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How would tonight's Medicare payment bill affect PFS payments if enacted?

Updated: Dec 13, 2021

Tonight, the House Rules Committee will vote on a bill adjusting, among other things, the Medicare Physician Fee Schedule’s (and other Medicare payment systems’) effective payment rates. The “Protecting Medicare & American Farmers from Sequester Cuts Act” makes edits to the familiar 2% sequestration, the new 4% PAYGO sequestration, and 2021’s 3.75% boost to the PFS conversion factor. The two sequestration policies apply only to the portion of provider payments coming from the Medicare Trust Fund (so affecting roughly 80% of Medicare Part B provider payments), but the 3.75% boost to the PFS conversion factor applies to all.

While tonight this may be voted on in the House Rules Committee, it would then need to go to the House floor, through the Senate, and ultimately be signed by the President before this becomes a reality. It’s an expensive bill. However, it is also very reasonable and it makes no sense to not sign it during the ongoing Public Health Emergency or in the context of PFS under-payment.

Regarding the 2% sequestration policy, the primary reason it was temporarily waived – the pandemic – has not ended. Regarding the new 4% PAYGO sequestration policy, triggering a significant cut to a public healthcare program as a budget offset to a Public Health Emergency makes absolutely no sense. Regarding the 3.75% boost to the PFS conversion factor, the PFS is so wildly underfunded that even a mild delay to this policy is a good start, and frankly should be increased in the future.

So, at last, here are estimates of high-level effects of tonight's bill's effects on PFS payment rates. All of the policies affected by the bill are on different schedules. The following Table and Figure present MCDA’s estimates of the effective payment rates over the next few years under current law if the bill is passed and executed. Note for PFS followers, there are other policies within the PFS that will significantly amplify or attenuate these changes for individual services.

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