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.
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.
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.
Congress has taken action to mitigate some of the recent MPFS cuts on a
temporary basis, however, reimbursement continues to decline. According to
an American Medical Association analysis of Medicare trustees data, when
adjusted for inflation, Medicare payments to clinicians have declined by
26% from 2001-2023. The failure of the MPFS to keep pace with the true
cost of providing care, combined with year-over-year cuts resulting from
the application of budget neutrality, sequestration, and a paucity of
available alternative payment models and value-based-care models, clearly
demonstrates the Medicare payment system is broken. The addition of an
inflationary update will provide budgetary stability as clinicians, many
of whom are small business owners, contend with a wide range of shifting
economic factors, such as increasing administrative burdens, staff
salaries, office rent, and purchasing of essential technology.
A full list of congressional representatives who have signed on to
H.R.2474 can be found
here. If you need help connecting with your congressional representatives,
contact the WSMA policy department at
policy@wsma.org. More information on
the Medicare payment cuts can be found at
fixmedicarenow.org/resources.
A Look Inside the 2025 Medicare Physician Payment Schedule
With Congress failing to stop the proposed cut to physicians' Medicare payments in its end-of-year health care package, the 2.83% cut contained in the Centers for Medicare and Medicaid Services' 2025 Medicare physician payment schedule is now in effect, making this the fifth straight year of cuts to physician payments.
According to a late December update from the American Medical Association, CMS has heard the advocacy from the house of medicine on the issue of tying payments to the Medicare Economic Index when calculating payment changes. The agency further acknowledged that the costs of care delivery for physicians will increase by 3.5% this year, per the MEI. CMS has said it will continue its delay in MEI reindexing until it analyzes the results from the AMA's fall 2024 practice information survey, as requested by the AMA.
The WSMA will continue to work with the AMA on supporting the broad reforms contained within the bipartisan Strengthening Medicare for Patients and Providers Act, which includes providing inflationary updates. We will keep members apprised of how they can best support these reforms in the weeks and months ahead.
For more on the 2025 Medicare final rule, see this update from the AMA and download a PDF of the AMA summary.
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.
Advancing value-based care also means encouraging innovation with
practices and systems with an emphasis on continuous improvement, boosting
the overall quality of care provided to the full spectrum of patient
populations, including higher-risk and higher-cost groups. Ideally, a
variety of payment models and incentives tailored to the distinct needs of
different specialties and practice settings should be in place, along with
a financially viable fee-for-service model.
And because the need to embed racial justice and advance equity across all
aspects of medicine has never been greater, payment model innovations
should be risk-adjusted and reflect the ongoing contributions of
physicians to dismantle health disparities. Physicians who address social
drivers of care need support as they provide care to historically
marginalized, higher risk, and harder-to-reach patient populations. This
support should extend to practices of all sizes and in all locations.
One of the biggest problems under the current payment system is the fact
that other Medicare providers benefit from built-in updates, such as a
medical economic index or an inflationary growth factor, that help offset
increases in the cost of providing services - but no such offset exists
for physicians.
Just as we didn't get where we are overnight, we are unlikely to secure
the massive, badly needed overhaul of the Medicare physician payment
system tomorrow. The good news is that we can get there through
single-minded determination and the collective efforts of our association,
our counterparts in the Federation of Medicine, and the AMA.
Working together, we can place the Medicare payment system back on a
sustainable path and ensure that our patients receive the quality care
they deserve.