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Physicians Struggle with Strained Medicare Payment System, AMA Calls for Reform

Written by PNN | Aug 3, 2023 3:00:00 PM

With unwavering dedication, physicians prioritize the health and well-being of their patients, leveraging their extensive training and experience to act with boldness and decisiveness as situations require. It is now incumbent upon Congress to follow suit and take urgent action to mend the ailing Medicare payment system, which currently places immense financial strain on physicians and jeopardizes the quality of care they can deliver.

Currently, the government based Medicare Economic Index (MEI), which gauges the inflation in medical practice costs, will hit 4.5% in 2024, the highest since the turn of the century, exceeding a total of 8% in 2 years.

Additionally, due to existing legal provisions, the Centers for Medicare & Medicaid Services (CMS) were forced to implement a 2% reduction in Medicare physician payment rates this year, with plans for a further 3.36% cut to the conversion factor scheduled for 2024. This situation imposes a unique challenge on physician practices, as other entities like hospitals and skilled nursing facilities routinely receive higher payment rates annually to accommodate rising costs. Unlike these entities, physician practices find themselves grappling with efforts to mitigate payment cuts each year, instead of receiving annual increases tied to inflation.

Even when adjusted for inflation, Medicare physician payment rates witnessed a staggering 26% decline from 2001 to 2023 – and this is without accounting for the latest proposed cuts. In contrast, an analysis of Medicare Trustees data reveals that during that period, Medicare physician payment rates experienced only a meager average annual increase of 0.4%. Meanwhile, practice costs surged by 47% over the same span, exacerbating the strain on physicians.

As the momentum towards finding solutions to this crisis gains traction, the urgency for prompt and impactful action remains paramount. Among the pillars of the AMA Recovery Plan for America's Physicians, Medicare payment reform stands at the forefront. Immediate relief from annual funding cuts and essential changes to Medicare reimbursement are crucial, according to the AMA. These changes should focus on simplicity, predictability, relevance, and alignment – principles initially laid out in a reform guide jointly issued by the AMA and our Federation of Medicine partners in the previous fall

A bipartisan measure, the Strengthening Medicare for Patients and Providers Act (H.R. 2474), currently under consideration in the 118th Congress, aims to bridge the gap between the Medicare physician payment schedule and the MEI. This significant step could finally bring physicians to a level playing field with other entities receiving Medicare payments. The proposal aligns with the recommendation of the Medicare Payment Advisory Commission, but falls short of the ideal by supporting an update tied to only 50% of the MEI.

Physicians can take action and contact their representatives in Congress through the AMA portal to advocate for the passage of H.R. 2474.