Medicine Achieves Reduction in Medicare Physician Pay Cut Amid Push for Reform
By Emma Freer


After a concerted advocacy campaign by the Texas Medical Association and others in organized medicine, Congress lessened a Medicare physician pay cut that took effect Jan. 1. Despite this intervention, physicians still face declining Medicare payments in 2023 and in 2024, underscoring the need for comprehensive reform.  

Meanwhile, TMA experts continue to analyze other potentially positive provisions of the extensive spending law that averted the cuts and its specific implications for Texas. 

The Centers for Medicare & Medicaid Services’ (CMS’) 2023 Medicare physician fee schedule final rule lowered the conversion factor that determines Medicare physician payments by 4.5% compared with the 2022 conversion factor. The cut mostly stems from an expiring physician pay increase funded by Congress through 2022 as well as from a much-maligned federal budget neutrality provision that requires any physician pay increase or decrease to be offsetting. 

In response, Texas physicians sent nearly 2,000 messages to their federal representatives, raising concerns about how the cut would impact practice viability and access to care among Medicare patients. This advocacy led to some relief when President Joe Biden signed into law the Consolidated Appropriations Act on Dec. 29. The $1.7 trillion spending legislation updated the 2023 conversion factor, reducing the scheduled physician pay cut from 4.5% to 2%. But it also requires CMS to cut Medicare physician payments by 1.25% in 2024.  

The omnibus law has other positive implications for Medicare and Medicaid coverage, which include: 

  • Extending pandemic-era telehealth waivers and alternative payment model incentive payments (albeit at 3.5% instead of 5%); 

  • Making permanent an option for states to provide 12 months of continuous Medicaid coverage to children and postpartum women;  

  • Authorizing 200 additional graduate medical education residency positions, half of which will be dedicated to psychiatry; 

  • Incentivizing domestic drug manufacturers to address supply shortages; and 

  • Funding more mental health, maternal health, and substance use disorder services. 

In the final weeks of 2022, TMA, the American Medical Association, and others in organized medicine pushed Congress to eliminate the pay cut altogether, including in a Dec. 8 letter to congressional leadership. 

“Put simply, the cost of congressional inaction is an across-the-board cut that will further amplify the financial hardship physician practices are already facing while inhibiting Medicare from delivering on its promises to seniors and future generations,” the signatories wrote. 

To rescue physicians from the semi-annual rigmarole of asking Congress to address Medicare physician payments, TMA has endorsed a set of AMA principles to guide Medicare physician payment reform. 

The Characteristics of a Rational Medicare Physician Payment System call on Congress to: 

  • Provide a baseline annual physician pay raise to keep up with inflation; 

  • Eliminate, replace, or revise budget neutrality requirements; 

  • Incentivize value-based care that suits various practice settings; and 

  • Support physician efforts to reduce health disparities.  

For a deep dive into this year’s Medicare Physician Fee Schedule, check out TMA’s on-demand CME webinar, “2023 Medicare Update,” available in the Education Center at no cost to members, compliments of TMA Insurance Trust. Earn 1 AMA PRA Category 1 Credit (enduring) and 1 ethics credit.   


Last Updated On

January 13, 2023

Originally Published On

January 13, 2023

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Emma Freer


(512) 370-1383

Emma Freer is a reporter for Texas Medicine. She previously worked in local news, covering city politics, economic development, and public health. A native Clevelander, she graduated from Columbia Journalism School and the University of St. Andrews.

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