Public Policy

Hospitalist Medicare payments are at risk for large cuts in 2021

Now is the time to act


From the beginning, SHM has consciously and consistently taken a unique approach to its advocacy efforts with the federal government. The advocacy priorities of SHM most often concern issues that we feel have an impact on our patients and the broader delivery system, as opposed to a focus on issues that have direct financial benefit to our members.

Dr. Ron Greeno

This strategy has served SHM well. It has earned respect among policymakers and we have seen significant success for a young and relatively small medical society. The issues where we spend the bulk of our time and effort include advocating for issues like alternative payment models (APMs), which reward care quality as opposed to volume, as well as issues related to data integrity that APMs require. We have advocated strongly for changes to dysfunctional observation status rules, for workforce adequacy and sustainability, and for recognition of the importance of hospital medicine’s contribution to the redesign of our nations delivery system. And SHM will continue to advocate for many other issues identified as being important to hospital medicine and our patients.

This year, for the first time in the two decades that I have served on the SHM Public Policy Committee, Medicare has proposed changes that would create unprecedented financial hardship for hospital medicine groups. Each year, as a part of its advocacy agenda, SHM reviews and comments on proposed changes to the Medicare Physician Fee Schedule (PFS). Among other things, the PFS adjusts payment rates to physicians for specific services. Changes under the PFS are required to be budget neutral. In effect, budget neutrality means that whenever certain services receive an increased payment rate, CMS is required to offset these changes by making cuts to other services. This year, in an effort to correct the long-standing underfunding of primary care services, CMS has increased payment for many Evaluation and Management (E&M) codes associated with outpatient primary care services. However, due to budget neutrality requirements, many inpatient E&M care services will be receiving significant cuts.

The goal of increasing payment rates for primary care services is laudable, as many of these cognitive services have been long underfunded. However, the proposed payment increases will only apply to outpatient E&M codes and not their corresponding inpatient codes. While our outpatient Internal Medicine and Family Practice colleagues will benefit from these changes, inpatient providers, including hospitalists, stand to lose a significant amount revenue. SHM and the hospitalists we represent estimate that the proposed budget neutrality adjustment will lead to an approximate 8 percent decrease in Medicare Fee for Services (FFS) revenue. Hospitalists are among the specialties that will be most impacted from these proposed changes. If put into effect, these proposals will leave hospital medicine behind.

These changes have been proposed at a time when hospitalists, along with their colleagues in critical care and emergency medicine, have been caring for patients on the frontlines of the COVID-19 pandemic at great risk to themselves at their families. While hospitalists are working tirelessly to provide lifesaving care to COVID-positive patients throughout the country, hospitalist groups have struggled financially as a result of the pandemic. Inpatient volumes, and therefore care reimbursement, has dropped significantly. Many hospitalists have already reported pay reductions of 20% or more. Others have seen their shifts reduced, resulting in understaffing, which may compromise the quality of care. For many groups, a Medicare reimbursement cut of this magnitude add fuel to an already strained revenue stream and will not be financially sustainable.

SHM is, of course, fighting back. We are not asking CMS to completely abandon the increases in reimbursement for primary care outpatient codes, and we support properly valuing outpatient care services. However, we are asking CMS to find a solution that does not come at the expense of hospital medicine and the other specialties that care for acutely ill hospitalized patients, including patients with COVID-19. If a better solution requires holding off on the proposal for another year, CMS should do so. Furthermore, SHM is asking Congress to abandon the statutory requirement for budget neutrality in these extraordinary times as CMS and Congress work to find towards a solution that properly values both inpatient and outpatient care services.

To send a message to your representatives urging them to stop these payment cuts, please visit SHM’s Legislative Action Center at You can read our full comments on the Medicare Physician Fee Schedule Proposed Rule at

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