MedPAC proposal on Medicare physician pay prompts praise from AMA

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Health care is in crisis, but tying physician reimbursement to inflation is one way to stabilize the American health care system, according to the American Medical Association (AMA).

On April 10, the Medicare Payment Advisory Commission voted unanimously to recommend Congress replace current law updates to the physician fee schedule with an annual change based on the Medicare Economic Index, such as MEI minus 1%.

Bruce A. Scott, MD
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That is “a timely recommendation as lawmakers wrestle with how to handle yet another cut in physician pay,” according to AMA. Association President Bruce A. Scott, MD, issued a statement of support similar to previous ones because the issue has been under discussion for months. In fact, Scott noted MedPAC has suggested the same to Congress at least three consecutive years.

The current baseline increase to physician reimbursement is 0.25%, or 0.75% for doctors participating in an alternative payment model. MedPAC said Congress should consider setting reimbursement at the rate of the Medicare Economic Index minus 1%, every year for the foreseeable future.

“In studying options, MedPAC saw the overwhelming evidence that a new approach was needed,” he said. “We appreciate that the Commission recommended an automatic, yearly update to reflect the increasing costs of running a practice. This is the approach Medicare has long used for other health care providers, and it has a record of ensuring stability.”

The MedPAC recommendation comes as Congress has failed to stop or reverse the 2.83% cut in Medicare payments for 2025, even though there have been several proposals to do so. This year marks the fifth consecutive year of payment cuts. Meanwhile, the MedPAC vote follows the decision to increase by 5% the payment rates for Medicare insurers. That move will generate more than $25 billion in additional revenue for the industry, according to AMA.

“Increasing pay to insurance companies — which are enjoying record profits — while cutting pay for physicians who are struggling to keep our practices afloat suggests a case of misaligned priorities,” Scott’s statement said. “Physicians are the very foundation of health care. Regardless how flush insurers are, patient access will suffer if physicians close their practices.”

AMA noted physicians are abandoning private practice, and patients, especially in rural and underserved areas, face obstacles to accessing care.

“We appreciate that MedPAC experts recognized the status quo is bad medicine for our patients,” Scott said. “We suggest Congress listen to the experts.”

In the informational presentation for the MedPAC meeting of April 10, staff noted Commission surveys find Medicare beneficiaries and patients with private insurance report comparable problems finding a new clinician. However, clinicians accept Medicare at rates similar to commercial insurance, even as Medicare pays less than private payers. Medical school applicant numbers are growing, as are the number of clinicians billing the Medicare Physician Fee Schedule, according to MedPAC.