Independent doctors’ offices are in critical condition amid Medicare reimbursement cuts

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America’s independent doctors’ offices are in critical condition. Physicians and their staff are dealing with an overlapping set of pressures that are making the practice of medicine harder than ever. Increased operating costs, widespread burnout, administrative burdens, staffing shortages, and keeping up with changing regulations all make it difficult to keep the focus on patients. Adding to those complexities was last week’s news from the federal government, that the Centers for Medicare & Medicaid Services (CMS) has proposed yet another cut to Medicare reimbursement for doctor’s offices.If Congress fails to mitigate these cuts by the end of the year, there will be a profound impact on clinicians and patients, including the country’s most vulnerable populations.

Every year, CMS releases the Medicare Physician Fee Schedule, a rule that dictates how the federal government reimburses ambulatory physicians for providing care to seniors on Medicare. While reimbursement rates for hospitals automatically climb with inflation, the same is not true for doctor’s offices. And for the front door of medicine, where patients are most commonly interacting with their health care providers, CMS proposed a nearly 3% cut in reimbursement rates.

Joe Ganley, JD
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It’s easy to think that a 2.93% cut will only affect patients on Medicare, which has an estimated 11,000 people aging into each day, but it goes far beyond that. These reimbursement cuts are part of a larger crisis impacting independent providers nationwide. Year after year, CMS is forced to cut payment rates due to statutory requirements and the failure of Congress to act. Since 2001, physician payment rates have declined 29% when adjusted for inflation. Congress must step in to provide both a short-term solution to alleviate this decrease for 2025, and build a sustainable, long-term solution to CMS’s ambulatory reimbursement model because if not, some practices may drop Medicare altogether, leaving our most vulnerable seniors struggling to find access to quality care and practices will struggle to stay afloat financially.

Athenahealth quantified the potential financial impact of this cut by looking at our top-100 small practice customers who see the highest percentage of Medicare patients. We found the average practice stands to lose $56,000 annually, which in some cases, equates to the cost of maintaining one full-time employee. As a technology company serving over 150,000 ambulatory providers, we understand the challenges physicians face when caring for patients in their communities. These cuts combined with rising practice expenses and staffing costs have a huge impact and unravel the progress practices have been making with value-based care models.

We know that many independent practices are already feeling the financial impact of keeping their practices running. In fact, a recent survey conducted by the Harris Poll on behalf of athenahealth revealed that the majority of physicians (62%) do not believe their practice is on a “sound financial footing” and nearly half (48%) said they are considering major changes to their practice operations to offset financial burdens. And now, some practices might decide to pack their schedules, shrinking the amount of time they spend with each patient, just to make the numbers work. Even worse, some practices may stop taking new Medicare patients or drop Medicare patients altogether because they simply can’t afford to keep them.

Doctor's offices are the front door of medicine and there is so much at risk with these devastating cuts. Timely access to quality care for the country’s aging population and the financial stability of independent practices are on the line. There is enormous promise in the Strengthening Medicare for Patients and Providers Act (HR 2474) currently pending in Congress. This bipartisan bill would tie Medicare physician reimbursement to medical inflation, thus permanently linking the reimbursement for treating a senior with the actual cost of that treatment. Now is the time to invest in the policies, programs, and technologies that build more resiliency in this most critical infrastructure and support those who support us in our time of need. Our collective health depends on it.

Joe Ganley, JD, has 20 years of experience in the fields of public affairs, government relations, corporate communications, crisis management and political campaigns. As vice president of government and regulatory affairs at athenahealth, he is responsible for leading the company’s public policy and regulatory strategy at the state and federal level.