A key congressional advisory panel lent its support to a Medicare physician pay increase for the first time in several years, underscoring the need for comprehensive Medicare physician payment reform.
The Medicare Payment Advisory Commission (MedPAC) voted unanimously in mid-January that Congress should increase Medicare payments to physicians as well as to other health care sectors.
Specifically, MedPAC recommended:
- Updating the 2023 Medicare base payment rate for physicians and other health care sectors by 50% of the projected increase in the Medicare Economic Index (MEI), a measure of physician practice cost inflation, which amounts to a 1.25% pay adjustment; and
- Increasing payment for services provided to low-income Medicare patients by 15% for primary care clinicians and by 5% for specialty clinicians.
Zeke Silva, MD, a radiologist in San Antonio and a member of the Texas Medical Association Council on Legislation, says it’s critical Medicare physician payment is tied to the MEI. He also chairs the American Medical Association’s Relative Value Scale Update Committee, which makes payment recommendations to Medicare.
“Physicians are paying more for supplies, equipment, and staff,” he said. “So, accommodating these increased costs requires, by definition, increased payment.”
Dr. Silva also notes MedPAC historically has been slow to recommend Medicare physician pay adjustments.
“The fact that they would come in and collectively make the statement that all physicians caring for Medicare [patients] should receive a 1.25% increase is significant,” he said. “But the amount is not enough.”
AMA echoed this sentiment, commending MedPAC for recognizing the need for a physician pay raise while chiding the panel for recommending a pay adjustment that only goes halfway.
“Physicians have struggled to keep their practices open in the face of rampant inflation, COVID, and growing costs of running a medical practice, and Medicare payments have not responded adequately,” AMA President James Resneck Jr., MD, said in a Jan. 12 statement. “Congress should adopt a 2024 Medicare payment update that recognizes the full inflationary growth in health care costs.”
To this end, TMA has endorsed a set of AMA principles to guide wholesale 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.
Greg Fuller, MD, a family physician in Keller and chair of TMA’s Council on Socioeconomics, says these changes would help level the playing field for physicians when compared with other health care sectors, such as hospitals and nursing homes.
Between 2001 and 2020, Medicare physician payment decreased 22% when adjusted for inflation, whereas payment to the other sectors generally has kept pace with inflation, according to AMA.
“Physicians get stuck in this zero-sum game every year – so, if anybody gains, somebody loses,” Dr. Fuller said. “We have to start getting payment adjustments each year.”