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Congressional Update: Action Needed to Fix Medicare
The need for Congress to act quickly and decisively to fix a broken Medicare payment system cannot be overstated. The fiscal stability of physician practices and the long-term viability of our nation’s entire healthcare system hangs in the balance.
AMA Recovery Plan for America's Physicians
Medicare payment reform is the first pillar of the AMA Recovery Plan for America’s Physicians. Our needs include immediate relief from annual funding cuts and fundamental changes to Medicare reimbursement centered on simplicity, predictability, relevance, and alignment, principles first outlined in reform principles issued last fall.
The current Medicare physician system reflects none of those principles, which needs to change. The government’s own Medicare Economic Index (MEI), which gauges the inflation in medical practice costs, will hit 4.5% in 2024, its highest level in two decades.
When combined with the 3.8% hike in the MEI recorded in 2023, that means medical practice cost increases will have exceeded eight percent over just two years. Many individual and group physician practices have experienced cost increases well beyond this level, while still seeking a full recovery from pandemic-related setbacks.
However, provisions in current law required the Centers for Medicare & Medicaid Services to implement a 2%, across-the-board reduction in Medicare physician payment rates this year, with another 3.36% cut to the conversion factor scheduled for 2024. In stark contrast to the annual payment increases tied to inflation given to hospitals, skilled nursing facilities, and other entities that bill Medicare, physician practices have fought to reduce or delay payment cuts nearly every year.
Taking inflation into account, Medicare physician payment rates fell 26% from 2001 to 2023, while practice costs rose by 47% over the same period. We must place physician practices on sound financial ground through Congressional action to fix the Medicare physician payment system.
Legislative relief
The AMA strongly supports the Strengthening Medicare for Patients and Providers Act (H.R. 2474), a bipartisan measure now pending in the 118th Congress, which would provide the crucial link between the Medicare physician payment schedule and the MEI, and finally put physicians on an equal fiscal footing with other entities drawing Medicare payment. Physicians can contact their representatives in Congress through this AMA portal to urge passage of H.R. 2474.
For those physicians who are meeting virtually or in person with their legislators and staff, a variety of resource material is available on a dedicated website, FixMedicareNow.org, including plain language explanations of the need for: automatic, annual inflation-based payment updates, reforms to budget neutrality policies, and simplifying the Merit-Based Incentive Payment System (MIPS).
Idaho Medical Association and the AMA intend to fight tirelessly for a financially stable and wholly predictable Medicare physician reimbursement model that protects both physicians and the patients we serve. We urge you to join us in urging Congress to ensure that Medicare continues to fulfill its crucial role in safeguarding both the health and financial well-being of tens of millions of Americans.
Change in the Works
As part of the Inflation Reduction Act, which was passed last year, the Biden administration has authorized Medicare to negotiate prices for ten high-cost medications. This decision is expected to significantly reduce out-of-pocket expenses for approximately nine million senior citizens, while also resulting in billions of dollars in savings for taxpayers.
Medicare will begin this year to negotiate with the manufacturers of popular medications used to treat blood clots, diabetes, heart disease, rheumatoid arthritis, chronic kidney disease, psoriasis, blood cancers, Crohn’s disease, and ulcerative colitis.
The Inflation Reduction Act allows people with Medicare prescription drug coverage to pay out-of-pocket costs in monthly payments spread throughout the year instead of one large payment upfront starting in 2025, under federal guidance issued for implementing the law.
Additionally, this massive spending package also included provisions to lower prescription drug prices, provide subsidies for climate change reduction technology, and modify the corporate tax rate.
Enrollees will begin to see lower prices in 2026.
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