On December 9, Congress passed legislation to address numerous year-end priorities, including provisions to avert several Medicare payment reductions that had been facing providers. President Biden signed the legislation into law on December 10.

Absent the legislation, physicians were expected to face significant cuts to Medicare payments in January 2022 resulting from:

• The expiration of a one-time 3.75 percent increase in Physician Fee Schedule payments that Congress previously enacted for 2021;
• Reinstatement of the 2 percent across-the-board Medicare sequestration that Congress had temporarily suspended in response to the COVID-19 public health emergency; and
• A 4 percent sequestration of Medicare benefit payments required under the Statutory Pay-as-You-Go (PAYGO) Act resulting from spending under the American Rescue Plan Act of 2021. 
  

The legislation will:

• Increase payments under the Medicare Physician Fee Schedule by 3 percent for 2022 relative to what they would have been absent Congressional action.  This increase will not, however, fully offset the expiration of the 3.75 percent increase that applied for 2021.
• Delay the 2 percent Medicare sequestration for three months (January through March) and reduce the sequestration level to 1 percent for the following three months (April through June).  The full 2 percent sequestration reduction will apply starting in July.
• Shift PAYGO effects to 2023.  No 4 percent PAYGO reduction will apply for 2022.
  

While these changes will not fully avert all the scheduled Medicare payment reductions, they offer significant relief for 2022 relative to payment reductions that were otherwise scheduled to take effect.