Saurin Patel, MD

Where the money in the fee schedule actually goes. CMS says the goal is to pay primary care more and lower the cost of care. Follow the dollars and it is doing the opposite. This week has focused on the problems in the physician fee schedule cuts. Today is about where the money actually goes, because once you track it, the policy makes even less sense. Paying primary care more is a goal we can all get behind. The problem is that budget neutrality means CMS cannot add money. It can only move it. In other words, every primary care raise is funded by a cut somewhere else, and where each half of that transfer lands is the part most haven’t seen. WHERE THE CUTS COME FROM Let’s start with total joint replacement. CMS cut the work RVUs on total hip and total knee from 19.11 to 16.70. That is an RVU-level cut. It hits every surgeon who does the procedure whether the independent surgeon through the practice's revenue or the employed surgeon through a comp plan that pays per wRVU. Everyone on the physician side pays in full. Now let’s look at the modifier 25 cut. Starting in January, an office visit billed with modifier 25 on the same day as a 0-day global procedure is paid at 80%. That is a payment-level cut. The RVUs on the visit do not change. So the independent dermatologist, ENT, or podiatrist bills the claim, collects 80%, and eats the difference on January 1. The employed physician in the same specialty is paid on wRVUs that have not changed. The 20% comes out of what the health system collects. The policy is invisible to the employed physician and fully visible to the independent one. Adding insult to injury, dermatology and podiatry are the least hospital-employed specialties in medicine (under a third by claims data). The cut was aimed, intentional or not, at the specialties where independent practice still lives. Last year's rule did the same thing with a third lever. CMS cut indirect practice expense RVUs for facility-based services by 50%, roughly 10% off the total RVUs for procedures like TAVR, PCI, and ablation. Practice expense does not flow into a wRVU comp plan either. This means the independent cardiologist or surgeon doing cases at the hospital lost the overhead reimbursement for the billing staff, the malpractice premium, and the credentialing she actually pays for. The employed physician in the next operating room is paid on wRVUs and felt nothing. We need to ask what each of these does to the physician on the receiving end of the cuts. The efficiency adjustment cut every proceduralist's wRVUs by 2.5%. The independent surgeon ate it as revenue against fixed overhead. The employed surgeon's health system raised its rate per wRVU and paid him more anyway. The compensation surveys show employed physician pay rising faster than productivity every year. Even the cut that reaches everyone hurts the independent physician more because only employed physicians have someone who stands to make money elsewhere and is therefore willing to backfill the cut. The facility practice expense cut told the independent proceduralist that Medicare will no longer pay for overhead when they work in a hospital. The hospital, meanwhile, collects a facility fee on every one of the physician’s cases. The obvious move is to sell the practice, drop the overhead, and let the hospital collect both fees. The modifier 25 cut told the independent dermatologist that same-day care now pays 80% of what it paid last week. The employed counterpart's paycheck did not change. Hospitals and private equity groups will notice the difference and jump on the opportunity. Every one of these changes teaches physicians that the way to stop losing money to the fee schedule is to stop billing it in your own name. This coming from a government that says it wants to break up consolidated medicine. Meanwhile, it is doing the opposite, one rule at a time, and paying hospitals to finish the job. WHERE THE GAINS GO The money from those cuts was supposed to go to primary care, but that’s not the entire story. More than half of primary care physicians are employed by hospitals or health systems, and most of those are paid on wRVUs. A growing share work for insurers like Optum and CenterWell and are paid off Medicare Advantage capitation, which the fee schedule does not touch at all. Roughly 40% remain in private practice, and they are the only ones who see a fee schedule raise in their own bank account. For the hospital-employed majority, when CMS raises what an office visit pays, through the conversion factor or through a percentage modifier, the extra dollars show up in the health system's collections. They do not show up as wRVUs, so they do not show up in the physician's paycheck unless the system decides to share their riches. This year it gets worse. G2211, the visit complexity add-on, was a real line item with 0.33 work RVUs that an employed PCP got credit for on every qualifying visit. In January it becomes modifier B1, a 16% bump with no RVUs of its own. CMS has not even settled whether the 16% applies to the whole visit or only the work component. The fact sheet says one thing and the crosswalk file says another. Most comp plans credit wRVUs by CPT code. A modifier does not impact physician pay. In the end, the employed PCP loses the G2211 credit and the employer collects whatever B1 turns out to pay, which under CMS's own crosswalk reading is less than G2211 on most established-patient visits. The interesting note is that G2211 was never mostly primary care anyway. In 2024, specialists billed 43% of it, primary care 40%, and fewer than a quarter of eligible clinicians used it at all. The conversion factor took a 2.18% cut that year to fund it, on CMS's assumption that it would go on 38% of visits. It only went on about 11%. Every physician paid for a primary care code that was not mostly primary care and that most primary physicians never billed. That money will never return to the system. Independent primary care, the only group that would actually see the raise, is a shrinking share of the workforce. The transfer was designed for them and yet mostly misses the group it intended to help. WHERE THAT LEADS Put the two halves together. The cuts fall hardest on independent specialists and teach them to sell. The gains are captured mostly by the health systems doing the buying. We are fueling a consolidation engine, and consolidation is the most expensive thing that can happen to Medicare. When a practice is acquired, the same visit in the same room starts generating a facility fee on top of the professional fee, because it is now billed as hospital outpatient. Studies of hospital acquisitions of physician practices consistently find prices rise afterward, and not by a little. MedPAC has spent years documenting the site-of-service differential and asking Congress to fix it. The spending CMS is trying to restrain through budget neutrality on the physician side comes back, larger, on the facility side. CMS set out to pay primary care more, lower the cost of care, and push back on consolidated medicine. The mechanism it has to work with cuts independent physicians, routes the proceeds to health systems, leaves most primary care physicians no better off, and funds the acquisitions that raise Medicare's total bill. Every stated goal has failed. I do not think anyone at CMS intended consolidation. I think it is what happens when the only tool the law allows is redistribution inside a fixed pot, and when the people you are trying to help do not bill Medicare in their own name. The fix cannot be a better redistribution formula. There must be an inflationary update for the whole fee schedule so that paying primary care fairly does not require taking it from someone else, and a serious look at who captures the money inside employment. Until then, every fee schedule that claims to help primary care should be read with one question in mind: who actually cashes the check the government writes?