MGMA's Anders Gilberg calls the 2027 fee schedule death by 1,000 cuts

A 1.68 percent cut does not sound like much until it lands on top of five straight years of the same thing. That is where independent groups sit heading into 2027, with the proposed Medicare physician fee schedule trimming the conversion factor again as the temporary 2.5 percent increase Congress has propped up for years runs out Dec. 31.

Anders Gilberg, senior vice president of government affairs at the Medical Group Management Association, sat down with Physicians Practice to walk through the conversion factor, budget neutrality, the modifier 25 proposal and why the move from MIPS to MIPS Value Pathways does not read to him as relief.

The following transcript has been edited for length and clarity.

Physicians Practice: The proposed rule for the physician fee schedule is out, and there is a lot of interesting material in there. Give us a quick rundown of what came down the pike.

Anders Gilberg: There are a few themes I can pick up on. Unfortunately, the recurring one is the inability of Medicare to keep up with inflation in terms of what it pays physicians. This year it is a proposal on the conversion factor. It incorporates the expiration of a 2.5 percent bump that Congress has put in place now for the last five years or so, and physicians would see a reduction depending on whether they are in a qualified APM or not. They would see a reduction of 1.19 percent if they are in an APM and a reduction of 1.68 percent if they are outside of an APM. Obviously that is problematic, and the fix there is going to be more on the congressional side. Overall the rule is more beneficial toward value-based care, the Medicare Shared Savings Program and ACOs, which is positive and something we support. But it also amplifies the budget neutrality requirements Medicare is under, which tend to exacerbate shifts from one specialty to another. You are often cutting one specialty to benefit another. It creates all kinds of political problems as well as care delivery problems when some specialties get cut 10 percent or more in order to fund primary care, which is very positive on its own. We are pursuing legislative initiatives to fix that as well.

Physicians Practice: We are looking at another conversion factor cut, 1.68 percent for most physicians. What are your members saying after five years of cuts?

Gilberg: There is frustration. Some of the cuts have been averted at the last minute, at the 11th hour. There is frustration overall about the state of the physician payment system in Medicare, and we just need a reliable system that pays based on inflation. We have seen incredible inflation over the last several years. It tempered a little bit, but it is picking up again, and we are certainly not immune to that in this industry. The fee schedule does not keep up. We have independent practices that have to pay their own rent and their own salaries. They are dependent on the physician fee schedule because that is how they are paid, 100 percent in Medicare at least, and it just is not keeping up. Those practices have to find alternative revenue sources, or subsidize the loss they take on Medicare through private insurance contracts. It is becoming overly problematic. Decisions get made when we see consolidation in the industry: we are going to have to sell our practice, or the large health system can absorb the losses our practice incurs in order to secure a referral base or drive ancillaries into the health system. All kinds of different things are heaping pressure on physician practices today.

Physicians Practice: You mentioned last-minute corrections. It seems Congress is constantly setting up a game of chicken with itself. The 2.5 percent patch dies Dec. 31. Are we looking at a permanent fix, or are we stuck in this one-year patch forever?

Gilberg: One of the more eventful things that happened this past week is the introduction of the Patients First Act, which is an important bill. It does not address the very near term of the cut in 2027 that the fee schedule implements, but it would address some of the things I know we will probably touch on, like the budget neutrality rules in the Medicare physician payment system, as well as the fact that we do not have an inflation association in the physician payment system in Medicare. The inflation measure in Medicare for physicians is something called the Medicare Economic Index. Those are some of the problems that are more legislative to fix, but that are resurfacing in this fee schedule.

Physicians Practice: Budget neutrality is pushing a lot of these cuts, and you have been fighting it forever. Is this the rule that finally fixes it?

Gilberg: I do not think it fixes it. It further highlights it. You have winners and losers. There are all kinds of moving pieces in a rule like this, but certainly dermatology is going to be hurt under this rule. Different surgical specialties would be hurt under this rule. Some of the sub-proposals dealing with practice expense RVUs, and some of the legacy items from last year dealing with work RVUs, are still affecting the specialties in different ways, and it gets amplified by the budget neutrality requirements. This is a continued theme where you are always going to have to rob Peter to pay Paul. You may have a very laudable reason to increase primary care, but again, at the expense of surgical or other specialties. It is just not a very effective or sustainable system.

Physicians Practice: CMS admits it is working with expense data that is 20 years old. Does the rebuild fix that, or just shuffle it around?

Gilberg: Candidly, I am not sure I see them using any new legitimate data sources to justify the proposals they have in place, for example the inputs for the practice expense RVUs. Just to refresh, in Medicare, in the RBRVS system, you have work RVUs, practice expense RVUs and malpractice RVUs. The vast majority of the work goes into physician work, and practice expense goes into overhead, and a lot of this is relative, which is the relative system we have. In this fee schedule and in other things the administration has done, they want to move away from the AMA processes, the relative value update committee and the CPT editorial panel, but they do not really have the data to back it up. There is criticism of those processes, which I would remind people are not the AMA sitting at the table. It is the specialties that sit at the table. It is not one big monolithic entity. The specialty organizations sit at the table and talk about the relative aspects of these codes. CMS has indicated it wants to move away from it. There is an RFI in this rule that solicits input on that. But in justifying their proposals, they do not really have support data for what they are trying to do. They just say they do not necessarily like what the AMA has come up with in the last couple of years, which I find kind of disingenuous, to be honest. It is unfortunate that they do not come up with their own alternative data sources, but are quick to criticize the existing processes. So in short, they do not present a bunch of new data to fix the problem they perceive to exist. Instead they criticize the current system and go ahead with changes that do not have a lot of underlying data behind them.

