Statement attributed to:

Jesse M. Ehrenfeld, MD, MPH

President, American Medical Association

“The Medicare Payment Advisory Commission (MedPAC) today called for (PDF) a physician payment update tied to the Medicare Economic Index (MEI), a move that physicians know is smart policy and desperately needed. The American Medical Association (AMA) has long championed this move and appreciates MedPAC’s acknowledgement that the current Medicare physician payment system is inadequate—a critical first step toward the larger, necessary work of reforming Medicare to make it more rational and serve patients better.

“MedPAC’s recommendation comes days after Congress allowed an approximate 2% cut in Medicare payments to become law. And it also comes as physicians deal with the cyberattack at Change Healthcare, another financial blow to the survival to private practices. Years of Medicare cuts, COVID-19 and inflation weakened physician practices’ ability to absorb all these shocks. Obviously, a new approach is needed. Decisions made in the next few months will affect the ability of seniors to access quality health care, particularly in rural and underserved areas.

“MedPAC’s decision recognizes that physician pay is lagging far behind the cost of practicing medicine. Yet, an update tied to 50 percent of MEI—as MedPAC recommended—will cause physician payment to fall even further behind increases in the cost of providing care. As one of the only Medicare providers without an inflationary payment update, physicians have waited a long time for this change. Prior to the enactment of the recent budget bill, Medicare physician payment had declined (PDF) 30% from 2001 to 2024, adjusted for inflation.

“Last year, MedPAC first called for increasing physician payment rates. In that short time, Medicare payment rates continued to fall while practice expenses soared. To remedy this, Congress should pass the Strengthening Medicare for Patients and Providers Act (HR 2474) and tie future updates to the full MEI.

“Patients, physicians, and many members of Congress recognize the need to stop the annual cycle of pay cuts and patches and enact permanent Medicare payment updates. The AMA is ready to offer solid policy proposals to jump-start this reform effort. Tomorrow is not too soon.”