The Executive Suite: Congressional budget will cut Medicare reimbursement for physicians

The federal government’s 2023 spending plan will hurt seniors’ access to medical care when physician reimbursement for Medicare drops in 2023.

Meanwhile, physicians will continue receiving incentive payments for value-based care models, but more money would help in the accountable care organization (ACO) movement.

On Dec. 19, the U.S. Senate Committee on Appropriations published the $1.7 trillion 2023 Omnibus Appropriations Bill with money for issues ranging from consumer inflation at home to the war in Ukraine.

A statement from Committee Chairman Sen. Patrick Leahy, D-Vermont, included some health care and research programs among its highlights:

$47.5 billion for the National Institutes of Health
$9.2 billion for the U.S. Centers for Disease Control and Prevention
$1.5 billion for the Advanced Research Projects Agency for Health (ARPA-H) fight against cancer
$950 million for the Biomedical Advanced Research and Development Authority to bolster national health security

Medicare was not included on that highlight list, even though for weeks the Medicare Physician Fee Schedule has been a target for health care organizations calling on Congress to take action to avoid reimbursement cuts for physicians.
‘Endangering access to care’

Health care organizations were blunt in their evaluations of the bill.

The appropriations act amounts to a 2% cut for physicians on top of decades of flat payment rates to physicians, American Medical Association (AMA) President Jack Resneck Jr. said in a published statement.

The cut will have consequences for health care access for older Americans, Resneck said.

“The AMA is extremely disappointed and dismayed that Congress failed to prevent Medicare cuts next year, threatening the financial viability of physician practices and endangering access to care for Medicare beneficiaries,” American Medical Association (AMA) President Jack Resneck Jr. said in a published statement.

“High inflation compounds the threat to practice viability because physicians are the only Medicare providers without annual inflation-based updates,” Resneck said. “We are deeply worried that many practices will be forced to stop taking new Medicare patients – at a time when access to care is already inadequate. Congress must immediately begin the work of long-overdue Medicare physician payment reform that will lead to the program stability that beneficiaries and physicians need.”
‘Deeply dismayed’

Medical Group Management Association (MGMA) leaders are “deeply dismayed” by Congress not addressing a 4.5% Medicare reimbursement cut that will affect physicians, from those in small rural practices to those in regional and national health systems.

“It is unconscionable that while every other provider category in the Medicare program is receiving a positive 2023 inflation update, physician rates will be cut,” Anders Gilberg, MGMA senior vice president of government affairs, said in a published statement. “Medical practices are in no way immune to the impact of the broader economy, and have been suffering from significant staffing shortages, wage inflation, and drastic cost increases across the board. Any cut to the Medicare conversion factor is simply untenable in this environment.”

Even before the scheduled cut, 92% of medical groups reported that Medicare reimbursement in 2022 already fails to adequately cover the cost of care provided, according to MGMA.

“Should Congress fail to avert the full 4.5% cut in final legislation this week, medical groups have reported they will be forced to make tough business decisions such as limiting the number of Medicare patients served, laying off clinical staff, and closing satellite locations,” Gilberg said.
Empire State ‘disaster’

Combined with rising costs of doing business for physicians, the situation is dire in New York, said Parag Mehta, MD, president of the Medical Society of the State of New York. Mehta’s statement proclaimed “New York is on the Precipice of a Patient Access Disaster,” and claimed lawmakers are disrespecting physicians.

“Despite physicians’ heroic efforts in treating patients during the pandemic, too many policymakers are now indifferent to their struggle in trying to keep their doors open to deliver essential patient care expected by our patients,” Mehta said in a published statement. “The latest evidence of this indifference – even disrespect – is Congress’ failure to prevent significant cuts to Medicare physician payment when inflation continues to rapidly drive up practice overhead costs, and at a time when other sectors of the health care delivery system are receiving increases. Rapidly increasing costs combined with cuts in payment from government and from insurers is simply unsustainable – physician practices will be unable to survive.”
ACO incentive payments

Congress did include a 3.5% value-based care incentive in the bill – a good start, although more work is needed to reform the nation’s physician payment system, according to the National Association of ACOs (NAACOS). About 300,000 clinicians receive 5% incentives on their Medicare payments, but those incentives are set to expire at the end of 2023.

“NAACOS and others have been calling on lawmakers to extend these critical incentives so that our health system can maintain momentum on its value-based care movement,” association President and CEO Clif Gaus, ScD, said in a news release. “Care for millions of patients will be better off because the health system is rewarding doctors for providing higher quality care at lower cost.

“This should be considered a bridge toward greater reforms needed to encourage providers’ move into accountable care organizations. Without additional carrots and sticks, doctors and hospitals will continue to be stuck in a volume-driven, fee-for-service payment system that discourages keeping patients healthy and out of the hospital,” Gaus said. “Instead, we need more patients and providers in value-based models, and the next Congress will play a critical role in work to overhaul our physician payment system.”