Physicians Practice: Traditional MIPS dies in 2029. MGMA has called it costly, irrelevant and punitive, and you have called it things we will keep off the record. Is the sunset a real win, or is it the same burden in a fancy wrapper?

Gilberg: Keith, it is not a win at all. Yes, we have been critical of MIPS, but MIPS was only meant to be a temporary bridge back when we repealed the SGR, 10 years or more ago, to repair the Medicare payment system at the time. It was meant to be a bridge to allow physicians and practices like our members to get into alternative payment models that rewarded high quality care and reduced costs. Unfortunately, MIPS has been a reporting exercise, a compliance exercise, reporting quality measures. It can be punitive, and it benefits the practices that are good at reporting quality measures more than it correlates directly to care. This rule implements, over the next several years, the expiration of MIPS into something called MIPS Value Pathways. But what are value pathways? They are just MIPS on steroids. Think about the concerns we are still trying to work out. For a typical practice, and practices are larger now, say a 30-physician practice with multiple specialties, under this new value pathway approach will all of those different specialties within the practice now have to report a MIPS-like measure set? A practice might have to report dozens of measures, 100 measures, and exponentially increase the burden that existed in MIPS, after all this time, without moving these practices into actual value-based care. We are not the biggest fans of the value pathway approach, even though it is an alternative to MIPS. We have been working with Congress and some of the physician specialties, as well as the AMA, supporting legislation introduced by Representatives Miller and Meeks that would make more direct reforms in the MIPS program without pushing it into MVPs, which we feel is doubling down on a problematic part of the fee schedule.

Physicians Practice: Small and rural practices always fare worse in these transitions. What should they do now, and what is MGMA demanding from CMS for them?

Gilberg: When you think about small practices in general, rural or urban, you look at a rule that is 2,000 pages long with all these moving pieces. There are all kinds of initiatives with this administration to double down on fraud, because they want to fix the health care system by dealing with what I consider much more bad actors than a typical small practice. It becomes the cumulative effect of all these policies and cuts to physician payment, or moving pieces, or new modifiers, or new changes to the practice expense RVUs. It becomes more and more cumbersome to administer for those practices, and they are being challenged to do more with less. This rule does not do anything to address the administrative burden for those practices. The payments are relatively flat, and have been for many years, and there becomes a breaking point when you have to pay staff, pay rent, and you are solely paid under the physician fee schedule. They have to make tough decisions about whether to continue to participate in Medicare, or whether to sell to a larger health system. This rule does not do much to help the trajectory that smaller practices have been on for several years.

Physicians Practice: We are looking at nearly 2,000 pages of rule. What is the sleeper provision nobody is watching?

Gilberg: There are some positive things. There is a renewed focus on the Medicare Shared Savings Program, and I think those are going to be things we support in the end in our comments. Is it a real sleeper? It is the tinkering under the hood of this engine. It is not a sleeper in the sense that we can identify what they are doing, and their end goal might be laudable, but given the budget neutrality rules and the way the system works, it does create winners and losers. For your audience, depending on what specialty a practice is in, what focus that practice has and what codes they bill, just pay attention when CMS makes these under-the-hood adjustments. They can be quite dramatic. There are new proposals dealing with the use of the 25 modifier, for example, which would limit payment in circumstances where a practice does an office visit and a procedure on the same day, and that could be substantial for a dermatology practice. It is very important for your readers and listeners to be aware that these changes can have dramatic effects. Some specialties will get a slight increase, and some will see a dramatic decrease.

Physicians Practice: Comments are due Sept. 14. What do you think CMS would actually budge on?

Gilberg: That is a great question. This administration in particular is kind of set in its ways. I have not seen a lot of movement so far, in terms of the difference between the proposal and the final in last year's fee schedule. For example, I thought they would address something from last year's fee schedule called the efficiency adjustment, which is on work RVUs and has a substantially negative effect on surgical specialties and other proceduralists. I thought they might address some of that in this fee schedule. They did not. They tinkered with some of the practice expense RVU adjustments from last year, but I do not think they addressed the underlying concerns. On the practice expense side last year, it really hurt independent practices. Say a surgical practice where a surgeon has his or her own independent practice, where you are still seeing patients, still doing pre-op and post-op visits, but then going to do your surgery in a hospital or hospital outpatient department. That cuts payment significantly for those physicians, with the notion that somehow they were being subsidized by the hospital itself. I thought this rule would address some of that, and it did not. I have not seen a lot of course corrections so far with the administration. I hope they do listen to us. The first Trump administration and this Trump administration use enormous amounts of RFIs, requests for information. What they do with that information is often a mystery.

Physicians Practice: Last year the big cliff was the end of the telehealth rules. That was the game of chicken Congress set up. So let us set a little bet. What is the one thing you expect Congress to chicken out on by the end of this year?

Gilberg: I am not entirely sure they are going to act to avert this cut this year. I am concerned, because there is a history. It is the notion of death by 1,000 cuts, which is what this feels like. We are going to have to double down and make sure physician practices and physicians do not receive a cut next year, because these smaller cuts sometimes get overlooked. But they are real cuts. They are not the kind of cuts you often hear the managed care plans talk about, where they did not get an increase they wanted in the MA rule. These are actual cuts, not cuts in growth rate, and they happen at a time when there is inflation in the industry. So I am concerned about that. It will need to be addressed in the lame duck session this year. I do not expect it before the election, but we will have extenders like every year: the work RVU, the geographic adjustments on the work RVU, the cut to the conversion factor. Not telehealth, because that is a two-year extension going through 2027. But there is work to be done, Keith, and we are going to be back at it at the end of the year.

Physicians Practice: It is always a pleasure, Anders. I am going to get you back on here sooner rather than later to talk about MIPS.

Gilberg: Thanks, Keith.