a provider’s overall care delivery strategy is critical (Guidehouse, 2023). A CMS final ruling issued April 2024 is supposed to ensure that MAP organizations provide equal access to Part A and Part B benefits as is provided in the traditional Medicare program, which includes criteria that they cannot be more restrictive than traditional Medicare. In summary, if Medicare pays for a service, MAPs are required to pay for the same service. Oversight of MAs adhering to the final rule has already been challenging.

The upcoming installments of this four-part series will discuss the vulnerability of healthcare, insurance contracts, data collection, government contacts, and contract negotiation.

References

Fuglesten Biniek, J. (2023). “Is the Biden Administration Proposing Cuts to Medicare Advantage?” KFF, 17 Feb. 2023, www.kff.org/policy-watch/is-the-biden-administration-proposing-cuts-to-medicare-advantage.

Guidehouse.com. (2023.) “2023 Health System Trends.”, https://guidehouse.com/insights/healthcare/2023/2023-health-system-trends. Electronically retrieved 26 June 2023. 

Sroczynski, Nolan. (2023). “Over 35 Million Prior Authorization Requests Were Submitted to Medicare Advantage Plans in 2021.”KFF, 2 Feb. 2023, www.kff.org/medicare/issue-brief/over-35-million-prior-authorization-requests-were-submitted-to-medicare-advantage-plans-in-2021.

Mann, C. & Striar, Adam. (2022).  “How Differences in Medicaid, Medicare, and Commercial Health Insurance Payment Rates Impact Access, Health Equity, and Cost,” To the Point (blog), Commonwealth Fund, Aug. 17, 2022. https://doi.org/10.26099/c71g-3225