Medicare Trustees warn of low physician payment
"It would be political malpractice for Congress to sit on its hands and not respond to this report," says AMA president.
Photo: Reza Estakhrian/Getty Images
The American Medical Association is again sounding the alarm on low physician pay, based on the release of the Medicare Trustees Report outlining the challenge of payments not keeping up with the pace with inflation or the cost of practicing medicine.
Trustees wrote: "Absent a change in the delivery system or level of update by subsequent legislation, the Trustees expect access to Medicare-participating physicians to become a significant issue in the long term."
The 2024 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds was released on Monday.
WHY THIS MATTERS
The report echoes warnings from the American Medical Association, said AMA president Dr. Jesse Ehrenfeld.
"This report continues the drumbeat of recommendations that all point out that the payment system is failing patients and physicians. When physicians face a set of facts, we respond to improve the situation. It would be political malpractice for Congress to sit on its hands and not respond to this report," Ehrenfeld said.
Physicians saw a 2% cut in Medicare payments in 2023 and close to 2% in 2024, according to the AMA. When adjusted for inflation in practice costs, physician pay has declined 29% from 2001 to 2024.
The trustees warned of the gap created between rising costs and physician payments, noting that the "quality of healthcare received by Medicare beneficiaries would, under current law, fall over time compared to that received by those with private health insurance."
THE LARGER TREND
The report is the latest call for Medicare reform. The Medicare Payment Advisory Commission (MedPAC) recently recommended that Congress increase 2025 Medicare physician payments above current law by linking the payment update to the Medicare Economic Index (MEI).
Members of Congress have introduced the Strengthening Medicare for Patients and Providers Act (HR 2474) that would tie future updates to the full MEI.
Medicare trustees said: "Certain features of current law may result in some challenges for the Medicare program. Physician payment update amounts are specified for all years in the future, and these amounts do not vary based on underlying economic conditions, nor are they expected to keep pace with the average rate of physician cost increases. These rate updates could be an issue in years when levels of inflation are high and would be problematic when the cumulative gap between the price updates and physician costs becomes large.
"Payment rate updates for most nonphysician categories of Medicare providers are reduced by the growth in economy-wide private nonfarm business total factor productivity although these health providers have historically achieved lower levels of productivity growth. If the health sector cannot transition to more efficient models of care delivery and if the provider reimbursement rates paid by commercial insurers continue to be based on the same negotiated process used to date, then the availability, particularly with respect to physician services, and quality of healthcare received by Medicare beneficiaries would, under current law, fall over time compared to that received by those with private health insurance."
Email the writer: SMorse@himss.org
