CHICAGO — Facing a fifth consecutive year of Medicare payment reductions, the American Medical Association (AMA) issued a clarion call today to the Centers for Medicare & Medicaid Services (CMS), urging the agency to be fully transparent about the impact of these payment cuts on physicians and patients.

CMS proposed in July a payment reduction of 2.8%. CMS also estimated that the Medicare Economic Index (MEI)—the agency’s measure of practice cost inflation—will increase by 3.6%. Facing this widening gap between what Medicare pays physicians and the cost of delivering quality care to patients, the AMA said in a comment letter (PDF) that the administration should work with Congress to enact a permanent, annual inflation-based update to Medicare physician payments. The AMA noted that other government bodies have warned about the impact on patient care. 

“[This] proposed rule is silent on the impact of the growing gap between what Medicare pays for care and what it costs to provide that care. 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,” the letter said.

The Medicare Physician 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 whose payment updates do not account for inflation, physicians have relentlessly advocated for this change. Medicare physician payment declined (PDF) 29% from 2001 to 2024, adjusted for inflation. The AMA and the entirety of organized medicine are working to secure a positive 2025 payment update.

The comment letter notes that the proposed cuts are self-defeating as they would reduce spending on the administration’s key policies including the cancer moonshot and maternal health programs.

“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,” the letter said. “We strongly urge 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, which includes specific recommendations regarding proposed changes to the Medicare physician fee schedule, can be found here (PDF).