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How the 2024 Final Physician Fee Schedule Empowers ACOs to Succeed
November 15, 2023

By Casey Korba, Director of Policy

In this blog, we examine what the final 2024 Physician Fee Schedule (PFS) means for primary care, both in fee-for-service (FFS) and in the Medicare Shared Savings Program (MSSP), and lay out what the future could hold for the flagship accountable care organization (ACO) program. For a deeper dive, check out our recent PFS webinar.

Changes to FFS Affecting Primary Care

Physician Payment and the AAPM Bonus

CMS released the final 2024 Physician Fee Schedule on November 2, although Congress will have more to say, as we expect action to mitigate the cuts to the conversion factor (CF). On November 8, the Senate Finance Committee voted to advance health care legislation that would extend the Advanced Alternative Payment Model (AAPM) bonus and increase Medicare physician payment, and we anticipate more discussion and negotiation in the coming days. 

Congress has intervened to address payment cuts every year the last several years. The current continuing resolution expires on November 17, providing the earliest opportunity for Congress to intervene, and the next opportunity will be early in 2024. As a reminder, if fixes to physician payment are not made before the end of the calendar year, changes made in early 2024 will be applied retroactively to January 1 as they have been before. 

FFS Codes

Budget neutrality requires that overall spending continue to drop without Congressional intervention. Existing primary care codes have increased in previous years: Evaluation & Management (E&M) codes are up more than 15%, Chronic Care Management is up nearly 50%, and Transitional Care Management is up 10% from 2020. However, for 2024, primary care FFS codes are facing a 1%-3% reduction from 2023. 

For 2024, CMS is continuing its streak of adding more management and complexity codes, including G2211 (an add-on code to capture visit complexity inherently associated with primary care to better account for complex patients); caregiver training codes; community health integration; principal illness navigation codes; and Social Determinants of Health Risk Assessment (SDoH) (G0136) that will allow clinicians to bill Medicare for administering a standardized SDoH screening tool during certain E&M visits.

Telehealth Reporting

CMS addressed the concerns of the many stakeholders, including Aledade, who have been advocating against requiring practitioners to report their home address to Medicare by the end of the calendar year if they are doing telehealth visits from their home. 

Through calendar year 2024, CMS is allowing practitioners to report their currently enrolled practice location instead of their home address when providing telehealth services from home. Beyond 2024, CMS is interested in getting additional feedback on what barriers and privacy concerns clinicians have before addressing in future rulemaking. 

MSSP Updates

While Congress scrambles to make annual fixes to FFS, successful practices participating in MSSP have likely seen their savings compound each year. For clinicians in MSSP, the financial power of being in an ACO program means that savings revenue can increase over time, unlike FFS, which often gets eaten away by inflation. 

Aledade member practices earned an average of $294 per Medicare beneficiary in shared savings revenue in the 2022 MSSP.* For reference, these same practices receive an average of $300 – $500 per Medicare beneficiary in FFS revenue. MACRA set the expectation that clinicians would participate in both FFS and value-based programs, and both CMS and Congress are making policy based on that assumption.

For clinicians in MSSP, the financial power of being in an ACO program means that savings revenue can increase over time, unlike FFS, which often gets eaten away by inflation. 

Attribution Changes

In addition to introducing a number of codes to be used for attribution, CMS finalized changes to when Medicare patients can be assigned to an ACO. These changes recognize the growing use of care teams of physicians and nurse practitioners/physician assistants. Instead of the requirement to see a physician every 12 months, CMS is extending the lookback period to 24 months to support patients who may not need to see a physician every year in practices employing care teams. CMS estimates this will increase attributed patients by almost 3%. 

Quality Reporting Updates

CMS has listened to the ACO community describe the barriers of transitioning to all-payer/all-patient/all-practice quality reporting and the resulting loss of accuracy in quality measurement. In the final rule, CMS finalized the transition to Medicare Clinical Quality Measures (CQMs), which includes reporting requirements on only Medicare patients who have a primary care visit with an ACO-based clinician. Quality measurement has always been at the forefront of MSSP, with the program’s laser focus on quality measures that matter. Quality will continue to be a big issue in 2024 as Web Interface measures sunset. 

Risk Adjustment Changes

Risk adjustment is critical to creating accurate benchmarks and monitoring how the health of the population might be changing. Wary of some of the findings in Medicare Advantage, CMS previously capped how much the risk score could grow for an ACO in MSSP, but left the region uncapped. 

Aledade and others in the community have demonstrated that non-capping the region suppresses the savings rate of ACOs in regions where the population is getting older and sicker – regions that need the work of ACOs the most. Our analysis shows that about 17% of ACOs are negatively affected by this asymmetry. In the final 2024 PFS, CMS finalized treating the ACO and region similarly, using the same model in both benchmark years and performance years. This does not apply to existing contracts, only new contracts, as CMS analysis showed some ACOs would be harmed if existing contracts were included.

Encouraging Participation for Higher Cost Organizations

Another change CMS finalized is to get rid of the negative regional adjustment, which often led to lower benchmarks for ACO participants with high-cost beneficiaries, making it more difficult for them to achieve savings. Aledade and others have advocated for this change, to encourage practices to join ACOs and make it easier for everyone to participate in value. This could encourage higher cost organizations that might have been hesitant to join an ACO previously because of this penalty. There are very few reasons not to join an ACO, and making this policy final just eliminated one of the very few. 

Looking Ahead: What’s Next for MSSP?

The data is clear that primary care is the foundation of a high-performing ACO. With recent wins on the FFS side, we are looking ahead to what could make the value landscape more appealing for those on the sidelines or in early stages. 

The biggest challenge in transitioning to value is the financial requirements to invest in advance while revenue is delayed for a year or more. While CMS offers a limited program for new ACOs, this is a challenge even for successful ACOs. CMS should offer enhanced primary care payments and a full risk track to everyone for 2025. 

Another area of Aledade advocacy that might come to fruition next year is increased waivers in MSSP. New care management codes have been helpful tools added to the primary care toolbox the last several years. These tools create enhanced payments for FFS, but they are more difficult for ACOs to use. The solution is more flexible waivers so that ACOs can get more credit for the efficient, high-quality care management they are doing. 

This year’s PFS was focused on smaller, but important, technical changes. These technical details matter a great deal. It is a true hallmark of a healthy program that CMS is engaging with stakeholders and the ACO community, listening to comments and addressing barriers. We are excited for what is ahead and ready to help practices succeed as we move into 2024. 

*Metric based on past performance. Past performance may not be indicative of future results. Shared savings revenue is not guaranteed