The third cut is due to the American Rescue Plan/COVID-19 relief bill passed in March 2021, which triggered a Statutory Pay-As-You-Go (PAYGO) cut that requires mandatory spending increases to be offset by tax increases or cuts to other areas of mandatory spending. The $1.9 trillion allocated for the American Rescue Plan Act triggered a 4% reduction in Medicare that equates to a $36 billion cut in Medicare reimbursement.1
The 4% reduction and the expiring 3.75% bump—both related to COVID relief—combine with the 2% annual Medicare sequestration cut for an overall 9.75% cut in the 2022 Medicare reimbursement rate for providers, including rheumatologists. “These are hugely significant cuts to physician Medicare reimbursements, at a time when practices’ bottom lines are most at risk and we’re facing en masse provider retirements due to pandemic emotional and financial stress,” Ms. McDaniel says.
The newest cuts compound historically flat physician payments over the past couple of decades, even though other areas of Medicare spending have generally kept up with inflation. After adjusting for the inflation in practice costs, Ms. McDaniel explains, Medicare physician payments have declined by 22% from 2001 to 2020.
“These latest cuts may impact non-Medicare patients, too, if third-party payers align their rates with these new Medicare rates, as they often do,” Ms. McDaniel cautions. She stresses that “physician practices already in survival mode will only face more difficult financial challenges if the 2022 Medicare cuts are implemented.”
How Reimbursement Cuts Will Impact Practices
Solo private practice rheumatologist Chris Phillips, MD, who works in Paducah, Ky., agrees that the 2022 Medicare reimbursement rate cuts come after years of Medicare undervaluation of rheumatology services.
“The uncertainty that potential cuts like this place on us as small business owners cannot be overstated,” he notes, explaining that independent practices remain the most cost-effective sites of care, yet these same practices are the most threatened by the currently scheduled reimbursement cuts.
Dr. Phillips says it’s unfortunate that it took the COVID-19 pandemic to roll back the unfair sequester cuts when rheumatologists were just celebrating Medicare’s recognition of the value of cognitive care by adjusting reimbursement for E/M codes to favor cognitive services.
Coming off these recent wins, he says, “it seems hard to believe we again face a cut, this time of nearly 10%, which will again force us to examine our overhead expenses, including staffing levels, and again have to give thought to Medicare patients’ access to our practices—something I had hoped we were done having to consider.”
