Ronnen Isakov Nov 27, 2023 11:07:24 AM 9 min read

Implications of the 2024 Medicare Physician Fee Schedule Final Ruling

On November 2nd, The Centers for Medicare & Medicaid Services (CMS) released the final 2024 Medicare Physician Fee Schedule (PFS) ruling. 

Although most healthcare organizations’ governmental affairs lobbying groups issued commentary and requests of CMS in the fall of 2023 to not make any material negative changes for the 2024 PFS, on initial review, it seems as though this year’s final ruling does have material negative payment implications for providers and the related hospital and health systems. The final rule also includes changes to the Merit-based Incentive Payment System (MIPS) and alternative payment model (APM) participation options and requirements for 2024. 

The Medical Group Management Association (MGMA) governmental affairs group summary highlights the following points from the Final Ruling:

  • Sets the 2024 Medicare payment rates for physician services. For 2024, CMS has finalized a conversion factor of $32.7375 and $20.4349 for Anesthesia (a decrease of 3.4% and 3.3%, respectively, over final 2023 rates of $33.89 and $21.12. As an additional reference, the 2022 Conversion Factors were $34.61 and $21.39, a 2 year decrease of 5.4% and 4.46%, respectively.
  • Implements E/M add-on code G2211 and defines the “substantive portion” of a split (or shared) E/M visit to mean more than half of the total time spent by the physician or nonphysician practitioner or a substantive part of the medical decision making;
  • Reimburses telehealth services furnished to patients in their homes at the higher, non-facility PFS rate;
  • Allows for direct supervision by a supervising practitioner through real-time audio and video interaction telecommunications through 2024;
  • Continues coverage and payment of telehealth services included on the Medicare Telehealth Services List through 2024;
  • Pauses implementation and rescinds the Appropriate Use Criteria program regulations;
  • Maintains the performance threshold of 75 points for all three MIPS reporting options;
  • Adds five new MIPS Value Pathways related to women's health, prevention and treatment of infectious disease, quality care in mental health/substance use disorder, quality care for ear, nose, and throat, and rehabilitative support for musculoskeletal care;
  • Changes the Medicare Shared Savings Program (MSSP) such as revising the MSSP quality performance standard, modifying the program’s benchmarking methodology, and determining beneficiary assignment under the MSSP; and,
  • Ends the 3.5% APM Incentive Payment after the 2023 performance year/2025 payment year, and transitions to a Qualifying APM Conversion Factor in the 2024 performance year/2026 payment year.

While Congress has provided temporary partial fixes to physician payment in the last several years, the relief from the Consolidated Appropriations Act (CAA), 2023, does not offset all the cuts in this rule. Lawmakers are considering legislative options as they have done in the past, but it remains unclear based on initial feedback from Washington, D.C. whether relief will be provided before the start of 2024.

Providers and healthcare organizations will be well served to review these changes in detail and identify which, if not all, of these items will significantly impact their practices and clinics. Your practice or group cannot count on Congress to fully roll back the scheduled fee changes for 2024. Remember that inflation and employee cost increases have already cut into practices’ margins. Regardless of Congress’ actions or inactions, now is a good time to review your operations. A thorough review can help you plan for CY 2024 from a financial budgeting perspective, as well as identify and prepare for some of the impacts the 2024 final rule will have on you in the coming year. 

Here are actions you can take as part of your review – before you start celebrating the new year:

  1. Develop a written practice budget for 2024 and conduct a thorough review of all expenses.  
  2. Assess each position to determine if the position is needed to achieve the practice goals.
  3. Review all maintenance and service contracts for telephone, computer, and copiers.  Compare the cost of repair versus new equipment, assessing the age of the equipment and the cost of maintenance.
  4. Review staff health insurance costs.  
  5. Review all business, life, and disability insurance policies (this should be performed annually).
  6. Take advantage of practice slow periods (down time) to call back inactive patients for physicals, screenings, etc.
  7. Review the billing and collections area for potential revenue that may be missing. Review all denial reports.  
  8. Evaluate cash generators. These include factors such as physician productivity, volume, billing and collections. Ensure you’re collecting all money that is due to your practice.
  9. Assess the value of your mid-level providers and their productivity. Calculate a return on investment to the practice.
  10. Develop an action plan. This should be a detailed strategy for success complete with dates, assignment of responsibilities and expected results. This plan will be the road map for your group for 2024. Review the plan bi-weekly.


As in 2023, we expect to see the conversion values of certain CPT codes’ wRVUs increase over the 2023 base conversion rates. Therefore, it will not surprise us to see the gap continue to widen – between the decrease in reimbursement under CMS 2024 guidelines and the increase in median WRVUs expected to be produced by providers for both primary care and specialists. 

For practices and health systems that have a compensation model built around productivity and reimbursing providers on their wRVUs being produced, we suggest the following steps to prepare for 2024.

  1. Evaluate your current compensation methodology at the provider, specialty and group level for your employed providers, for any Physician Service Agreements (PSA) in play or other arrangements that are built around a compensation per wRVU factor. 
  2. If your organization is still using the 2020 Medicare Professional Fee Schedule for purposes of compensating your providers, consider developing a transitional plan for the future.
  3. Consider various economic adjustments to ensure financial success for the medical groups and providers directly relating to their compensation.  

While the 2024 final rule presents negative payment implications for providers, taking proactive steps to review operations and prepare for the changes can help put practices and health systems on a path to success. 

This article and the information included in it are for educational purposes only. If you have any specific questions or concerns regarding the final rule implications on your group or system’s reimbursement or compensation models, please reach out to Ronnen Isakov at


Ronnen Isakov is Managing Director Advisory Service of Management Group, LLC. His background includes extensive work in areas including business advisory, valuation, network optimization, transaction support, and project management.