In a comment letter to the Centers for Medicare & Medicaid Services (CMS) concerning the Medicare physician payment schedule, the American Medical Association (AMA) said today the proposed cuts are bad policy, bad timing and bad for patients. Physicians are facing a triple whammy as pay reductions are pending on several fronts. This unsustainable approach is threatening access to care.

The AMA again questions the wisdom of the conversion factor reductions, specifically the proposed 3.36 percent reduction in 2024. The proposed reduction is attributable to two factors, including a 1.25 percent reduction stemming from a temporary legislative update and a negative budget neutrality adjustment linked to the introduction of a CMS-developed office visit add-on code.

“With higher costs for everything associated with practicing medicine, another year of Medicare payment cuts jeopardizes patient access and imperils the physician practices on which so many seniors rely,” said AMA President Jesse M. Ehrenfeld, M.D., MPH. “These cuts are unsustainable and unconscionable.”

Even before rampant inflation and an epidemic, physicians were facing an unsustainable trend. When adjusted for inflation, Medicare physician payment already has effectively declined (PDF) 26 percent from 2001 to 2023 before additional inflation and these cuts are factored in. Additionally, physicians saw a 2 percent payment reduction for 2023. Physicians are one of the only providers without an automatic increase to account for inflation.

Worse, the AMA is hearing that more physicians and group practices will be hit with a MIPS penalty in 2024 based on the newly released 2022 performance period feedback. These penalties can reduce Medicare payment by as much as 9 percent. The MIPS program was largely paused during the 2020 and 2021 performance periods due to the COVID-19 public health emergency, and the AMA has serious concerns that it may unfairly penalize physician practices—particularly small, independent, and rural practices—due to a lack of awareness of the expiration of the automatic COVID-19 flexibilities.

Moreover, reductions in physician payment rates will severely hamper access to care for Medicare patients. The Medicare Trustees have explicitly warned that physician access for patients with Medicare could be seriously compromised in the long term if payment rates fail to adapt. Delays in care, particularly in underserved populations, are associated with worse health outcomes and inequitable health care delivery.

“Policymakers have a responsibility to fix Medicare and prevent these outcomes. As physicians, we owe our patients our best efforts to see that health care access is not curtailed. With our allies in organized medicine, we will make sure that CMS and Congress hear this point of view,” Dr. Ehrenfeld said.

Momentum is building for reform. In March, the Medicare Payment Advisory Commission recommended a physician payment update tied to the Medicare Economic Index (the government’s index of inflation in medical practice costs) for the first time. And in April, a bipartisan group of House members introduced a bill that would provide annual inflation updates to the Medicare fee schedule based on the MEI. At the AMA’s recent Annual Meeting, physicians from across the country called for a campaign to address this situation.

The AMA and our partners in organized medicine have developed a set of principles (PDF) to guide efforts on Medicare physician payment reform. This is part of the AMA’s Recovery Plan for America’s Physicians and represents our ongoing work to establish a rational Medicare physician payment system that provides financial stability through positive annual payment updates, improves the financial viability of physician practices, and eases administrative burdens.

The entire letter can be found here.