The Centers for Medicare & Medicaid Services (CMS) is proposing a 2.8% cut to physician Medicare payments starting Jan. 1. At the same time, the agency also estimates that the cost of practicing medicine next year—paying clinical and administrative staff, rent and purchasing equipment and supplies—will rise by 3.6%.
Yet the proposed rule from CMS on revisions to Medicare payment policies under the Medicare physician payment schedule and Quality Payment Program (QPP) that were published in the Federal Register in July are silent on the “impact of the growing gap between what Medicare pays for care and what it costs to provide that care,” the AMA tells CMS Administrator Chiquita Brooks-LaSure in its comments on the proposed rule.
“A chorus of authorities on the Medicare program has expressed concern about the ability of patients to continue receiving high-quality care as physician payments erode,” says the AMA’s letter.
Medicare’s trustees and the Medicare Payment Advisory Commission (MedPAC) have been sounding the alarm on their concern that patients may lose to access high-quality care as physician pay becomes more and more insufficient.
The Medicare trustees’ 2024 report warns that without congressional action to change the delivery system or level of payment update, “the trustees expect access to Medicare participating physicians to become a significant issue in the long-term.” It’s not the first time they have expressed that concern.
A MedPAC report to Congress in June said the widening gap between the cost of providing care and payment “could create incentives for clinicians to reduce the number of Medicare beneficiaries they treat or stop participating in Medicare entirely,” the AMA’s letter to CMS notes.
The AMA is leading the charge to reform the Medicare payment system.
Day of reckoning is here
The AMA’s letter notes that “the 2025 cuts compound across-the-board cuts in 2021, 2022, 2023 and 2024, and are not sustainable for physicians and their patients, and risk jeopardizing the Administration’s priorities and access to critical services.” When adjusted for inflation, Medicare physician pay has plummeted 29% since 2001.
The AMA strongly urged “CMS to acknowledge the negative effects of the proposed payment cut on Medicare beneficiaries in the final rule and the Biden-Harris administration to support any congressional action to replace the cut with a positive update.”
The letter also urges the administration to work with Congress to enact a permanent, annual inflation-based update to Medicare physician payments tied to the Medicare Economic Index (MEI) and to fix the flawed structure of the Merit-based Incentive Payment System (MIPS).
The AMA letter explains that this is why organized medicine supports Congress swiftly passing the bipartisan Strengthening Medicare for Patients and Providers Act (H.R. 2474) that would provide an annual physician payment update in Medicare that is tied to the MEI, something almost all other Medicare providers already enjoy.
The letter to CMS includes stories that physicians have shared with the AMA about the real impact declining Medicare physician pay is having on doctors and their practices.
An Ohio emergency physician said they are seeing “more patients coming to the emergency department because they can’t access care [for (sic)] their primary doctor or their specialist physicians, who either can [no] longer cover Medicare patients because of decreasing reimbursement or have reduced hours or services because of Medicare reimbursement.”
Meanwhile, a Virginia family physician said that because “many of the insurance products that we take in our office are indexed off of Medicare, every time Medicare cuts payment … their payment is cut as well. So, it’s not like Medicare will cut their payment and everybody else will stay the same and we’ll be able to balance it. When Medicare goes down, everything goes down.”
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MIPS exacerbates payment instability
Layered onto these payment cuts, for physicians who participate in the MIPS program, penalties can cut Medicare payment by as much as 9%, the AMA tells CMS. And the cuts disproportionately impact small, rural and independent practices and they exacerbate health inequities. Certain specialists are also more severely impacted than others. According to CMS’ 2022 Quality Payment Program Experience Report:
- 27% of small physician practices were penalized.
- 18% of rural physician practices were penalized.
- Nearly 30% of physicians in solo practice received the maximum 9% penalty.
- Anesthesiology and orthopaedic surgery were among the specialties with the highest proportion of physicians getting a penalty.
AMA members “appreciate that CMS proposes a couple of policies that have the potential to improve MIPS, such as changing the cost measure scoring methodology to increase physicians’ final scores,” the letter says, while adding that “this proposed rule does not resolve many of the root causes of the problems in the MIPS program as they require statutory remedies.”
Instead, the letter says, the AMA, all 51 state medical associations including the District of Columbia, and 76 national medical specialty societies are calling on (PDF) Congress to replace key elements of MIPS with a new data-driven performance payment system. This proposal would, among other things:
- Ensure that CMS provides quarterly feedback reports by holding physicians harmless from penalties should the agency fail to provide this data.
- Align program requirements with other CMS hospital value-based programs.
- Simplify reporting by allowing cross-category credit.
- Enhance measurement accuracy.
In addition, the AMA strongly urged CMS to improve its MIPS Value Pathway framework by adopting in the final rule an AMA alternative (PDF) that would address many of the pitfalls in the current CMS approach, including inappropriately lumping subspecialties together. The AMA also strongly urged against creating a new mandatory pay-for-performance program for specialists based on CMS’ flawed framework. Rather, the AMA recommended that CMS focus on implementing more specialty-developed alternative payment models (APMs).
