NATIONAL HARBOR, MD – Delegates at the Interim Meeting of the American Medical Association (AMA) forcefully called for fixes to the flawed Medicare payment system that imperils patient access and physician practices.

Physicians from across the country described a payment system that creates financial havoc resulting from annual cuts in the face of rising expenses.

“Physicians heed the idea of ‘First do not harm.’ Yet, the payment system year after year inflicts harm on the ability of physician practices to stay afloat,” said AMA President Jesse M. Ehrenfeld, M.D., MPH. “We also are aware of the First Law of Holes. When you find yourself in one, stop digging. We are in a veritable crater. Cutting payments again is only taking us deeper.”

Delegates at the Interim Meeting built on a resolution that passed at the Annual Meeting in June calling for a multipronged campaign to overhaul the outdated Medicare payment system.

The AMA has worked with Congress and physicians around the country to build momentum for Medicare physician payment reform, and there are signs that policymakers comprehend the problem.

In March, the Medicare Payment Advisory Commission – for the first time -- called for a physician payment update tied to the Medicare Economic Index (MEI), which is the government measure of inflation in medical practice costs. And in April, a bipartisan group of House members introduced a bill that would provide annual inflation updates to the Medicare payment schedule based on the MEI. MEI will be 4.6 percent in 2024, the highest this century, and only compounds upon last year’s 3.8 percent.

In October, the new payment schedule for 2024 called for a downward adjustment of 3.4 percent. This has prompted lawmakers to release a legislative discussion draft that would bring more stability and accuracy to budget neutrality adjustments.

“For 2024, there will be an 8 percent decline between the 3.4 percent adjustment to the payment schedule and 4.6 percent increase in MEI. How many business models anticipate that for the coming year? The answer is few if they hope to survive. Yet, unless Congress acts in the next two months, that’s what awaits physicians. Coming out of COVID-19, physicians did not expect and surely do not deserve this,” Ehrenfeld said.

Seniors and people with disabilities are concerned by the prospect of disappearing access, a threat that has moved from the theoretical to reality.

“In my speech to delegates, I told the story of how my parents had to find coverage after their physician no longer would accept Medicare patients. Most patients don’t have an AMA president to help them navigate this complex and unnecessary obstacle that is as entirely predictable as it is avoidable. Let’s fix Medicare now,” Ehrenfeld said.

When adjusted for inflation, Medicare physician payment has effectively declined (PDF) 26% from 2001 to 2023. These declining revenues disproportionately affect small, independent, and rural physician practices, as well as those treating low-income or other historically minoritized or marginalized patient communities.

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 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.