The Center for Medicare and Medicaid Services (CMS) operates under the principle of budget neutrality, a policy which ensures any increase in payment for a specific service(s) must be offset by a decrease in payment elsewhere within the target area of expenditure. This principle has been linked to significant declines in physician fee schedule reimbursement for Medicare, a matter that has garnered increased attention in light of recent research.
A group of researchers from the Harvey L. Neiman Health Policy Institute recently published a study in the Journal of the American College of Radiology, documenting a steep decrease in radiologist reimbursement for imaging services provided to Medicare beneficiaries. This decline, observed over a 16-year span and adjusted for inflation, is driven by the very budget neutrality strategy that CMS employs.
This situation carries a greater implication as it negatively impacts the financial viability of many healthcare practices, subsequently reducing patient access to essential care. For instance, several hospital-based specialties such as radiology, which are heavily dependent on Medicare payments, have witnessed dramatic reductions in their fee schedules.
Of concern is a definite trend towards declining payments when adjusted for inflation. Recommendations for revisions of service codes result in increased relative value units (RVUs); nevertheless, budget neutrality calls for an adjustment in the conversion factor to balance the additional expenditure, leading to a reduced overall reimbursement rate.
To bring about a more equitable system of reimbursement, stakeholders are likely required to advocate for revisions to budget neutrality mandates for the CMS. It is a critical step towards ensuring physicians’ financial viability, improving access to quality healthcare services for beneficiaries, and delivering a truly patient-centric care system.
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