Congress must fix Medicare doc payment system

After years of continued payment cuts to doctors, the future of healthcare as we know it increasingly hangs in the balance. Congress has reached a pivotal moment in this regard — where it can relieve pressure on the broken Medicare payment system by addressing the massive disparity between what Medicare reimburses physicians and what it actually costs those physicians to provide care.

Without such action, the repercussions for patients, providers and the future of healthcare delivery in America will turn ugly — and quickly. Failure to put the Medicare Physician Fee Schedule on a more sustainable path could destabilize the Medicare program and eventually lead to a groundswell of support for the dreaded Medicare for All, which would, of course, undermine the integrity and efficacy of the entire system. Policymakers must sort out the current mess before it comes to that.

The MPFS lacks annual inflationary updates, unlike the payment systems for all other Medicare provider types. While inpatient and outpatient hospitals, nursing centers, hospices, and other medical facilities receive payment increases yearly to account for rising inflation, doctors working with the Medicare program see no such updates.

This is having an overwhelmingly negative effect on physician practices, notably smaller, independent practices in rural communities. With the intense and unusual economic hardships these practices have faced in recent years — from the pandemic to a growing workforce shortage — this unfair payment system could be the straw that breaks the camel’s back.

According to Medicare’s data, physician pay has increased by 9% over the last 22 years, averaging a minuscule 0.4% annually. In that period, the cost of running a physician practice has increased by 47%.

When adjusted for inflation in practice costs, Medicare payments to physicians have declined by more than 25% since 2001. And we wonder why they’re all retiring?

The current physician payment freeze is scheduled to continue until at least 2026, at this point updates will resume at a paltry 0.25% annually, well below the inflation rate.

The discrepancy between what it costs to run a practice and the payments physicians receive from Medicare is threatening to push smaller practices out of business. This will lead to greater consolidation in the healthcare industry, which increases costs and undermines patient access.

The MPFS must ensure payment accuracy to help keep physician practice doors open and ensure continued access to highquality, affordable care for Medicare beneficiaries and all patients.

If Congress fails to address this issue and fix the broken Medicare physician payment system soon, it could exacerbate the physician shortage that is hurting rural communities and further contribute to the instability of the entire Medicare program. Failure to take action will give Medicare for All proponents fuel for their ultimate ambition for massively increased government control of our healthcare system.

Fortunately — and surprisingly — bipartisan legislation has been introduced by physician members of Congress to take aim at the problem. If passed, the Strengthening Medicare for Patients and Providers Act would reform the MPFS by providing annual payment inflationary updates to physicians, similar to the ones other Medicare providers receive. Not only would this help provide financial security for physicians, but it would also help keep the entire program stable in the long term.