Freezing Medicare physician fee payments may force physicians out of the program

The Medicare Payment Advisory Commission (MedPAC) report sent to Congress recommends a continuation of the freeze in Medicare physician fee payments, an analysis that medical groups are saying is deeply flawed and endangers both patients and Medicare.

The American Medical Association (AMA) said the report contains flawed analyses that would imperil patient access to high-quality care and ignores a host of trailing indicators, none more obvious than the impact of the COVID-19 pandemic on physician practices.

In 2020, there was a $13.9 billion decrease in Medicare physician fee schedule spending as patients delayed treatments. Burnout, stress, workload, and fear of COVID Infection are leading one in five physicians to consider leaving their current practice within two years.

The AMA says the Medicare physician payment has been reduced 20 percent, adjusted for inflation, from 2001–2021, and that analysis does not include the recent inflationary spike. Also, the Medicare physician payment system lacks an adequate annual physician payment update similar to other Medicare providers.

At a minimum, the AMA says 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.

Likewise, the Medical Group Management Assocation is concerned about the long-term effects of the MedPAC analysis.

“MGMA is deeply troubled by the MedPAC report and recommendation to Congress that it provide no annual payment update for physician services in 2023, especially in the context of experiencing the highest annual inflation rate in 40 years,” said Anders Gilberg, senior vice president, government affairs, MGMA, in a statement. “With reinstatement of the 2% Medicare sequester penalty scheduled to begin phasing-in in a few short weeks, physician practices are already set to face serious financial impacts — at a time when they are still reeling from pandemic related disruptions, rampant staffing shortages and skyrocketing expenses — making MedPAC’s decision even more out of touch with the reality physician practices face every day.”

Gilberg said that without a modest annual payment update to keep up with the cost of inflation, physician practices will inevitably be forced to make difficult decisions about their Medicare participation — decisions that would certainly result in diminished access to the critical health care services on which beneficiaries rely.

To ensure the financial stability of physician practices and protect beneficiaries’ access to care, MGMA is urging Congress to make critical updates to physician payment including the permanent repeal of the 2% Medicare sequester, an update to Medicare payments in 2023 that reflects actual inflation, and an extension of the 5% incentive payment for participants in alternative payment models.