What's next with Medicare payment reform, Part I

. 19 MIN READ

Moving Medicine

What's next with Medicare payment reform, Part I

Jan 29, 2024

Payment cuts and temporary fixes have become predictable in Medicare physician payment over the past decade—leaving physician practices and patient access to care at serious risk. We’re working to change that by urging lawmakers to work with the physician community to permanently reform the system. Congress needs to establish a permanent, annual inflationary Medicare physician payment update that keeps up with the cost of practicing medicine and encourages practice innovation. Learn more in the first part of a two-part episode of the Moving Medicine podcast.

Moderator

  • Willie Underwood III, MD, MSc, MPH, chair, AMA Board of Trustees

Speakers

  • G. Ray Callas, MD, president-elect, Texas Medical Association
  • Katie Orrico, senior vice president, Health Policy and Advocacy, American Association of Neurological Surgeons/Congress of Neurological Surgeons
  • Todd Askew, senior vice president, Advocacy, AMA

Host

  • Todd Unger, chief experience officer, AMA

Listen to the episode on the go on Apple Podcasts, Spotify or anywhere podcasts are available.

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Unger: Welcome to Moving Medicine, a podcast by the American Medical Association. Today begins part one of another two-part series moderated by Dr. Willie Underwood, chair of the AMA Board of Trustees. He’s joined by panelists to discuss what’s next in Medicare payment reform.

Panelists include Dr. G. Ray Callas, president-elect of the Texas Medical Association; Katie Orrico, senior vice president of Health Policy and Advocacy at the American Association of Neurological Surgeons and Congress of Neurological Surgeons; and Todd Askew, senior vice president of Advocacy at the AMA.

Be sure to tune in to part two of this conversation in a few weeks and subscribe to AMA Moving Medicine on your favorite podcast platform. Here’s Dr. Underwood.

Dr. Underwood: Thanks to the AMA team for bringing together thought leaders and change makers who will be part of this very important discussion on Medicare payment reform. I'd like to share why this topic is so important to the AMA, to physicians and to the patients that we are privileged to serve.

Physicians everywhere across every state and specialty continue to carry tremendous burdens, obstacles that interfere with our love of this profession, issues that have frustrated us and burnt us out, burdens that are forcing so many physicians to turn their back on the practice of medicine.

Over the last 20 years, a shrinking Medicare reimbursement rate for physicians have pushed many small independent practices to the brink of financial collapse and jeopardized the care of millions of American seniors. When you adjust for inflation, the payment rates to physicians who care for Medicare patients has dropped 26% since 2001.

I don't know many businesses or any industry that can withstand a 26% drop in revenue and still survive, much less an industry like ours which is so essential to the health and well-being of our nation. Meanwhile, I've seen high inflation, rising personnel costs, increased practice costs and that does exacerbate these payment cuts.

As we know, this issue doesn't affect physicians alone. The current Medicare payment system has a negative impact on our patients.

When doctors lack the resources they need to keep their practice open, they close their offices, or they reduce their hours. Or they make do with inadequate technology and equipment or fewer support staffs, or they limit the number of new Medicare patients they take or stop seeing Medicare patients altogether.

We need Congress to pass a bipartisan bill that we introduced to the House of Representatives, the Strengthened Medicare for Patients and Providers Act, HR 2474—which would do what the AMA has long advocated for—providing physicians with annual payment updates to account for the practice cost inflation as reflected in the Medicare Economic Index.

This would simply put physicians on equal footing as inpatient and outpatient hospitals, skilled nursing facilities and others who receive payment through Medicare. We'll talk about this. We'll talk about that and more today with our panel of experts.

So let's get down to business. I'd like to thank each of you for joining us today. I'd like to begin with the first question to you, Todd.

I briefly touched on this in my opening remarks. But Todd, can you give us some more details about the current state of Medicare payment. What are the issues with the current system and how do we get there?

Askew: Sure. Thanks again, Dr. Underwood. As you probably heard, CMS released the payment rule for 2024, which calls for a 3.34% across-the-board cut to the Medicare conversion factor and a similar cut for anesthesia services. All of this is a result of the flawed Medicare payment formula known as MIPS, which came to us under the MACRA law that passed several years ago.

