Medicare Payment Cuts “Thin Gruel” for Seniors, Physicians

The following statement is attributable to:
Jesse M. Ehrenfeld, M.D., M.P.H.
President, American Medical Association

“The Medicare physician payment schedule released… is an unfortunate continuation of a two-decade march in making Medicare unsustainable for patients and physicians.

“For 2024, the new rule indicates there will be another downward adjustment of 3.4 percent, on top of the 2 percent payment reduction in 2023. At the same time, the payment schedule confirms the Medicare Economic Index (MEI) increase at 4.6 percent, the highest this century and on top of last year’s 3.8 percent. MEI is the government measure of inflation in medical practice costs.

“This is a recipe for financial instability. Patients and physicians will wonder why such thin gruel is being served.

“Physicians routinely have faced cuts in the last two decades. Yet, there is nothing routine about the past few years. Physicians have faced the COVID pandemic and subsequent burnout. They have seen the costs soar for running a medical practice, while Medicare payment updates have offered too little relief.

“There is widespread acknowledgement that access to care is being threatened. The declining revenues in the face of steep cost increases disproportionately affect small, independent, and rural physician practices, as well as those treating low-income or other historically minoritized or marginalized patient communities.

“When adjusted for inflation, Medicare physician payment already has effectively declined (PDF) 26% from 2001 to 2023 before additional inflation and these cuts are factored in.

“Medicare reform is moving to the top of many agendas, no doubt spurred by seniors and people with disabilities concerned by the prospect of disappearing access. In March, the Medicare Payment Advisory Commission recommended a physician payment update tied to the MEI 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 payment schedule based on the MEI. The AMA and house of medicine strongly urge Congress to advance this legislation. At the AMA’s 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 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.”