Medical Groups May Reduce Staff, Patients Amid Medicare Payment Cuts

As medical groups expect to see Medicare payment cuts in 2023, practices are considering limiting the number of new Medicare patients and reducing clinical staff to ensure financial stability, according to the Medical Group Management Association (MGMA).

The report reflects responses from 517 group practices across 45 states that shared how they plan to respond to the proposed Medicare payment reductions.

The 4.5 percent decrease in the Medicare conversion factor included in the 2023 Physician Fee Schedule (PFS) proposed rule coupled with the 4 percent Pay-As-You-Go (PAYGO) sequester will reduce 2023 Medicare payments by at least 8.5 percent.

The majority of practices (92 percent) said that 2022 Medicare reimbursement rates already do not adequately cover the cost of care provided.

In order to maintain finances in the wake of even further reductions, medical groups will have to adjust some of their practices, MGMA found.

“As a regional safety net academic Health System in one of the poorest regions of the country, we will not stop caring for our Medicare patients. However, our ability to maintain a sustainable financial situation will be so challenging,” a multispecialty group employing 1,800 physicians in urban Alabama said. “We are already stretched due to increasing labor and supply costs – a cut in Medicare would be beyond anything we could manage.”

Nearly 60 percent of groups are considering limiting the number of new Medicare patients they accept, while 66 percent have considered reducing charity care. Fifty-eight percent of respondents said they might have to reduce the number of clinical staff and 29 percent are considering closing satellite locations.

“This would most likely force us to eliminate 2 to 3 staff members,” a small physician family practice in rural Iowa shared. “With the increased stresses associated with care, our staff is already spread too thin. Medicaid reimbursement is dismal and adding Medicare reductions to our already stressed environment will most likely require us to close one of our two satellite clinics.”

MGMA has urged Congress to act accordingly to prevent the significant Medicare payment reduction.

The organization asked federal leaders to provide a 4.5 percent increase to the PFS conversion factor to prevent additional reimbursement cuts and extend the funding provided in 2022.

MGMA also requested that Congress provide an inflationary update based on the Medicare Economic Index (MEI), which would give medical groups more financial stability. In addition, Congress should waive the 4 percent PAYGO sequester, MGMA said.

Other physician groups have been vocal about opposing the reimbursement cut proposed in the Medicare PFS.

The American Medical Association (AMA) penned a letter to CMS highlighting how finalizing the payment cut would hurt patient access to care. In addition, the American Medical Group Association (AMGA) voiced concerns about the proposed decrease in telehealth reimbursement rates included in the rule.

Hospitals and medical groups are already struggling with workforce shortages, and reduced reimbursement rates may exacerbate the situation.

A report from the American Hospital Association (AHA) found that low reimbursement rates and staffing shortages were driving factors behind rural hospital closures in 2020.