Now, the current system replaced the SGR, the sustainable growth rate. And at the end of the SGR, it was scheduled to produce cuts in excess of 20%. So MIPS was an improvement initially, but we are beginning to go back into this cycle where we were with the SGR, where each year medicine has to fight just to keep cuts from going into effect or to limit the size of cuts rather than making substantial improvements.

What the MACRA law gave us was this cobbled-together set of legacy programs, MIPS with the promise of new physician-driven alternative payment models, and a statutory payment freeze followed by very limited updates in the out years. But what's really come about is the fact that the MIPS program has really failed to produce any significant increases in quality while at the same time producing significant increases in administrative burden and practice costs.

And the promises of physician-driven alternative payment models has for many physicians gone unfulfilled. Combine that with the statutory freeze, combining the statutory freeze with budget neutrality adjustments, which are required elsewhere in statute, has resulted in across-the-board cuts to physicians.

Now, most other payment systems in Medicare also have budget neutrality cuts to offset changes they make. But all of those other types of health care providers—hospitals and nursing homes, home health—they receive automatic inflationary-based updates every year to keep up with the cost of inflation. So the burden of budget neutrality adjustments doesn’t tend to have as much impact.

Physicians are the only ones providing care under the Medicare program that don't have annual adjustments that help us keep pace with inflation. And that's our goal, as Dr. Underwood mentioned in his opening. So where we are right now is we have a broken quality reporting system. We have no way to keep up with inflation, and we are facing years of cuts that erode the value of Medicare payments because of that high inflation.

That's where we find ourselves, and that is what our challenge is—to work with Congress and the administration to put ourselves on a better path.

Dr. Underwood: And that's a huge challenge. But this is a mountain that we have to climb, and we have to climb it together. And on that note, Katie, your association, the Neurologic Surgeons, have done a lot of work with the AMA on this issue. How is organized medicine working in Washington, D.C., to develop and promote payment reform?

Orrico: Well, thank you for that question, Dr. Underwood. As you noted, we've been at this a long time one way or another. And we did think in 2015 when Congress passed MACRA that we were on the right path and that was the reform, as Todd mentioned, that was going to really drive medicine forward, improve value and help physicians really be positioned to deliver high quality care to their patients.

That's unfortunately not what's happened in part because there have been challenges implementing the quality payment program and some of the MACRA reforms at the agency level. But also as Todd mentioned, there are some still basic fundamental challenges with the broken formula. We don't get that update, the budget neutrality where you have to rob Peter to pay Paul to stay within a fixed budget any time CMS wants to make any changes to the Medicare physician fee schedule.

We have various work groups looking at ways to improve the alternative payment model program, ways to improve the Merit-based Incentive Program, or MIPS, ways to improve the overarching structure of the fee schedule, including budget neutrality and the inflationary update.

And bringing all that together through the convening of that AMA-led work group, medicine came up with a basic set of principles that we released last year that were signed off by all the specialties and all the state medical associations. And those principles have three basic pillars to them in our efforts to seek reform.

First is to get an annual inflationary update based on the Medicare Economic Index, which is a measure of physician practice costs just like all those other providers in Medicare have.

Second is to get some changes to that Medicare budget neutrality formula so that we can exempt more services from budget neutrality or modernize it in a way that will help lead to predictable reimbursement, so we don't have these wild swings or these unanticipated cuts from year to year that require us to go up to Capitol Hill and try and stop.

And then the third pillar is getting at the Quality Payment Program and making some changes there. And so through that collaborative work, we've taken those principles and now we're converting those into legislative proposals. As you alluded to, Dr. Underwood, at your opening statement, we've been successful in getting one piece of legislation already introduced, HR 2474, which would provide physicians with an annual payment update based on the Medicare Economic Index.

Just a few weeks ago, some members of the leaders of the House doc caucus, the doctor's caucus, issued a discussion draft bill that addresses elements of the budget neutrality piece. So we're working through that right now, and we're waiting for some technical assistance from CMS and some other input to make sure that that bill is in good shape for introduction as well. And the workgroup is still working on some legislative proposals for the MIPS and APM systems so that that'll be our third piece of legislation that we put forward.

