Lawmakers Want to Tie Physician Payment Updates to Inflation

Several lawmakers are seeking to tie physician payment updates in Medicare to inflation to prevent potential physician shortage issues.

Representatives Raul Ruiz, MD (D-CA-25), Larry Bucshon, MD (R-IN-08), Ami Bera, MD (D-CA-06), and Mariannette Miller-Meeks, MD (R-IA-01) introduced H.R. 2474, the Strengthening Medicare for Patients and Providers Act, today. The bill would link the Medicare Physician Fee Schedule to the Medicare Economic Index, a measure of the average annual price change for the market basket inputs, including physician compensation and practice expenses.

Just recently, the Medicare Payment Advisory Committee (MedPAC) recommended in its March report to Congress that lawmakers increase physician payments above current law next year by tying the payment update to the Medicare Economic Index.

The Medicare Economic Index has increased significantly over the past decade, exceeding the 6 percent cumulative boost in annual updates to the Medicare Physician Fee Schedule rates, MedPAC reported. Meanwhile, the American Medical Association (AMA) reports that physician payments have declined by 26 percent since 2001, even after adjusting for the inflation of practice costs.

“I am deeply concerned about the impact the outdated Medicare physician payment rate is having on [healthcare] access for my constituents,” said Representative Ruiz said in a statement. “That is why I am announcing legislation that will move us away from a system where every year seniors’ access to care is threatened due to uncertainty over potential cuts.”

The bipartisan bill aims to bring certainty to physicians and their Medicare beneficiaries by preventing a possible physician shortage in the federal healthcare program, the coalition of doctors in Congress added in the statement.

“At a time when our [healthcare] system is already strained, instability in our Medicare payment system creates further access and workforce issues,” said Representative Bera, former Chief Medical Officer for Sacramento County.

AMA said it welcomes the bill that “could put Congress on the path to finally reforming the outdated Medicare payment system.” The Association has long backed tying physician payments to the Medicare Economic Index, it said in a statement today.

Medicare physician payments are currently subject to a six-year freeze expected to last until 2026. Additionally, Congress recently cut physician payment rates by 2 percent under the year-end omnibus bill.

As physicians deal with inflation, burnout, and the lingering effects of the COVID-19 pandemic, many healthcare stakeholders fear physician payments are not adequate to keep doctors practicing, especially those treating historically underserved and marginalized communities. Inadequate payments could also threaten the financial viability of small, independent, and rural practices.

“This toxic brew threatens health care access for Medicare patients,” Jack Resneck Jr, MD, president of the AMA, said in the Association’s statement. “It’s no coincidence that the bill sponsors are physicians. They know the challenges physicians face. The AMA will work with them so the rest of Congress understand that the status quo threatens access to care in communities across our country.”