Legislators introduce bill to modify Medicare physician payment formula
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Key takeaways:
- Legislation has been introduced to tie Medicare physician pay updates to inflation.
- The Medicare Payment Advisory Commission has advised Congress to update the physician payment formula.
A coalition of U.S. legislators has drafted a bill that would tie annual changes in Medicare physician reimbursement to inflation as measured by the Medicare Economic Index.
U.S. Rep. Raul Ruiz, MD, (D-Calif.) sponsored H.R. 2474, the Strengthening Medicare for Patients and Providers Act, with support from co-sponsors Reps. Larry Bucshon, MD, (R-Ind.), Ami Bera, MD, (D-Calif.) and Mariannette Miller-Meeks, MD, (R-Iowa). The aim of the bill is to “address payment uncertainty affecting Medicare-participating physicians and avoid a possible physician shortage for Medicare beneficiaries,” the legislators said in a press release.
The Medicare Economic Index (MEI) is a measure of practice cost inflation that was developed in 1975 to estimate annual changes in physicians’ operating costs and earnings levels.
Practice costs
“Costs of running medical practices have gone up by 47%, and physicians’ payments have declined 26% from 2001 to 2023, when adjusted for inflation, making it difficult for small, rural and low-income serving practices to stay operational,” the legislators said in the release. “In recent years, many non-partisan government stakeholders have repeatedly expressed concerns about the failure of Medicare payments to keep pace with the rising costs of running a medical practice and the damaging impact it could have on patient access to care.”
In its March 2023 report, the Medicare Payment Advisory Commission called for legislative action to address the Medicare physician payment system by providing physicians with an annual inflation-based update tied to the MEI.
Physician burnout
“I am deeply concerned about the impact the outdated Medicare physician payment rate is having on health care access for my constituents,” Ruiz said in the release. “That is why I am announcing legislation that will move us away from a system where every year seniors’ access to care is threatened due to uncertainty over potential cuts.”
Bucshon said, “All patients deserve timely access to health care from quality physicians in their communities. An inadequate mechanism for determining Medicare reimbursement adjustments is threatening access and must be addressed.
“I am committed to working in a bipartisan way to obtain a Congressional Budget Office score for this bill and to find options for covering the cost. The current path toward further consolidation, physician burnout and closure of medical practices must be corrected.”
References:
- H.R.2474 - To amend title XVIII of the Social Security Act to provide for an update to a single conversion factor under the Medicare physician fee schedule that is based on the Medicare economic index. https://www.congress.gov/bill/118th-congress/house-bill/2474/text?s=2&r=1&q=%7B%22search%22%3A%5B%22HR2474%22%5D%7. Accessed April 10, 2023.
- Medicare Payment Advisory Commission. Chapter 4. Physician and Other Health Services. https://www.medpac.gov/wp-content/uploads/2023/03/Ch4_Mar23_MedPAC_Report_To_Congress_SEC.pdf. Accessed April 10, 2023.
- Report on the Council of Medical Service. https://www.ama-assn.org/sites/ama-assn.org/files/corp/media-browser/public/about-ama/councils/Council%20Reports/council-on-medical-service/i08-cms-improving-medicare-economic.pdf. Accessed April 10, 2023.
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