So taken together, we hope to move those principles into action through those legislative vehicles. And we were collaborating beyond the workgroup by doing joint lobbying visits on Capitol Hill, sharing grassroots messages and the like.

So I think this is an exciting time for medicine in that we're united. We're really trying to do the best to represent physicians, and to make a difference and get these proposals across the finish line so we can actually once and for all hopefully stabilize the fee schedule and get certainty into Medicare. So our doctors don't have to quit private practice and go join hospital employment and things of that nature.

Dr. Underwood: Right. Thank you. Now, we know that this fight is not just in D.C., right, that the battlegrounds are 50 states in the United States. They're in every specialty organization that you've laid out for us, Katie, so eloquently. So Dr. Callas, how has the Texas Medical Association been working to reform Medicare payments?

Dr. Callas: As you know, Dr. Underwood, Texas is not shy when it comes to advocacy. We're also very actively—we meet with our congressional leaders in Washington, D.C., and at home. I personally know all my U.S. senators are too, and many, many U.S. representatives and many senators throughout the United States and throughout the representatives.

But whenever I host these guys, these women and men in my home, it's always important that I educate them about Medicare payment. And the reason why I educate them about Medicare payment is because we are the only business in the last 20 years that continue to get cut after cut after cut after cut and we try to keep our offices open.

I don't know about any other business. If you decide to open a business and lose 28% every year and a plethora of your patients are Medicare, good luck to you, my friend. We at TMA, we forcibly, actively educate our members in the sense that we forcibly give them as much knowledge as they want. Let them drink through a fire hose.

But we let them know about Medicare, and we let them know that the fight is not just for private practice. The fight is for academic physicians, PE physicians, hospital-based physicians—you name the physician, everything's tied to Medicare.

Also too, our recent action that I sent out, an alert recently, we had more than 800 responses, the most we've ever had. Almost up there with medical liability reform and also up there with scope of practice. We just had another tremendous year not allowing scope creep at all in the great state of Texas.

We also take time to impress on our members the importance of advocacy. It's time for you to step into the game. I will tell you, as a Gulf War veteran, if I didn't have my men and women that worked beside me working together as a team, we wouldn't have been successful to make sure we came home safe and to make a difference in this world.

It's not about us. It's not about you. It's about we. And we have to work together to solve this issue that is totally hurting our elderly patients, and people deserve to have Medicare because they worked hard in this country to make it to what country it is today.

Dr. Underwood: Without question. Without question. So look, I know people are asking this, and they're beginning to wonder this. OK, so what are our goals for Medicare payment reform in the short term and then looking down the road to the longer term for more permanent fixes? So I'm going to run this through all three of you. But we're going to start with Katie.

Orrico: Sure. Thank you. Well, I think in the short term, we're staring down another pay cut. And there's no way around that fact. And so I think just as the saying, let's first do no harm, I think one of the things we are trying to impress upon—and we're going to be working in the coming weeks to impress upon Congress—is that first step is to prevent this cut and even think about giving us something that reflects inflation in some way. So that buys us some more time to continue to work on this legislation that I alluded to earlier.

And unfortunately we keep getting in the same cycle every year. And as we're trying to move towards longer-term reforms, every year we're faced with, again, another cut so we have to pivot and deal with that. And this year is, unfortunately, no different than the past few years have been. So we're going to be working hard in the coming weeks to try and turn that cut into, hopefully, a positive number but at the very least, not a negative number.

In the long term, we're going to continue working on those bills that I spoke of earlier. I think, again, our goal is to take those principles that medicine has come around and get legislation enacted and signed into law so that it will stabilize the system.

And I think Dr. Callas, you're correct that it's not just about private practice. It's about academic. It's about all of our physician members. But we are facing challenges as everyone tuning in knows about physicians shuttering their private practices, either going into employment with hospitals or even with private equity and other things because they cannot possibly keep their doors open with negative payment rates every single year.

And that actually is problematic because it's driving up overall health care costs with consolidation happening and the like. And so it's really in the best interests of the country to have a plurality of physician practices out there to keep costs down and to really broaden access as best we can. And the way we think we can do that is with these long-term solutions to the physician fee schedule.

