Medicare physician payment reform has never been more urgent

Physicians who may have wondered why Medicare payment reform has become the AMA’s single most important advocacy priority received a painful reminder last week when the Centers for Medicare & Medicaid Services (CMS) unveiled a proposed physician payment schedule that called for—you guessed it—another payment cut next year, 2.8% this time.

If this happens, it’ll mark the fifth straight year of Medicare payment reductions for physicians, continuing a devastating, two-decade decline that has pushed many practices  to the brink of financial collapse and threatens access to care for our nation’s elderly and disabled population.

Without factoring in next year’s projected cuts, physicians have experienced a 29% drop in Medicare payment since 2001 (PDF). And that’s after the AMA successfully lobbied Congress to pull back half of the planned cuts that went into effect earlier this year.

Think about it: For many of our physician colleagues around the country, the current rate of Medicare payment is lower than when they graduated medical school. And in many cases, far lower.

To be blunt, physicians are paying the price for a broken Medicare payment system. That’s especially true for physicians like me in small, independent practices that have endured significant payment cuts in a time of steadily increasing practice costs. In fact, CMS’ own projections for next year anticipate practice-cost inflation rising by another 3.6%. How can this remarkably flawed Medicare policy possibly justify another round of cuts?

This is why we fight. And it’s why the AMA continues to press Congress on wholesale Medicare payment reform based on bipartisan solutions already in play. 

The AMA continues to support H.R. 2474, the Strengthening Medicare for Patients and Providers Act, a bipartisan bill that would provide a permanent, annual update equal to the increase in the Medicare Economic Index, which measures practice cost inflation.

This is not some radical proposal but rather simply pays physicians using the same logic as used to update pay for hospitals. Our AMA is not stopping there. We have a proposal to make the Merit-based Incentive Payment System (MIPS) more relevant to patients and we support pending legislation that would improve the budget neutrality process and better reflect actual Medicare costs. 

Despite setbacks, we’re confident that momentum is shifting toward significant Medicare reform. Thanks to our Fix Medicare Now campaign, multiple hearings on the Hill, significant media visibility, and persistent lobbying efforts, there is now broad acceptance from lawmakers that the current Medicare payment models don’t work. And there is growing support in Congress for Medicare reforms aligned with AMA’s recommendations that seek to put physicians on equal footing with all other health care providers.

We need all our physician colleagues to lend your voice 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.

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This work has never been more urgent.

Physician practices cannot continue to absorb rising costs while their payment rates dwindle.
The Medicare Payment Advisory Commission (MedPAC) and the Medicare Trustees have issued warnings about the dangers of repeated Medicare cuts and how they threaten access to care. As one of the only Medicare providers without an inflationary payment update, physicians now demand this change.

The annual pay cuts that physicians are asked to endure stand in sharp contrast to the substantial boosts routinely awarded each year to hospitals, skilled nursing facilities and others who serve Medicare patients.

Of course, private payers are keenly aware of the downward spiral of Medicare physician payment, which is why they so often tie their own physician contracts to the Medicare payment schedule. At my small, six-physician otolaryngology practice in Louisville, Kentucky, an insurance company that dominates the private payer market in our region offered us a contract renewal with payments based on 80% of the Medicare payment rate—and surgical rates below what they paid us six years earlier.

Our good-faith negotiations with that insurer went nowhere. My partners and I were caught up in the same type of squeeze play that private practices nationwide face constantly, in that we weren’t sure we could survive financially if we signed. But if we declined to renew, we feared that our patients could be harmed and that we would still suffer financial consequences. Continued consolidation in the health insurance industry is the larger issue at play here, but tying an annual update in Medicare physician payments to the rate of inflation will help reflect the true cost of providing care.

Ideally, Medicare payment reform should yield a system that is financially stable and predictable for both patients and physicians. The goal should be protecting value-based care while protecting 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. Join us in this fight!