Medicare & Medicaid

Another year of Medicare physician pay cuts is unconscionable

Kevin B. O'Reilly , Senior News Editor

AMA News Wire

Another year of Medicare physician pay cuts is unconscionable

Sep 13, 2023

What’s the news: The AMA is making loud and clear that the 3.36% cut in the proposed 2024 Medicare physician pay schedule is bad policy that threatens access to high-quality physician care for the over 50 million older adults enrolled in Medicare.

“With higher costs for everything associated with practicing medicine, another year of Medicare payment cuts jeopardizes patient access and imperils the physician practices on which communities rely,” said AMA President Jesse M. Ehrenfeld, MD, MPH. “These cuts are unsustainable and unconscionable.”

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In a 120-page comment letter (PDF) to the Centers for Medicare & Medicaid Services (CMS) concerning the Medicare physician payment schedule, the AMA noted that physicians are facing a triple whammy as pay reductions are pending on several fronts.

The proposed 3.36% cut is attributable to two factors. One is a 1.25% reduction stemming from a temporary legislative update and the other is a negative budget-neutrality adjustment linked to the introduction of a CMS-developed office visit add-on code.

Learn about how you can take part in the fight to fix Medicare on behalf of your patients and practices at the AMA's Fix Medicare Now website.

Leading the charge to reform Medicare pay is the first pillar of the AMA Recovery Plan for America’s Physicians.

The AMA has challenged Congress to work on systemic reforms and make Medicare work better for you and your patients. Our work will continue, fighting tirelessly against future cuts—and against all barriers to patient care.

Related Coverage

Inside the proposed 2024 Medicare physician pay schedule

Why it’s important: Even before rampant inflation and an epidemic, physicians were facing an unsustainable trend. 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. Additionally, physicians saw a 2% pay cut in 2023. Physicians are one of the only providers without an automatic increase to account for inflation. 

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Worse, the AMA is hearing that more physicians and group practices will be hit with a Medicare Merit-based Incentive Payment System (MIPS) penalty in 2024 based on the newly released 2022 performance period feedback. These penalties can reduce Medicare payment by as much as 9%.

MIPS was largely paused during the 2020 and 2021 performance periods due to the COVID-19 public health emergency, and the AMA has serious concerns that it may unfairly penalize physician practices—particularly small, independent and rural practices—due to a lack of awareness of the expiration of the automatic COVID-19 flexibilities.

CMS recently released MIPS performance feedback and final scores for the 2022 performance year, which determine whether a physician will receive a positive, neutral or negative payment adjustment on Medicare services furnished in 2024.

Physicians can view this information on the Quality Payment Program website using their HCQIS Access Role and Profile (HARP) credentials. Physicians who believe there was an error in the calculation of the MIPS final score should request an appeal, which CMS calls a targeted review, by Oct. 9.

Moreover, reductions in physician payment rates will severely hamper access to care for Medicare patients. The Medicare Trustees have explicitly warned that physician access for patients with Medicare could be seriously compromised in the long term if payment rates fail to adapt. Delays in care, particularly among populations underserved with limited access to health care, are associated with worse health outcomes and inequitable health care delivery.

“Policymakers have a responsibility to fix Medicare and prevent these outcomes. As physicians, we owe our patients our best efforts to see that health care access is not curtailed. With our allies in organized medicine, we will make sure that CMS and Congress hear this point of view,” Dr. Ehrenfeld said.

Related Coverage

Congress must act now on Medicare physician payment reform

Momentum is building for reform. In March, the Medicare Payment Advisory Commission for the first time recommended a physician payment update tied to the Medicare Economic Index—the government’s index of inflation in medical practice costs. And in April, a bipartisan group of House members introduced a bill that would provide annual inflation updates to the Medicare pay schedule based on the Medicare Economic Index.

In July, a bipartisan group of 101 House members signed a letter (PDF) to House Majority Leader Kevin McCarthy and Minority Leader Hakeem Jeffries calling for urgent action to address problems in the health system that have been exacerbated by a pandemic and physician burnout. The letter points out the problematic Medicare payment system that fails patients because physician practices are struggling to keep their doors open amid spiking inflation and rising costs.

Learn more: The AMA has declared Medicare physician payment reform to be an urgent advocacy and legislative priority. To help physician advocates and lawmakers get a stronger grasp on the complicated terrain of Medicare physician payment reform, the AMA's Medicare Basics series provides an in-depth, straightforward look at key elements of the payment system and why they are in need of reform. 

The AMA is advocating for you

The AMA has achieved recent wins in 5 critical areas for physicians.

Among many other areas covered in its comment letter, the AMA weighed in on CMS proposals regarding:

  • Valuation of specific codes.
  • Practice-expense data.
  • Evaluation-and-management (E/M) add-on code.
  • Appropriate Use Criteria for Advanced Diagnostic Imaging Program.
  • Supervision of residents in teaching settings.
  • Telehealth and remote monitoring.
  • Medicare Shared Savings Program accountable care organizations.
  • Diabetes screening.
  • Billing for split or shared visits.

Visit AMA Advocacy in Action to find out what’s at stake in reforming Medicare payment and other advocacy priorities the AMA is actively working on.