Dr. Underwood: Dr. Callas, anything you'd like to add to that?

Dr. Callas: Yeah, I agree with Katie. As a private practice physician that has been—a matter of fact, our practice is the oldest medical practice in the state. I'm an anesthesiologist, but I will tell you where the rubber’s meeting the road right now is that if you want to do what got me involved in AMA and TMA, was it was member driven. And most of the time whenever we first started, we can all be honest, we were mostly independent practicing physicians or hanging the shingle on ourselves.

Now we're at the crossroads. I still feel that this is to maintain the practice of medicine because everything as we move forward physicians lead health care the best. And if we don't give them a platform to continue to provide for our elderly, which is payments sustainability and increased on cost of living and wages that we as practicing physicians are spending every year higher and higher and higher, where the revenue is now going this way, our cost of operating is going this way, it is not sustainable, Dr. Underwood. So I feel very strongly that members, please, let's get this done and let's work together.

Dr. Underwood: Todd, like to add anything to that?

Askew: No, I think Dr. Callas and Katie are exactly right. I think our long-term goal here has to be to make sure we have a Medicare physician payment system that allows doctors like Dr. Callas, like you, Dr. Underwood, to practice in the way that you feel is best for your patients. Maybe that is a large group, maybe that's a small practice, maybe that's a multi-specialty.

What is best for your patient should be the way you're practicing medicine. And you should not be forced financially to make compromises or to provide care in a way that you don't feel is best. And so that's number one for me.

Selfishly, and for all of us are involved in health care advocacy beyond just this issue, I would like to spend some time talking about other ways we can improve the health care system in this country instead of every year having to scramble to try and prevent more practices’ doors being shuttered, more Medicare payment cuts, more burden being heaped on physicians.

If we can get out of this cycle and build a stable payment system, then we can get on to the business about making other improvements to the health care that's provided in this country.

Dr. Underwood: Yes, you raise excellent points, all three of you. So the issue is short term; long term, we have to create a system that's sustainable, a system that improves health care outcomes and decrease costs. And in order to do that, Medicare payment reform is necessary so that we can stabilize the practice of medicine payment-wise and we can focus on improving health outcomes, improving quality and decreasing costs, and improving the lives and the health care and the health of our citizens. Awesome.

Man, I'm excited to be a part of this conversation. That's why I keep throwing in words in there so I can be real with you guys. It's not just that you're my friends and colleagues, but this conversation is extremely important. So I'm going to keep moving forward.

So Todd, I'm coming to you, all right? So what have you been hearing from members of Congress? Do they recognize that this is an issue, that there are differing views on how to fix it or the challenges right now and more getting the attention of the lawmakers?

Askew: Well, there's a lot going on. Let's say there's a lot going on right now. We're in very contentious times. There's a lot of acrimony. But I will tell you a year ago, over a year ago, when we started in earnest pressing this issue on Capitol Hill with specific policies, there was very little interest. Most of the policymakers didn't think it was very urgent. They didn't really put it high on the priority list.

And you can understand. It's a heavy lift. It's expensive. It's complicated. Most of the people and their staffs on the Hill have never worked really on the payment formula that much. And it is very complicated.

But I will tell you, and I bet Katie and Dr. Callas can echo this too, the more you talk to people now, they know―there's a recognition. There is an acceptance even by those who don't want to do it. There is an acceptance that sooner or later, and that is sooner rather than later, Congress is going to have to step up to the plate and take on this issue because it is clear that it is not sustainable.

Even MedPAC, the congressional advisory committee that advises Congress on Medicare, which has previously said all is well, access is good, people are still taking Medicare, even they have said, but we don't think this is sustainable. And we do need to start giving inflationary-based updates to physicians.

And so, I think we have in our collective work together changed the conversation, changed the sense of urgency. And I think that is the kind of momentum we need just to continue to build on as the federation.

Unger: That wraps up the first part of this two-part series. Don’t miss part two of the conversation—subscribe to Moving Medicine today. Thanks for listening.


Disclaimer: The viewpoints expressed in this podcast are those of the participants and/or do not necessarily reflect the views and policies of the AMA.

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