AMA Challenges MedPAC Suggestion to Freeze Medicare Physician Payment

The American Medical Association (AMA) published a statement criticizing the Medicare Payment Advisory Commission’s (MedPAC’s) stance on Medicare physician payments next year.

MedPAC, a panel tasked with advising Congress on issues impacting the Medicare program, voted to recommend no increase to 2023 Medicare reimbursement rates for physicians. 

"Temporary or high variable coronavirus effects are best addressed through target, short term funding policies rather than permanent changes to all providers' payment rates in 2023 and future year," the advisory group shared in a presentation  earlier this month.

The AMA has voiced opposition, stating that the implementation of MedPAC's recommendation would limit patient access to high-quality care as healthcare expenses increase. 

"A stable, annual physician payment update is necessary to keep pace with rising inflation and innovation in physician practices and to ensure all Medicare patients continue to have access to the care they need when they need it," Gerald E. Harmon, AMA president, said in the statement.

According to data from AMA, Medicare physician payment dropped 20 percent between 2001 and 2020. 

The cost of operating a medical practice grew by 39 percent from 2001 to 2021. In addition, CMS decreased Medicare physician fee schedule spending by $13.9 billion in 2021.\

Despite the decreases in funding, the industry group expressed appreciation for Congress’s decision to avert the 10 percent physician payment cuts in 2022 and financial assistance throughout the pandemic. However, as the costs to practice medicine rises, AMA states physicians need more resources to avoid delaying patient treatment.

"The discrepancy between what it costs to run a practice and payment is sparking consolidation and driving physicians out of rural and underserved areas," Harmon stated. "In addition to being asked to do more with fewer resources each year, physicians continue to face significant clinical and financial disruptions during the COVID-19 pandemic.”

If Congress did not stop Medicare payment cuts, healthcare organizations planned to consider physician compensation and staffing changes.

According to an American Medical Group Association­ (AMGA) survey, 47 percent of medical groups would have remodeled physician compensation if the 10 percent Medicare payments cuts were enacted.

“During COVID and with everything that we experienced, by that I mean elective surgery stopped much like it did for everybody else, we furloughed half of our 1,000 employees. I don’t want to do that again under Medicare cuts,” Carol Brockmiller, CEO of Quincy Medical Group, an independent, multi-specialty, physician-owned group based in Illinois, said at the time.

In the past few years, financial challenges caused by the COVID-19 pandemic have forced physician practices and large health systems to lay off providers, eliminate positions, and decrease the compensation for their healthcare staff.

A survey conducted from April 10, 2020, to April 13, 2020, by the Primary Care Collaborative and The Larry A. Green Center discovered that 46 percent of primary care practices are unsure if they have enough cash to keep their practices open.

Nearly 42 percent of respondents reported concerns about layoffs and furloughed staff, and an overwhelming majority (85 percent) noticed sharp decreases in patient volume.

Practices have largely recovered from the lows of 2020. However, operating margins are still slim as providers continue to face higher expenses and surges of COVID-19 patients.