Medicare Payment Reform
Declining Medicare reimbursements threaten seniors’ ability to access timely care as well as the long-term sustainability of physician practices
Diverting the Medicare physician payment system away from its current unsustainable path and steering it instead toward physician practice sustainability will protect patient access to quality, evidence-based care while easing administrative burdens.
The American Medical Association, together with the WSMA and other state and national medical societies, have outlined a practical, commonsense approach reforming Medicare physician reimbursement based on the principles of simplicity, relevance, alignment and predictability.
Why We Must Reform the Medicare Physician Payment System
The need for change is clear. Taking inflation in practice costs into account, Medicare physician payment plunged 20% from 2001 to 2021. Medicare spending on physician services per enrollee retreated by 1% between 2010 and 2020, even as spending per enrollee for other parts of Medicare jumped by between 3.6% and 42.1%.
Compounding the problem of low and eroding reimbursement is the fact that insurers increasingly use Medicare as their baseline for payment standards. “The rates for much of commercial insurance, which in the past had cross-subsidized Medicare and Medicaid, are trending toward Medicare,” says WSMA President (2021-2022) Mika Sinanan, MD, PhD. “They say you have to live and work at a Medicare level.”
With inflation soaring to 40-year highs, statutory payment cuts looming, and many physician practices still dealing with pandemic-related financial issues, recent proposals from the Centers for Medicare and Medicaid Services undermine the long-term sustainability of physician practices while threatening patient access to physicians participating in Medicare.
Long-term Reform Needed
The WSMA is urging Washington’s congressional delegation to sign on to H.R. 2474, the Strengthening Medicare for Patients and Providers Act. The legislation applies a permanent inflation-based update to the Medicare Physician Fee Schedule conversion factor, which will provide much-needed stability to the Medicare payment system as our members contend with an increasingly challenging environment providing Medicare beneficiaries with access to timely and quality care.
More information on the Medicare payment cuts can be found at fixmedicarenow.org/resources.
Rewarding the Value of Physician Care
Leading the charge to reform Medicare physician payment is a core element of the AMA’s Recovery Plan for America’s Physicians, along with fixing prior authorization, supporting telehealth, reducing physician burnout and stopping scope of practice creep.
Physicians deserve payment models that recognize and invest in their contributions in providing high- value care to patients, while generating cost savings across all parts of Medicare and the broader health care system. In practical terms, this means directly rewarding the value of care that physicians offer to patients, as opposed to administrative tasks such as data entry that are often irrelevant to the service being provided.