Medicare & Medicaid

Latest Medicare physician pay cut shows desperate need for overhaul

Kevin B. O'Reilly , Senior News Editor

AMA News Wire

Latest Medicare physician pay cut shows desperate need for overhaul

Mar 6, 2024

What’s the news: The U.S. Congress has again failed to stop in its entirety a pay cut that will threaten Medicare patients’ access to high-quality physician care.

In a federal budget deal struck to continue operating the government, the House of Representatives has voted to reduce by about half—1.68%—of the 2024 3.37% across-the-board physician pay cut that took effect in January. The Senate is expected to vote for the deal Thursday, and the new pay rate starts March 9.

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The cut comes on top of last year’s 2% Medicare physician pay reduction, and the new payment rate is not retroactive.

“While we appreciate the challenges Congress confronted when drafting the current 2024 appropriations package, we are extremely disappointed that about half of the 2024 Medicare physician payment cuts will be allowed to continue,” said AMA President Jesse M. Ehrenfeld, MD, MPH.

“There were many opportunities and widespread support to block the 3.37% Medicare cuts for physician services that took place Jan. 1,” noted Dr. Ehrenfeld, a senior associate dean, tenured professor of anesthesiology and director of the Advancing a Healthier Wisconsin Endowment at the Medical College of Wisconsin.

“The need to stop the annual cycle of pay cuts and patches and enact permanent Medicare payment reforms could not be more clear,” he said.

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.

Physicians and patients can visit the AMA’s Fix Medicare Now website to write their congressional representatives to support physician payment reform.

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Why it’s important: Running a practice and caring for patients is becoming unsustainable for physicians, who have been hit hard by the COVID-19 pandemic, inflation, staff shortages, burnout and more. When adjusted for inflation prior to the 1.68% relief in the budget deal, the payment rate to physicians who care for Medicare patients was 30% less than it was in 2001 (JPG).

“Because of Congress’ failure to reverse these cuts, millions of seniors, like my parents, will find it more difficult to access high-quality care and physicians will find it more difficult to accept new Medicare patients,” Dr. Ehrenfeld said.

“This will become noticeable first in rural and underserved areas and with small, independent physician practices,” he added.

“As physicians, we are trained to run toward emergencies. We urge Congress to do the same. We encourage Congress to act if this policy decision is an emergency because—in fact—it is. It is well past time to put an end to stopgap measures that fail to address the underlying causes of the continuing decline in Medicare physician payments. In the coming months, Congress must turn its attention to Medicare reform. The AMA has been studying this issue and is eager to share solid policy proposals and a deep conviction that the current path is unsustainable.”

Physicians fall into the only group that does not automatically get an annual inflation increase to cover the rising costs of doing business. In January, the influential Medicare Payment Advisory Committee again recommended increasing payment rates based on an inflation-based index for Medicare.

If physicians got an inflationary adjustment like hospitals and other health professionals are getting, doctors would have seen a 4.6% increase in payment in 2024.

Medicare provider updates for 2024 chart

Congress’ failure came despite calls in both chambers to reverse the cut in full. Notably, Sens. John Boozman (R-Ariz.) and Peter Welch (D-Vt.) led 30 colleagues in sending a Feb. 23 letter calling on Senate leaders to advance a legislative solution to “scrap the 3.37% Medicare payment cut,” as Dr. Ehrenfeld noted in a statement. In December, nearly 200 members of Congress co-signed a letter (PDF) urging House and Senate leaders to expeditiously pass legislation to address 2024 Medicare payment cuts.

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AMA Recovery Plan for America's Physicians-series only

The AMA will be relentless in working to advance comprehensive fixes to the unsustainable Medicare physician payment system. Among the fixes is H.R. 2474, the Strengthening Medicare for Patients and Providers Act. That bipartisan legislation would provide physicians with an annual, permanent inflationary payment update in Medicare tied to the Medicare Economic Index.

Among the sponsors of that legislation is Indiana Republican Larry Bucshon, MD. At the 2024 AMA National Advocacy in Conference, he said there is “good news” in Congress, which is that “we've institutionalized the fact that this is a huge problem—not only amongst the doctors in Congress, but amongst all members of Congress on both sides of the aisle.”

He added that “people in both political parties on both sides of the Capitol know this has to be fixed.”

Learn more: 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.

The AMA Medicare Basics series provides an in-depth look at important aspects of the Medicare physician payment system. Through straightforward explanations, policymakers and physician advocates can learn about key elements of the payment system and why they are in need of reform.