New Congress plays ‘dangerous game’ as Medicare cuts to physicians could hurt patient access to care

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A cut in Medicare reimbursement to physicians took effect Jan. 1, so doctors need financial help now, according to the Medical Group Management Association (MGMA).

Many provisions to help doctors and medical groups were left out of the American Relief Act 2025, passed late last year with broad bipartisan support, said Anders Gilberg, MGMA senior vice president for government affairs, in his letter to congressional leaders.

With the 2025 Medicare Physician Fee Schedule decreasing reimbursement by 2.83%, that means physicians need aid now, he said. The issue cannot wait until the March 14 federal government funding deadline.

“It demands immediate attention,” Gilberg said in the letter. “Medical groups have already begun to feel the adverse effects of this significant decrease in reimbursement, heading into the new year facing uncertainty and financial shortfalls from not only Medicare but commercial contracts tied to Medicare rates, as well as Medicaid reimbursement in states that use Medicare as a benchmark.

“Lawmakers are playing a dangerous game that will ultimately damage patients’ access to physicians who can no longer deal with the chaos caused by congressional inaction to fix a reimbursement formula that continues to destabilize the Medicare program,” he said.

There is more work to be done. The short list for the U.S. health care system includes:

• Passing prior authorization reform, an issue with bipartisan support in Congress and widespread support among medical organizations.
• Extending the Advanced Alternative Payment Model incentive payments for 2025
• Extending the 1.0 work Geographic Practice Cost Index floor and telehealth rule flexibilities now set to expire March 31.

Medicare reimbursement

Last year, 92% of medical groups reported increased operating costs. From 2012 to 2022, total operating costs per full-time equivalent physician rose 63%, while the Medicare conversion factor inched up 1.7%, Gilberg said in the letter.

“In the face of these serious financial tensions, another reduction to Medicare reimbursement is simply untenable – it is imperative to address the cut as quickly as possible,” he said.

In the last Congress, MGMA supported the Strengthening Medicare for Patients and Providers Act, which would align annual Medicare physician payments with inflation as measured by the Medicare Economic Index (MEI) used by the Medicare Payment Advisory Commission (MedPAC).

Apart from MGMA, MedPAC last year reported to Congress that clinicians’ input costs, as measured by the MEI, are expected to increase 2.3% a year from 2025 to 2033. MGMA and other organizations have repeated a point MedPAC also reported to Congress: “This gap between the growth in clinician input costs and updates to PFS payment rates could, over time, create incentives for clinicians to reduce the number of Medicare beneficiaries they treat or stop participating in Medicare entirely.”

MGMA also called for Congress to modernize changes to “antiquated” budget neutrality policies that lead to “this continual dance of physician practices staring down yearly cuts to reimbursement,” Gilberg’s letter said.

Prior authorization reform

The new Congress should pass the Improving Seniors’ Timely Access to Care Act, a bill that would reform prior authorization procedures. That legislation has passed in the House of Representatives and it now has the financial stamp of approval from the Congressional Budget Office, Gilberg said. But the provisions to reform prior authorizations were left out of the American Relief Act of 2025, he said.

Alternative payment incentives

Also removed was a provision to extend the APM incentive payments of 3.53% for medical groups transitioning to value-based care payment models. The money helps those groups make the infrastructure investments they need to succeed in those practice models, Gilberg said.

The bill also left out language maintaining the thresholds for Qualifying APM Participants (QP) for 2025. Those QP thresholds should be maintained at 2024 levels, Gilberg said. Setting them unreachably high hurts the ability of medical groups to participate in alternative payment models. That in turn undercuts Medicare leaders’ goal to have every participant in an accountable-care-based model by 2030, he said.

Telehealth and place of care

Telehealth exploded in use during the COVID-19 pandemic, and Congress has continued allowing greater flexibility in use and reimbursement rule, but with deadlines. With some policies now set to run through the end of March, Congress should grant a two-year or longer extension that will provide more stability for physician practices, Gilberg said.

As for the 1.0 work Geographic Practice Cost Index floor, it is vital to extend it to avoid needless additional payment cuts for medical groups in rural areas, he said.