Advocacy Update

May 31, 2024: Medicare Payment Reform Advocacy Update


In March, Congress finally passed the delayed appropriations package which included a 1.68% reduction to the 3.37% Medicare physician payment cut that went into effect on January 1. While that relief was welcomed, it is not enough.

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To make matters worse, in addition to the lack of full relief of the 3.37% cut, physicians remain the only providers whose Medicare payments do not automatically receive an annual inflationary update. As a result, Medicare physician payments have lagged 29% behind the rate of inflation growth since 2001.

Multiple pieces of legislation have been introduced to address these issues but so far Congress has refused to act. For example, H.R. 2474, championed by a bipartisan group of physician members of Congress and supported by over a hundred cosponsors, would reform this flawed system and provide annual inflationary updates, based on the Medicare Economic Index (MEI), for Medicare physician services, similar to updates received by other health care providers.

Further inaction is not an option. Both the Medicare Payment Advisory Commission (MedPAC) and the Medicare Trustees issued reports this year noting the growing, cumulative gap between Medicare payment rates and the costs of running a practice. In fact, the Trustees noted that without Congressional action the “quality of health care received by Medicare beneficiaries would, under current law, fall over time compared to that received by those with private health insurance.

Please contact your members of Congress today and urge them to support America's physicians and their Medicare patients by ending the cycle of annual cuts and passing H.R. 2474 to ensure physicians are provided an annual inflationary update so they can continue to provide high quality care to their patients.

On May 23, the House Ways and Means Health Subcommittee held a hearing on the interconnectedness of Congress passing legislation to reform the current Medicare payment system and the ability of private practice physicians to remain a viable option for patients. The hearing, which was entitled, “The Collapse of Private Practice: Examining the Challenges Facing Independent Medicine,” touched on a variety of key policy themes that will help preserve private practice, including:

  • The need for Congress to pass legislation providing physicians with an annual inflationary update in Medicare tied to the Medicare Economic Index (MEI)
  • Burden reduction and administrative reforms
  • Overhauling the Merit-based Incentive Payment System (MIPS)
  • Protecting private practice from the entry of private equity
  • Enacting medical liability reform to shield doctors from merit-less lawsuits
  • Removing the effective ban on physician-owned hospitals
  • Limiting the use of non-compete clauses in health care

The Ways and Means Health Subcommittee heard from the following witnesses:

Health Subcommittee Chairman Vern Buchanan (R-FL) used his opening statement to show that Medicare physician payment rates plummeting 29% over the last two decades and large, annual changes in reimbursement stemming from the Medicare Physician Fee Schedule are working together to seriously undermine private practice in the United States. The Chairman bemoaned how these two trends have made it difficult for physicians to remain in business and that they stifle patient access to care. Health Subcommittee Ranking Member Lloyd Doggett (D-TX) used his opening statement to highlight how consolidation and the growth of Medicare Advantage (MA) plans that deploy harmful utilization management techniques, including prior authorization, are two prominent reasons private practice physicians are struggling in the United States.

Multiple members of the Ways and Means Health Subcommittee, especially Representatives Terri Sewell (D-AL), Judy Chu (D-CA), Brian Fitzpatrick (R-PA), and Blake Moore (R-UT), used their allotted time for questions and answers to solicit responses from the witnesses about the importance of passing legislation to provide physicians with a permanent inflationary update in Medicare (Sewell, Chu, and Fitzpatrick) and reforming MIPS (Moore).

The AMA submitted a detailed statement for the record (PDF), which focused on many of the same policies that were debated during the hearing, especially support for H.R. 2474, the Supporting Medicare for Patients and Providers Act, and H.R. 6371, the Provider Reimbursement Stability Act. The statement also highlights the importance of Congress passing legislation to extend telehealth flexibilities beyond Dec. 31, 2024, reform prior authorization, eliminate insurer charged fees for providing physicians with electronic fund transfers (EFTs) as part of receiving direct deposits, train more physicians, and reduce burnout. The Ways and Means Committee followed similar physician payment hearings held in the House Energy and Commerce and Senate Finance Committees over the last two years. AMA will continue to push federal lawmakers to pass comprehensive legislation to reform Medicare physician payments before the end of the 118th Congress.

Due to continued pressure by the AMA (PDF) on the administration and the Centers for Medicare & Medicaid Services (CMS) about the ongoing impact the Change Healthcare cyberattack has had on physician practices, CMS has added an option to cite the cyberattack when requesting the 2024 Merit-based Incentive Payment System (MIPS) Extreme and Uncontrollable Circumstances (EUC) hardship exception.

To account for the increased number of physicians that have been impacted by a cyberattack this year, CMS has specifically added a drop-down tab in the application to indicate the EUC is due to the Change cyberattack. When in the EUC portal, physicians should select the event type as “ransom/malware.” Once a physician clicks on the event type “ransom/malware” a drop-down box will appear asking whether the event pertains to the Change Healthcare cyberattack. Reference page 8 in the 2024 MIPS EUC Application User Guide (PDF) for more details. The 2024 MIPS EUC portal is now open, and physicians have until Dec. 31, 2024, to file a hardship application and avoid a 2026 MIPS negative payment adjustment.

When applying for a hardship, physicians have the option to request reweighting of up to four MIPS categories. Reweighting of all performance categories will result in avoiding a MIPS penalty of up to -9% in 2026. As a reminder, if a physician or group submits data, it will override the hardship exception and the physician or group may be scored.

In response to a CMS Request for Information, the AMA urges (PDF) that CMS provide additional data from Medicare Advantage (MA) plans regarding utilization of services by patients enrolled in these plans. CMS currently makes datasets available based on claims submitted to the regular Medicare program, for example, with information about submitted services and charges, allowed services and charges, denied services and charges, and total payment amounts. A similar dataset for MA encounters would be very useful.

The AMA letter also recommends that CMS provide more data about substance use disorder treatment access in MA plans. As data on drug overdoses and deaths has found that many Medicare patients diagnosed with opioid use disorder (OUD) are not receiving medications for OUD, data from MA plans, including whether patients are being treated with buprenorphine or methadone, whether care is provided in- or out-of-network, and whether patients face drug utilization management barriers to accessing these medications such as prior authorization and quantity limits, as well as cost-sharing, could help identify strategies to improve access.

The AMA also reiterated its advocacy for transparency in MA plans’ use of prior authorization for other drugs and services as prior authorization delays care and has a negative impact on patient clinical outcomes. While the AMA applauds CMS for finalizing regulations to improve oversight of prior authorization in MA, there remains a pressing need for more robust data reporting to assess the impact of prior authorization and other utilization management tools on patient care and outcomes. The AMA is seeking data on:

  • The clinical criteria used by MA plans
  • Their policies related to transition periods and duration of prior authorization approvals
  • Granular data on prior authorization requests, denials and appeals
  • Data related to health equity and post-acute care transitions

The letter also makes recommendations related to MA transparency in AI and algorithms, administrative burdens, use of MA supplemental benefits, and care quality and outcomes data. Finally, the letter includes an AMA analysis of antitrust and competition in MA markets.

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