Congress Weighs Legislation Tying Medicare Physician Payments to Inflation

Heeding advocacy by the Texas Medical Association and others in organized medicine, Congress is weighing bipartisan legislation that would index Medicare physician payments to inflation, overriding cuts scheduled to take effect in 2024. 

The Strengthening Medicare for Patients and Providers Act (House Resolution 2474) by U.S. Rep. Raul Ruiz (D-California) would implement an annual, inflation-based payment update based on the full Medicare Economic Index (MEI), a measure of physician practice cost inflation, starting in 2024. 

TMA joined the American Medical Association and 118 national specialty and state medical associations in thanking Congressman Ruiz and his three co-sponsors for the bill. 

“Providing an annual inflation update equal to the [MEI] for Medicare physician payments is essential to enabling physician practices to better absorb payment distributions triggered by budget neutrality rules, performance adjustments, and periods of high inflation,” they wrote in an April 19 letter. “It will also help physicians invest in their practices and implement new strategies to provide high-value care.”  

HR 2474 comes of the heels of a similar – if less impactful – recommendation from the Medicare Payment Advisory Commission (MedPAC), a congressional advisory panel, which voted in January to support increasing Medicare physician payments for the first time in several years. But MedPAC notably recommended raising payments by only 50% of the projected increase in the MEI.  

San Antonio radiologist Zeke Silva, MD, says it’s critical that Medicare physician payment is tied to the full MEI. He serves on TMA’s Council on Legislation and chairs AMA’s Relative Value Scale Update Committee, which makes payment recommendations to Medicare. 

“Physicians are paying more for supplies, equipment, and staff,” he recently told Texas Medicine. “Accommodating these increased costs requires, by definition, increased payment.” 

HR 2474 also represents an important step toward comprehensive Medicare physician payment reform, which medicine supports.  

“The annual ‘stop the Medicare payment cut’ exercises are due, in no small part, to the fact that physician services do not receive the annual inflationary update that virtually all other Medicare providers can rely on to better weather periods of fiscal uncertainty,” the signatories wrote.  

Between 2001 and 2023, Medicare physician payments decreased by 26% when adjusted for inflation, whereas Medicare payments for hospitals and other health care facilities generally have kept pace with inflation, according to AMA. Over the same period, the consumer price index for physician services in U.S. cities increased 65%. 

“Therefore, organized medicine is united in support of a long-term payment solution that centers on annual inflationary updates,” they continued.  

HR 2474 is in alignment with the Characteristics of a Rational Medicare Physician Payment System, a set of AMA principles that TMA has endorsed. In addition to an annual adjustment for inflation, the principles call on Congress to:  

Eliminate, replace, or revise budget neutrality requirements; 

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

Support physician efforts to reduce health disparities.  

Read all of TMA’s comment letters to state and federal leadership in TMA’s advocacy center.   

Last Updated On

April 26, 2023

Originally Published On

April 26, 2023

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