If the 65 million (and counting) Americans who rely on Medicare want to see this 58-year-old federally-backed insurance program continue to meet their needs, they had better contact their Member of Congress and Senators and urge them to quickly fix the outdated and unfair physician reimbursement system.
Not only does the current system, administered by the Centers for Medicare & Medicaid Services (CMS), greatly underpay participating physicians, but it is exacerbating workforce shortages throughout the nation’s entire healthcare system. This in turn makes it difficult for independent physicians to maintain their practices.
If national policymakers fail to address this fundamental problem, the shrinking number of doctors will serve only to fuel radical arguments for a single-payer, Medicare-for-all system favored by far-Left Democrats. This will mean the end of the Medicare system as we have known it and as it has worked well for nearly six decades.
The Medicare Physician Fee Schedule (MPFS) is on a dangerously unsustainable path. For years, Medicare has failed to include annual inflationary updates for physicians. Other provider types, including inpatient and outpatient hospitals, skilled nursing centers, and hospices, all receive annual upgrades based on inflation. Physicians, however, have been forced to endure a congressionally ordered statutory freeze on payment increases until at least 2026. Even then, updates are set to resume at a minuscule 0.25 percent per year, well below the rate of runaway inflation we’ve seen under Bidenomics.
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According to Medicare Trustees data, Medicare physician payments have only increased 9 percent over the past 22 years, roughly 0.4 percent per year. In that same time, the actual costs of running a medical practice increased by 47 percent, or 1.8 percent per year. Making things far worse, economy-wide inflation has risen by 73 percent, recently reaching historic levels not seen since the 1980s.
To put it mildly, Medicare payments to physicians do not go nearly as far as they once did. In fact, when taking inflation into account, Medicare physician payments actually declined by 26 percent from 2001 to 2023.
Considered together with the economic impact that the pandemic has had on our healthcare system, these reductions in payments are making it increasingly difficult for physicians to address ongoing workforce challenges. The impact this deeply flawed payment system has had on physicians nationwide – particularly in our many rural and other medically underserved communities – cannot be overstated.
As more private physician practices struggle with these burdens, more and more physicians are choosing to leave the profession entirely. Between 2021 and 2022 alone, over 71,000 physicians left Medicare – exacerbating the ongoing national healthcare workforce shortage.
Additionally, Medicare’s failure to keep up with inflation is fueling higher rates of healthcare consolidation, which threatens to increase overall costs and decrease access options for patients. That is especially true in rural communities that already struggle to access comprehensive health services. If something is not done to fix the MPFS, we likely will see more rural physician practices close at a time when we should be working to protect and expand access to healthcare in America’s rural communities.
To keep Medicare sustainable and responsive to beneficiaries’ needs, doctors must be reimbursed for the true costs of providing care in this economic climate, and not have their payments restricted by some complicated academic formula determined by Washington bureaucrats or siphoned off to pay for the consequences of consolidation and less competition in the marketplace.
Fortunately, a coalition of physician representatives in the U. S. House has introduced bipartisan legislation – the Strengthening Medicare for Patients and Providers Act (HR 2474) – that would take an important step forward to fix this broken system. The legislation would provide physicians with similar inflation-based payment updates just like the ones other Medicare providers already receive. This reasonable and much-needed solution would help put the MPFS on a more sustainable, realistic path in order to protect patient access and keep America’s physician practices strong and responsive to their communities’ needs.
Fixing the Medicare payment system now, before it further threatens the viability of physician practices and patient access to care, definitely is the smarter option to prevent more radical upheavals or the broad failure of our entire healthcare system. That is why Congress must pass HR 2474 to stabilize one of the primary pillars of our nation’s healthcare system.
Bob Barr represented Georgia’s Seventh District in the U.S. House of Representatives from 1995 to 2003. He served as the United States Attorney in Atlanta from 1986 to 1990 and was an official with the CIA in the 1970s. He now practices law in Atlanta, Georgia and serves as head of Liberty Guard.
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