The Centers for Medicare and Medicaid Services (CMS) disclosed their proposed reimbursement changes for physicians and hospitals, prompting Physicians and healthcare organizations to voice their displeasure with the 2024 Medicare Physician Fee Schedule. Under this proposal, Medicare intends to implement a 3.34% reduction in the conversion factor, a complex formula used to calculate physician payments.

The proposed changes have raised considerable unease among healthcare providers, as they fear the potential adverse impact on their practices and financial viability. As the debate over the reimbursement proposals continues, stakeholders eagerly await further developments from CMS.

American Medical Association (AMA) President, Jesse M. Ehrenfeld, M.D., M.P.H. penned a statement aimed in response, noting its especially alarming given that CMS estimates a 4.5% increase in the Medicare Economic Index, the federal measure of inflation in medical practice costs. The AMA says the inflation jump is the highest of the century, and comes after a 3.8% increase a year ago.

“The proposed Medicare physician payment schedule released today is a critical reminder that patients and physicians desperately need Congress to develop a permanent solution that addresses the financial instability and threatens access to care", Ehrenfeld wrote. “In the face of these growing costs of running a medical practice, physicians have faced the COVID pandemic and increased inflation. Not only have Medicare payments failed to respond, but physicians saw a 2% payment reduction for 2023, creating an additional challenge at a perilous moment. For 2024, the new rule indicates there will be another downward adjustment of 3.36%. When adjusted for inflation, Medicare physician payment already has effectively declined(PDF) 26% from 2001 to 2023 before additional inflation and these cuts are factored in. Physicians are one of the only providers without an automatic inflationary increase.

“This is almost biblical in its impact, he continued. “Seven lean years that include a pandemic and rampaging inflation. Physicians need relief from this unsustainable journey. These increasingly thin or negative operating margins disproportionately affect small, independent, and rural physician practices and those treating low-income or other historically minoritized or marginalized patient communities. Piling on more cuts is an unsustainable approach. Congress needs to turn its attention to fixing Medicare so we can preserve access for patients.

“Most hospitals across the country continue to operate on negative or very thin margins that make providing care and investing in their workforce very challenging day to day,” Stacey Hughes, the AHA’s executive vice president, said in a statement. “Without a more robust payment update in the final rule, hospitals’ and health systems’ ability to continue caring for patients and providing essential services for their communities may be jeopardized.”