An Update from the American Medical Association
Contributor: Jim Pawelski | AMA Director, Federation Relations
The need for Congress to act quickly and decisively to fix a broken Medicare payment system cannot be overstated. The fiscal stability of physician practices and the long-term viability of our nation’s entire health care system hang in the balance.
Medicare payment reform is the first pillar of the AMA Recovery Plan for America’s Physicians. Our needs include immediate relief from annual funding cuts and fundamental changes to Medicare reimbursement centered on simplicity, predictability, relevance and alignment, principles first outlined in reform principles issued last fall.
The current Medicare physician system reflects none of those principles, which needs to change. The government’s own Medicare Economic Index (MEI), which gauges the inflation in medical practice costs, will hit 4.5% in 2024, its highest level in two decades.
When combined with the 3.8% hike in the MEI recorded in 2023 that means medical practice costs increases will have exceeded 8 percent over just two years. Many individual and group physician practices have experienced cost increases well beyond this level, while still seeking a full recovery from pandemic-related setbacks.
However, provisions in current law required the Centers for Medicare & Medicaid Services to implement a 2%, across-the-board reduction in Medicare physician payment rates this year, with another 3.36% cut to the conversion factor scheduled for 2024. In stark contrast to the annual payment increases tied to inflation given to hospitals, skilled nursing facilities and other entities that bill Medicare, physician practices have fought to reduce or delay payment cuts nearly every year.
Taking inflation into account, Medicare physician payment rates fell 26% from 2001 to 2023, while practice costs rose by 47% over the same period. We must place physician practices on sound financial ground through Congressional action to fix the Medicare physician payment system.
Legislative Relief
The AMA is strongly supporting the Strengthening Medicare for Patients and Providers Act (H.R. 2474), a bipartisan measure now pending in the 118th Congress, which would provide the crucial link between the Medicare physician payment schedule and the MEI, and finally put physicians on an equal fiscal footing with other entities drawing Medicare payment. Physicians can contact their representatives in Congress through this AMA portal to urge passage of H.R. 2474.
For those physicians who are meeting virtually or in person with their legislators and staff, a variety of resource material is available on a dedicated web site, FixMedicareNow.org, including plain language explanations of the need for: automatic, annual inflation-based payment updates, reforms to budget neutrality policies, and simplifying the Merit-Based Incentive Payment System (MIPS).
The AMA intends to fight tirelessly for a financially stable and wholly predictable Medicare physician reimbursement model that protects both physicians and the patients they serve. We urge you to join us in urging Congress to ensure that Medicare continues to fulfill its crucial role in safeguarding both the health and financial well-being of tens of millions of Americans.
