Congress must prioritize Medicare payment reform in 2023

Jack Resneck Jr., MD , Immediate Past President

AMA News Wire

Congress must prioritize Medicare payment reform in 2023

Jan 26, 2023

After physicians put their lives on the line to battle COVID-19, with burnout rates threatening our physician workforce and high inflation jeopardizing practice viability, the latest round of Medicare physician payment cuts comes at a perilous time.

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Yes, the worst of the threatened reductions were averted, but the fact that Congress still allowed cuts to remain—with the system stretched to its limits and health care access under threat—underscores the brokenness of the system and the imperative for immediate change.

The Medicare physician payment model is simply broken. As we have been reminded throughout the COVID-19 pandemic, doctors and their practices face considerable financial pressures—and haven’t had a meaningful increase in payment in more than two decades. This problem is magnified in periods of high inflation as practice costs escalate.

When financially strained practices cut hours, can’t take on new Medicare patients, or close entirely, patients lose access to essential care. The stakes are high in rural communities, where a lone physician’s office may provide the only access point to health care for hundreds of miles. Many urban areas now find themselves also suffering from physician shortages, with unacceptably long wait times for patients to access care.

It is crucial that lawmakers understand the risks, set aside political differences and prioritize reforming this flawed and failing system. Physicians and patients shouldn’t have to face the uncertainty of annual cliffhangers or constant threats of additional cuts. As the 118th Congress begins work, the AMA and our Federation of Medicine partners are renewing our push for comprehensive Medicare reform that will put struggling physician practices on a sustainable path by tying annual physician payment updates to practice-cost inflation.

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Medicare physician payment reform is long overdue

While portions of the 8.5% cut scheduled for 2023 were averted, the remaining 2% across-the-board reduction in Medicare physician reimbursement comes on the heels of two decades of stagnant payment rates. Astoundingly, after adjusting for inflation in practice costs, Medicare physician pay actually dropped by 22% between 2001 and 2021.

Piling on this latest cut in the midst of high inflation and soaring physician burnout will have negative consequences as older Americans struggle to find access to the primary care physicians and specialists they need.

It just doesn’t make any sense that the Medicare physician payment system lacks an inflation-based annual update. This stands in stark contrast to the routine, automatic, yearly increases given to hospitals, skilled nursing facilities and others who bill Medicare.

Congress should reassess the financial burden imposed on physician practices by existing laws and budget neutrality rules, and replace the frantic, end-of-year scramble with reforms centered on simplicity, predictability, relevance and alignment as spelled out in core principles released by the AMA and our Federation of Medicine partners last year. Long-term reform of the Medicare payment system is also a core pillar in the AMA Recovery Plan for America’s Physicians.

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Medicare physician pay cuts underscore need to fix broken system

Congressional statutory cuts aren’t the only problem with the Medicare physician payment system. Budget neutrality rules penalize physicians for new Medicare expenditures beyond their control, but fail to credit physicians for generating cost savings across all parts of Medicare through quality improvement, preventive care, and reduced hospitalizations. Physicians deserve payment models that recognize and invest in their contributions in providing high-value care to patients.

Advancing value-based care also means supporting innovation and investment within practices and systems, with an emphasis on continuous improvement that boosts overall quality of care provided to the full spectrum of patient populations, including higher-risk and higher-cost groups. And we have to do this in ways that reduce measurement and reporting burdens for physicians.

An optimal solution may well involve a variety of payment models and incentives tailored to the disparate needs of different physician specialties and practice settings, accompanied by a financially viable fee-for-service model. Congress took a step in the right direction by extending the alternative payment model bonus at 3.5% and delaying the scheduled increase in the impossible-to-meet revenue threshold requirements.

Physicians have risked their lives responding to the most severe public health crisis in a century.  We need to fix what’s broken in health care—and it’s not the doctor. AMA’s Recovery Plan for America’s Physicians targets the greatest obstacles to both patient care and practice sustainability.

It is essential that Congress act quickly and in a bipartisan fashion to permanently fix the flaws in the Medicare payment system that put both physicians and patients at risk. We urge you to join us in telling Congress to make Medicare reform a priority this year.