With the election behind us, it is critical that Congress tackle an issue that is jeopardizing access to care for tens of millions of patients and threatens the viability of our entire health system: Fixing our broken Medicare payment system.
This issue has risen to the top of AMA’s advocacy priorities because we understand just how much is at stake given the impossible position that physicians are in thanks to a 29% drop in Medicare payment since 2001.
Medicare payment reform must happen, and it must happen now.
It must happen now because a bad situation is getting worse. The Centers for Medicare & Medicaid Services (CMS) has proposed yet another payment cut—2.8%—in Medicare physician payments for 2025. CMS put forth this reduction while acknowledging that the costs incurred by physicians to deliver care will actually go up by 3.5% next year.
Unless Congress acts during the current lame-duck session, 2025 will mark the fifth consecutive year of payment cuts for physicians, and extend a devastating decline in Medicare physician reimbursement that already stretches beyond two decades.
Physicians from every state and specialty are unified on this issue. That’s because while Medicare payment cuts most directly affect independent physicians practices like mine, the fallout has broad implications across health care and for physicians regardless of practice setting.
Direct threat to patient care
This is an unsustainable situation that directly threatens care provided to all patients—not just Medicare patients—because the net effect is to push physician practices to the brink of financial ruin. According to the Peterson-KFF Health System Tracker, the price of medical care (including physician services and medical equipment) has risen by 121% since 2000, much higher than the 86% jump in prices for all consumer goods and services over that same period.
When you consider the tremendous fiscal impact of a 29% payment reduction (PDF) and 121% increase in costs incurred, the financial strain placed on physicians could not be more clear. As a physician colleague told me this past summer, “We’re getting paid less every year for working harder … I’m ready to get out as soon as I can.”
Sadly, that doctor is not alone. When I addressed the AMA House of Delegates in November at the Interim Meeting in Lake Buena Vista, Florida, I highlighted the toll this situation is taking on so many of our fellow physicians. In doing so, I shared part of a letter written by another physician colleague to their patients in a rural area. It contains this passage:
With profound sadness and a heart full of memories, I am writing to inform you that after 27 years of dedicated service, my practice will be closing on October 31, 2024. This decision marks the end of a chapter that has been filled with joy, challenges, and countless moments of connection with each of you.
The world of independent medical practice has become increasingly difficult to navigate, and despite my deep love for this work and for all of you, the financial pressures have reached a point where I can no longer sustain the practice.
That letter broke my heart. We cannot afford to lose even one more doctor, but the financial reality we face makes letters like this more common. The lack of Medicare payment reform is just one of that factors driving physician burnout, to be sure, but its absence is triggering other negative consequences as well. Some physicians no longer accept Medicare patients, while others are cutting back their hours or shutting down their practices entirely. And of course it’s our patients who suffer, with elderly and disabled persons at the greatest risk.
How cuts threaten access to care
Magnifying the problem is that fact most private payers, well aware of the annual downward spiral of Medicare reimbursement, tie their physician payments to the Medicare rate. Likewise, Medicaid payment in many states is also linked to Medicare rates.
Ensuring that physicians can maintain the fiscal viability of their practices through an inflation-based annual update is critical to ensuring patients have access to Medicare in the future. Taking that long-overdue action merely brings physicians into alignment with the rational and automatic yearly inflationary payment increases already granted to hospitals, skilled nursing facilities and others who serve Medicare patients.
The AMA is not alone in sounding the alarm. Both the Medicare Physician Payment Advisory Commission (MedPAC) and the Medicare trustees have warned that repeated Medicare payment cuts jeopardize access to care. All patients are put at risk when a flawed and outdated payment system forces physicians to cut hours or close their doors.
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Legislative action needed now
A “dear colleague” letter (PDF) addressed to House leadership signed this fall by 233 Republican and Democratic House members supports not only blocking the 2.8% payment cut for physicians treating Medicare patients due to take effect on Jan. 1, 2025, but also calls for a permanent annual update tied to the Medicare Economic Index (MEI) that reflects the increasing cost of delivering patient care.
This letter states, in part: “To prevent the very real scenario of insufficient access to physicians treating Medicare patients, Congress must stop the 2.8% payment cut from occurring in 2025, enact targeted reforms to statutory budget-neutrality requirements and provide physicians with a payment update reflective of inflationary pressures.
This letter is a direct result of physician-led advocacy by the AMA and dozens of state and specialty societies across the country whose members have been significantly impacted by declining Medicare reimbursement. Both of the reform measures called for in the letter—stopping the payment cut and adding an inflation-based update—are critically important in maintaining patient access to Medicare.
The AMA and our partners in the Federation of Medicine strongly support the newly introduced Medicare Patient Access and Practice Sustainability Act of 2024, which would halt the 2025 payment cut and increase physician payment rates by one-half of the MEI by applying a 12-month payment update of 4.73%. Enacting this measure, with its update tied to inflation, is an important first step down the road toward the comprehensive Medicare reform that we so badly need.
Collective effort can prevail
It is time to get off the sidelines and engage! We need all our physician colleagues to add their voices to our Fix Medicare Now grassroots campaign, which calls for a number of specific reform measures to create a rational Medicare payment system that safeguards patient access to high-quality care. We intend to bring forth a financially stable and fully predictable Medicare payment system for both patients and physicians, one that protects value-based care while preserving access to high-quality care where it is needed most.
We must keep the pressure on Congress to ensure that Medicare can continue to play a critical role in the delivery of high-quality, affordable health care for so many of our country’s most at-risk patients. Quick fixes are not enough; physicians demand a comprehensive solution. Band-Aids have their place in medicine, but they are not effective treatments for patients on life support.
Congress must prioritize Medicare reform now. Together we can fix Medicare now! Please join us in this fight.
