MedPAC Backs Medicare Physician Payment Increase – Again
By Emma Freer

Echoing advocacy by the Texas Medical Association and others in organized medicine, the Medicare Payment Advisory Commission (MedPAC) recently reupped its recommendation that Congress increase Medicare physician payment by tying such payment to inflation, among other factors.  

If implemented, the changes would reverse the decades-long trend of declining Medicare physician payment, says Gary Sheppard, MD, an internist in Houston and chair of TMA’s Council on Socioeconomics.  

“We can't decrease physician payment when inflation increases,” he told Texas Medicine Today

Specifically, MedPAC, a congressional advisory panel, urged Congress in its March 2024 report to:  

  • Annually update the base Medicare 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. In 2025, such an update would amount to a 1.3% raise.  
  • Establish safety-net add-on payments for clinician services provided to traditional Medicare patients with low incomes, with higher add-on payments for primary care clinicians. Together with the base pay update, this policy change would increase Medicare payment, on average, by 5.7% for primary care clinicians and by 2.5% for other clinicians.   

Dr. Sheppard says such safety-net add-on payments could improve low-income patients’ access to care, including preventive primary care services that often are valued less than specialty procedures. 

“That sitting, talking, going over everything [with patients] – that has not been valued as much,” he said.  

MedPAC made similar recommendations in January 2023, underscoring the long-standing need for Medicare physician payment reform. 

Between 2001 and 2023, Medicare physician payment decreased 30% when adjusted for inflation, whereas payment to other sectors generally has kept pace, according to the American Medical Association.  Over the same period, the consumer price index for physician services in U.S. cities increased 65%. 

Successive Medicare physician pay cuts stem from a much-maligned federal budget-neutrality provision that requires any physician pay increase or decrease to be offsetting. Such cuts also carry with them risks of practice closures, early retirement, and reductions in health care services, office hours, and Medicare patient panels, as TMA repeatedly has warned Congress.  

As a result, TMA, AMA, and others are focused on reforming Medicare physician payment policy. Dr. Sheppard says MedPAC’s recommendations are a good start but fall short of such a comprehensive overhaul. 

“The whole system needs to be fixed ... instead of having these little patches,” he said. 

Get involved in this crucial advocacy effort and get the news and information you need on TMA’s Federal Advocacy webpage

Last Updated On

March 26, 2024

Originally Published On

March 26, 2024

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Emma Freer

Associate Editor

(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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