Medicare at a Crossroads: MGMA Calls for Urgent Physician Payment Reform

The Medical Group Management Association (MGMA) has issued a strong rebuke of Congress following the passage of a continuing resolution (CR) that fails to address the ongoing issue of Medicare physician payment cuts. Anders Gilberg, Senior Vice President of Government Affairs at MGMA, described the lack of action as a “massive congressional failure” and a “blatant abdication of duty” to both physicians and Medicare beneficiaries. This statement underscores the growing frustration within the medical community over the financial instability caused by the Medicare Access and CHIP Reauthorization Act (MACRA) and its impact on physician reimbursement.

The Core Issue: Declining Medicare Reimbursement

For five consecutive years, Medicare reimbursement rates have declined, creating significant financial strain on medical practices. The Medicare Physician Fee Schedule (MPFS), which determines payment rates, has been criticized for its lack of an automatic inflation-based update. This omission has left physicians grappling with rising operational costs while reimbursement rates fail to keep pace. According to MGMA, the cumulative effect of these cuts threatens the financial viability of medical practices, particularly those in rural and underserved areas.

The Medicare Economic Index (MEI), a measure of practice cost inflation, has been cited as a potential solution. MGMA advocates for tying annual physician payment updates to the full MEI, which would provide a more predictable and sustainable financial framework for medical practices. Additionally, the organization calls for the modernization of Medicare’s budget neutrality policies, which currently require offsetting increases in payment rates with cuts elsewhere in the system. Critics argue that these policies disproportionately affect physicians and exacerbate financial instability.

Differing Perspectives

While MGMA’s statement reflects widespread concern among healthcare providers, opinions on the path forward vary. The American Medical Association (AMA) has also called for comprehensive Medicare payment reform, emphasizing the need for a baseline positive annual update to reflect inflation in practice costs. AMA President Dr. Bruce A. Scott has described the current system as “unsustainable,” noting that it undermines the ability of physicians to invest in their practices and provide quality care.

On the other hand, some policymakers argue that the focus should be on broader healthcare reform rather than incremental changes to the MPFS. They contend that addressing systemic issues, such as the rising cost of healthcare and inefficiencies within the Medicare program, would have a more significant impact on long-term sustainability.

The Impact on Physicians and Patients

The financial challenges posed by declining Medicare reimbursement rates extend beyond physicians to the patients they serve. MGMA warns that the current trajectory threatens beneficiary access to care, particularly in rural and underserved communities where medical practices operate on thin margins. The organization also highlights the risk of increased consolidation within the healthcare industry, as independent practices struggle to remain financially viable and are forced to merge with larger health systems or private equity firms.

Proposed Solutions

MGMA and other advocacy groups have outlined several potential solutions to address the issue:

1. Annual Inflation-Based Updates: Implementing an automatic update tied to the MEI would provide financial stability and predictability for medical practices.
2. Modernizing Budget Neutrality Policies: Revising these policies to allow for appropriate spending growth without penalizing physicians could alleviate financial pressures.
3. Comprehensive Payment Reform: Enacting legislation to replace the flawed MACRA framework with a more sustainable model is seen as a long-term solution.

Legislative Efforts

The Medicare Patient Access and Practice Stabilization Act, a bipartisan bill introduced in Congress, aims to reverse the latest round of physician payment cuts and provide a 4.7% payment update in 2025. The bill has garnered support from over 100 national and state healthcare organizations, including MGMA and AMA. However, its passage remains uncertain, as lawmakers grapple with competing priorities and budget constraints.

Conclusion

The lack of a Medicare physician payment fix in the recent CR has reignited calls for comprehensive reform. While MGMA and other advocacy groups continue to push for immediate action to avert further cuts, the broader challenge lies in addressing the systemic issues that have plagued the Medicare payment system for decades. As Congress debates the path forward, the stakes for physicians and patients alike could not be higher.