Infectious Disease

MedPAC recommends increasing physician payments to Congress

January 17, 2023

2 min read

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The Medicare Payment Advisory Commission, or MedPAC, recently voted to recommend that Congress increase 2024 Medicare payments for physicians and other health services.

Specifically, MedPAC recommended linking payments to the Medicare Economic Index (MEI), updating them to 50% of the MEI, according to the American Hospital Association.

The Medicare Payment Advisory Committee has voted for several recommendations to Congress, which include linking 2024 physician payments to the Medicare Economic Index and updating them to 50% of the index. Source: Adobe Stock.

MedPAC also called for “a non-budget-neutral add-on payment under the physician fee schedule (PFS) to services provided to low-income Medicare beneficiaries,” the association said in a press release.

Last year, MedPAC denied an increase in physician payments for 2023, a decision that was met with criticism from leading health institutions. At the time, MedPAC leaders countered that Congress had provided flexibility to physicians through telehealth and COVID-19 pandemic relief funds.

Several other recommendations in this year’s vote include:

  • updating 2024 Medicare payment rates for hospital inpatient and outpatient services by the current law amount plus 1%;
  • distributing an additional $2 billion to safety-net hospitals by switching to a safety-net index policy;
  • reducing the payment rate for home health agencies by 7%;
  • reducing payment rates for skilled nursing facilities and inpatient rehabilitation facilities by 3%; other
  • updating the Medicare base payment rate for hospice services by the amount specified by the current law while wage adjusting and reducing the hospice aggregate cap by 20%.

AMA President Jack Resneck jr.MD, applauded MedPAC for recognizing that physician pay “has not kept up with the cost of practicing medicine,” but he also said in a press release that the AMA feels an update tied to only half of the MEI “does not go far enough.”

The AMA previously called upon Congress to prevent cuts to physician payments, noting that the 2023 payment system failed to account for inflation and pandemic-related obstacles.

“As the only Medicare provider without an inflationary payment update, physicians have waited a long time for this change. When adjusted for inflation, Medicare physician payment has declined 22% from 2001 to 2021,” Resneck said. “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, capped off most recently by a 2% payment reduction in 2023.”

In a letter to MedPAC, the American Hospital Association said the increase, which translates to 1.25%, will not be effective in offsetting either the 2% payment reduction in 2023 or the projected 3.25% reduction in 2024.

The American Hospital Association also highlighted widening gaps between the MEI and projected spending, which suggest “that the proposed increase of 1.25% will be insufficient to compensate for the longitudinal decrements in reimbursement and projected gap between MEI and spending.”

The ACP shared similar sentiments on increases not being sufficient “given that physicians and their practices have been faced with decades of flat payments, as well as increased practice expenses, high inflation rates, and staffing and medical practice supply shortages,” ACP Chief Advocacy Officer and Senior Vice President of Governmental Affairs and Public Policy Shari M. Erickson, MPH, told Healio.

“ACP calls on Congress to immediately take on comprehensive Medicare physician payment reform to provide stability for physicians and ensure access to care for their patients,” she said. “Our nation’s seniors and our physicians deserve better.”

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