The AMA strongly supports moves in Congress that would adjust Medicare physician payment to rise with the rate of practice-cost inflation while warning that Medicaid proposals in the House Energy and Commerce Committee’s budget-reconciliation text would add administrative complexity and lead to coverage interruptions that especially affect Americans with low incomes and those living in rural areas.
In response to the budget-reconciliation text released Sunday night, AMA Executive Vice President and CEO James L. Madara, MD, wrote in strong support of section 44304 of the committee’s recommendations, which “provides the first Medicare physician payment update that is permanently built into baseline Medicare rates since the passage of the Medicare and CHIP Reauthorization Act (MACRA) in 2015.” Such a change was recommended by the Medicare Payment Advisory Commission (MedPAC) and would link Medicare physician payments to the Medicare Economic Index (MEI).
“Physician practices have faced a 33% loss in purchasing power since 2001, severely straining their sustainability,” Dr. Madara wrote May 13 (PDF) to House Energy and Commerce Committee Chair Brett Guthrie (R-Ala.) and Ranking Member Frank Pallone (D-N.J.).
“Congress has adopted several temporary physician payment updates to help address steep pay cuts that took effect starting in 2021, but each of these updates led to a steep cliff as the payment update expired and reverted to the reduced payment rate as if there had been no legislative provision at all,” wrote Dr. Madara.
The committee’s proposed update for 2026 is 75% of MEI, which would be “significantly higher than any of the annual physician payment updates in MACRA,” wrote Dr. Madara. “It has been decades since Medicare physician payment updates were linked to the MEI and the AMA strongly supports it.”
It is the AMA’s understanding that this provision would represent an investment of about $8.9 billion in the Medicare physician payment system over a 10-year budget window. In addition, the bill eliminates the dual conversion factor update of 0.25% for most physicians and 0.75% for alternative-payment model participants and replaces them with a single conversion factor update for 2027 and beyond at 10% of the MEI.
Decades of falling Medicare physician payment have coincided with a big drop in the sustainability of independent physician practice. While 61% of physicians were practice owners in 2001, by 2016 less than half had ownership stakes in their practices and physician employees have outnumbered physician practice owners since 2018.
These specific budget provisions represent “a foundational step toward comprehensive Medicare physician payment reform in the 119th Congress,” Dr. Madara wrote. “Ensuring regular, adequate payment updates is vital to maintaining practice stability, advancing value-based care models, and safeguarding access to care for Medicare beneficiaries—particularly in rural and underserved communities. Medical practices in the most rural locations treat four times as many Medicare patients as metropolitan practices. The AMA remains committed to working with Congress to achieve lasting reforms so patients and physicians have the Medicare program they deserve.”
The AMA is leading the charge to reform the Medicare payment system.
Dive deeper to learn how Medicare pay cuts:
- Endanger physician practices.
- Threaten patients’ access to care.
- Especially affect rural America.
- Hit solo physician practices hard.
- Put even big medical groups at risk.
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Proposals on Medicaid
A variety of proposals in sections 44101, 44102, 44102, 44108 and 44141 of the committee’s budget-reconciliation text could result in patients who are eligible for coverage under Medicaid or the Children’s Health Insurance Program (CHIP) being denied that coverage or losing it.
“These provisions create additional administrative burdens for patients and could result in more patients being denied or losing coverage under Medicaid or CHIP for failing to comply with administrative requirements, despite meeting all substantive criteria for eligibility,” Dr. Madara wrote.
“Administrative hurdles in these two safety-net programs are a proven barrier to eligible individuals enrolling for coverage, especially given that of the estimated 25.3 million uninsured Americans in 2023, 6.3 million were eligible for Medicaid or CHIP but not enrolled, often due to administrative barriers,” he added. “The proposed changes may increase the risk of wrongful denials or disenrollments, disrupting patients’ access to care and potentially affecting the continuity of care physicians strive to provide. To limit patient churn and help ensure continuity of care, AMA policy supports 12-month continuous eligibility in Medicaid and CHIP.”
Section 44141 of the committee’s budget-reconciliation deals with work requirements, dubbed “community-engagement requirements” because patients could satisfy them through a variety of means such as volunteer work.
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While the AMA appreciates the goal of encouraging stable employment, Dr. Madara wrote that physicians “are particularly concerned about the potential for coverage losses and disruptions in continuity of care. Work requirements have in some instances contributed to fluctuations in coverage in and out of the program.”
He added that “experience from state-level programs suggests that work requirements can be administratively complex and have not consistently achieved improved employment outcomes. This experience supports AMA policy that opposes work requirements due to serious concerns about the impact that such proposals may have on access to health care for patients who are otherwise eligible for coverage under Medicaid.”
The group that will be hit hardest by such requirements are those covered under Medicaid-expansion programs that 40 states have adopted since 2014.
“Over 90% of adults enrolled in Medicaid through the expansion pathway either already work or meet the criteria for exemption from the requirement, such as being the parent of a dependent child,” Dr. Madara noted in his letter, which cites research published by the Urban Institute, Commonwealth Fund, Health Affairs, KFF and others.
“Evidence from work-requirement programs implemented in multiple states shows that the administrative burdens of demonstrating compliance with work requirements can result in coverage interruptions even among individuals who are working or otherwise exempt,” Dr. Madara added. “While the implementation challenges associated with work requirements and the resulting losses in coverage for working beneficiaries are universal, they are even more pronounced in rural areas.”
Many studies have shown that states where Medicaid expansion has taken place have seen higher health rates of health insurance coverage, better access to care and lower overall mortality and improved maternal health mortality and morbidity.
“Medicaid expansion has played an important role in fighting America’s opioid epidemic, providing much-needed treatment and coverage of lifesaving medications for opioid-use disorder to millions of beneficiaries with substance use disorders and creating significant savings through decreased hospital and emergency department utilization,” added Dr. Madara, who is retiring in June and will be replaced July 1 by new AMA executive vice president and CEO John Whyte, MD, MPH.
The AMA is urging the House Energy and Commerce Committee “to reconsider the proposed changes that create additional administrative barriers for all Medicaid and CHIP patients.” If the proposals stay in as the budget-reconciliation bill moves ahead, then the committee should “consider adding safeguards to ensure that such measures do not result in eligible patients losing coverage under Medicaid and CHIP.”
Dr. Madara’s written response also details the AMA’s support for more transparency from pharmacy benefit managers (PBMs) and further concerns about retroactive coverage and cost-sharing requirements in Medicaid and CHIP.
