AMA: Congress Must Reevaluate Medicare Physician Payment System

AMA raised concerns over Congress’s “indifference” to the incoming pay cuts and financial instability of the Medicare physician payment system in a recent letter to congressional leaders. Physician practices are expected to face a 9.75 percent pay cut on January 1st, even as health systems across the country are still struggling to recover from the pandemic.

The letter urged lawmakers to prevent the oncoming fiscal challenges with legislation and to hold hearings to improve the Medicare physician payment system and avoid future uncertainty.

“Not only does Congress seem indifferent to the confluence of fiscal uncertainties confronting physician practices at the end of this year, but lawmakers’ pursuit of policies to extend the current Medicare sequester that, in effect, will require physicians and health systems to pay for hard infrastructure amplifies our ongoing concerns,” the letter remarked.

A July 15th letter from the AMA, AHA, and other major healthcare organizations pleaded with top lawmakers to not extend mandatory Medicare sequestration for another decade, as suggested in the Biden administration’s new bipartisan infrastructure framework.

Congress had originally intended to end the two percent sequester originating from the Budget Control Act of 2011 in 2021, but recently extended it to at least 2030 to fund non-healthcare infrastructure initiatives.

In addition, AMA cited the burden of a 4 percent Statutory Pay-As-You-Go (PAYGO) sequester, likely for the next 10 years, as an additional stressor to physician practices. The sequester is a result of the American Rescue Plan Act.

The Statutory PAYGO “requires deficit neutrality overall in the laws (other than annual appropriations) enacted by Congress and imposes automatic spending reductions at the end of the year if such laws increase the deficit when they are added together,” according to the US House Committee on the Budget.

If no one intervenes, this will be the first time that Congress has not waived the Statutory PAYGO.

The recently introduced Medicare Physician Fee Schedule (PFS) proposed rule included a 3.75 percent reduction to the PFS conversion factor, which caused an uproar of dissent from major healthcare organizations.

The Consolidated Appropriations Act initially enacted a 3.75 percent increase in PFS payments to avoid cuts relating to budget neutrality adjustments during the pandemic. Ending this rule will serve as another financial stressor to practices, the AMA suggested.

The American Medical Group Association (AMGA) expressed comparable concerns about the conversion factor reduction and extended mandatory sequestration under the PFS proposed rule, similarly urging Congress to intervene and prevent cuts.

Additionally, under the Medicare Access and CHIP Reauthorization Act (MACRA), there will be a statutory freeze in Medicare PFS changes until 2026. When updates begin again, rates will be at 0.25 percent per year, which AMA says is significantly below inflation rates.

“All this financial uncertainty comes at a time when physician practices are still recovering from the financial impact of the COVID-19 public health emergency, including continued infection control protocols that, while necessary, have increased the costs of providing care,” the AMA letter explained.

“The combination of all these policies would be challenging to endure in normal times. Yet, physician practices continue to be stretched to their limits clinically, emotionally, and financially as the pandemic persists well beyond 15 months.”

Access to and quality of care are likely to be negatively impacted by these changes, AMA underscored. In addition, many physicians are caught in limbo since the MACRA program has not come to fruition as promised.

AMA emphasized that “The promise of a robust and patient-centered alternative payment model pathway for physicians under MACRA has yet to be realized, leaving the majority of practices stuck in the MIPS portion of the MACRA program, with legacy and siloed cost and quality measurement programs that impose steep administrative burdens while lacking clinical relevance.”