AMA voices serious concerns about Medicare physician payment freeze

Following a report from the Medicare Payment Advisory Commission that recommended a continued freeze on Medicare physician payment rates, the American Medical Association has sent a letter to Congress voice serious concerns about the future of the program.

“This recommendation would imperil patient access to high-quality care as the costs to practice medicine continue to rise. Physicians have been enduring an increasing financial instability of the Medicare physician payment system due to a confluence of fiscal uncertainties related to the COVID-19 pandemic, statutory payment cuts, consistent lack of inflationary updates, and significant administrative barriers,” the letter reads in part.

The AMA said the payment freeze is impossible to reconcile when compared to the nearly 8% payment increase CMS projects for Medicare Advantage plans in 2023. Meanwhile, Medicare physician payment has been reduced 20%, adjusted for inflation, from 2001-2021, and lacks an adequate annual payment update similar to other Medicare providers.

The letter continues: “Medicare spending per enrollee has been falling for physician payment schedule services even as it has risen steeply for other Medicare benefits (see attached chart 2). Furthermore, a continuing statutory freeze in annual Medicare physician payments is scheduled to last until 2026, when updates resume at a rate of only 0.25 percent a year indefinitely, well below the rate of medical or consumer price index inflation.”

Without an inflation-based update, the gap between frozen physician payment rates and rising inflation in medical practice costs will widen considerably. In addition, physicians in some practices are saddled with complying with the Medicare Merit-Based Incentive Payment system, which one study estimated costs more than $12,000 and more than 200 hours per physician per year.

“In addition to being asked to do more with fewer resources each year, physicians continue to face significant clinical and financial disruptions during the COVID-19 pandemic. In 2020, according to an AMA study, there was a $13.9 billion decrease (equating to a 14 percent reduction) in Medicare physician payment schedule spending as patients delayed treatments. Burnout, stress, workload, and fear of COVID-19 infection are leading one in five physicians to consider leaving their current practice within two years,” the letter states.

The AMA noted that it appreciates that Congress averted the nearly 10 percent cut to physician payment in 2022 and provided financial relief throughout the pandemic. However, it urges Congress to work with the physician community to develop solutions to the systematic problems with the Medicare physician payment system and preserve patient access to care.

“At a minimum, Congress must establish a stable, annual Medicare physician payment update that keeps pace with inflation and practice costs and allows for innovation to ensure Medicare patients continue to have access to physician practice-based care,” the letter concludes.