The Medicare Physician Payment System Needs A Comprehensive Solution – Not Temporary Fixes

Oct 6, 2023 | Uncategorized

Physician Compensation And Medicare:

When it comes to physician compensation within the Medicare system, it often feels like we’re applying quick fixes rather than addressing the underlying issues. Instead of constantly maneuvering to avoid these pay cuts, it’s important for the government to take steps towards creating a sustainable payment system. In this article, we’ll delve deeper into this ongoing challenge.

2% Reduction In Medicare Payments In 2023

The recent efforts by the American Medical Association (AMA) to mitigate an impending 8.5% Medicare pay cut in the 2023 omnibus spending bill managed to slow down the impending crisis but didn’t bring it to a complete halt. Physicians are still poised to experience a 2% reduction in Medicare payments this year, with a further 1.25% cut looming in 2024. Relying on stopgap measures and perpetually averting cuts year after year is an unsustainable practice, as emphasized by Todd Askew, the Senior Vice President of Advocacy at AMA.

In the initial stages of 2023, Medicare physicians were confronted with a daunting 8.5% reduction in their payment rates. This significant reduction stemmed from a combination of factors, including the expiration of a 3% bonus designed to account for evaluation and management (E/M) increases, the introduction of new E/M values necessitating a budget-neutral adjustment of 1.5%, and an additional 4% cut attributed to pay-as-you-go (PAYGO) measures aimed at curbing excessive spending. Todd Askew observed, “The timing couldn’t have been more unfavorable, particularly considering that many practices are still grappling with the financial aftermath of reduced revenue during the peak of the pandemic.”

PAYGO Cut Successfully Averted

Through collaborative efforts, the American Medical Association (AMA) joined forces with 150 other physician organizations and healthcare groups to diligently prevent these impending reductions. Todd Askew, in reflecting on these advocacy endeavors, noted some positive strides. He stated, “In the larger picture, we managed to delay the 4% PAYGO reduction, effectively eliminating it for this year.” Furthermore, Congress orchestrated a phased reduction of the physician bonus, which offsets the E/M increases, reducing it to 2.5% for the current year, with an additional reduction planned for 2024, bringing it down to 1.25%. Lawmakers opted not to address the counterbalancing of the heightened E/M values, which were responsible for other budget-neutral cuts. All in all, this translates to approximately a 2% reduction in Medicare reimbursement fees from 2022 to the present year, as succinctly explained by Askew.

Medicare Participation Under Scrutiny

While a 2% reduction may be preferable to the initially proposed 8.5%, the impending decrease will cause medical practices to confront challenging decisions. Some practices are already operating on razor-thin margins, with a 2% or even 0% margin. “This situation will undoubtedly prompt many practices to reevaluate the feasibility of their participation in the Medicare program,” he stressed.

For older adult patients, this predicament is likely to lead to widespread access issues across various specialties and healthcare services throughout the country. The ongoing erosion of Medicare payments when compared to inflation will undoubtedly carry long-term repercussions, as pointed out by Askew. Physicians have already witnessed a cumulative reduction of 22% in their payments over the past few decades. Askew underscored this by stating, “This reduction is primarily a result of the underlying payment system’s lack of a mechanism for regular increases to keep pace with the rising costs of inflation.”

A Call for Congressional Attention

Notably, Congress has not undertaken any substantial review of the existing payment system since its inception under the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015. The 2% reduction serves as an alert to Congress, urging them about the ongoing cuts and the gradual devaluation of Medicare payments. This poses a substantial threat to healthcare access.

Askew strongly urged physicians to remain engaged through the AMA’s social media platforms and to remain vigilant for alerts from the Physicians Grassroots Network. “We cannot afford to wait for another crisis because it is highly likely that we will face further reductions in the coming year,” he cautioned. This article was originally published on

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