Physicians face Medicare payment cuts unless Congress acts

As physicians whose practices incorporate the entire spectrum, from primary care to surgery, we hear stories from our patients daily about how difficult it is to access high-quality healthcare. Particularly when the COVID-19 pandemic has laid bare the fragile state of our nation’s healthcare system, patients have increasingly faced long delays in their attempts to secure needed services—from preventive visits to life-changing operations. Physician practices have been consolidating or closing, and those offices that are able to remain open have been unable to ensure adequate staffing.

According to a September 2021 survey by the Medical Group Management Association (MGMA), 73% of medical practices reported staffing as the biggest pandemic challenge heading into 2022, creating a disconnect between our healthcare system and patient access. This has led to long waits for appointments and delays in treatment. Further, lack of access to care disproportionately affects the most vulnerable members of our society, many of whom already face health equity issues. A study from August of this year found that the majority of those who delayed care in the U.S. in 2021 reported that they had at least one pre-existing condition that could be exacerbated by a delay in care.

What is needed to correct this disturbing trend? An improved investment in, and prioritization of, the physician workforce across America, and appropriate Medicare payment rates.

For the past two decades, Medicare and Medicaid investments in physician services have been held flat or, in some cases, cut. This is happening even as the cost to run a practice has continued to substantially increase. An MGMA study this year found that 90% of medical practices had reported costs rising faster than revenue. Physician practice operations are unable to keep up with inflation, now at its highest rate in decades, let alone undertake costly innovations to improve patient care.

This much we know to be true: Continued financial challenges, administrative burdens and staff shortages, coupled with outdated Medicare payment policies, make it more difficult for physicians to maintain their practices and serve their communities. Many state Medicaid agencies, managed-care plans, and private payers base their payment rates on those established by Medicare’s physician fee schedule. Insufficient Medicare payment rates translate to insufficient payment rates across payers and patient populations. In contrast, other nonphysician areas within healthcare are seeing significant increases in payments and receive positive Medicare updates that reflect rising costs.

Challenges associated with these outdated policies are about to worsen. An overall cut of nearly 10% is scheduled to be applied to physician payments on Jan. 1, 2023. The reduction stems from a complex set of budgetary rules and systemic flaws within the Medicare physician fee schedule that, unless addressed, will continue to plague physicians for years to come. These include a budget-neutrality requirement for Medicare mandating that any payment increase for certain physician services must be offset by cuts elsewhere. The cuts are further exacerbated by the fact that Medicare physician payment rates are not adjusted for inflation—a problem that hospitals, skilled-nursing facilities and other organizations paid by Medicare do not face.

Together, our groups represent more than 370,000 physicians, and we care for millions of patients every year. It’s critical that this problem be addressed and that we invest in ensuring that we have a physician workforce ready to care for the next generation. We can’t simply shift funding around without addressing the fundamental problems.

The call to action is clear: Congress must take action to protect patients’ access to care by halting the payment cuts that will take effect in January. And then lawmakers need to provide for annual positive payment updates that account for rising costs and move us toward a more sustainable Medicare payment system. Only then can we protect our practices and ensure that patients have the care they need and deserve.

Download Modern Healthcare’s app to stay informed when industry news breaks.