cartoon image of one hand holding a stack of dollar bills while another hand snips the money with scissors, symbolizing a payment cut

More than 100 state medical associations and national medical societies, including AMDA — The Society for Post-Acute and Long-Term Care Medicine and the American Academy of Hospice and Palliative Medicine, recently signed a letter advocating for Medicare reform policies that would help physicians’ pay keep up with rising inflation and costs for service. 

The Centers for Medicare & Medicaid Services has acknowledged that the operating costs for providers will increase 4.6% next year, yet the recently finalized physician fee schedule for 2024 includes a 3.37% payment reduction for physicians, according to the letter sent to leaders in the House and Senate. Accounting for inflation and rising costs, physician pay has actually declined 26% since 2001, the letter noted.

“If Congress does not act by the end of the year to stop this impending payment cut, many physicians will be forced to reduce available health care services, cut office hours, or even forgo treating Medicare patients altogether,” its authors wrote. “The flawed Medicare physician payment system is in desperate need of fixing.”

Perhaps the biggest flaw, according to one of the letter’s signees, is the lack of a mechanism to increase pay based on inflation or growing operational costs.

“Physician Medicare payment as a whole does not have a built-in legislative increase based on inflation or tied to the Medicare Economic Index. It’s the entire payment in the entire Medicare system that’s done that,” Alex Bardakh, senior director of advocacy and strategic partnerships at AMDA — The Society for Post-Acute and Long-Term Care Medicine, said in an interview with McKnight’s Home Care Daily Pulse. “Physician payment has remained stagnant for many years because that’s not built in, so they get a 0% update every year.”

Bardakh noted that the physician fee schedule is one fixed amount of money. When new services are added to the fee schedule, the pot does not grow; rather, payment is stretched thinner.

“If I’m adding services within the fee schedule, I need to figure out a way to cut someone else’s payment within the fee schedule, due to budget neutrality rules,” Bardakh said. A potential solution, what he and the letter’s other signees have advocated for, is the proposed Strengthening Medicare for Patients and Providers Act.

The bill, HR 2474, would give physicians an annual, permanent inflationary Medicare payment update tied to the Medicare Economic Index, according to the American Medical Association, which supports the proposed legislation. Currently, more than 50 members of Congress have co-sponsored the bill.

“This isn’t about just, quote unquote, paying the physicians. The issue is, ‘Will patients and elderly people who are aging have access to physicians who can care for them?’” Bardakh said. “We know that geriatricians and people who do home health, skilled nursing facility and assisted living care are some of the lowest reimbursed of the primary care physicians out there. And so when you have these continued cuts, it really inhibits the ability of these clinicians to be in a practice, to run a practice.”