Last month saw the publication of two highly anticipated annual reports that analyze the state of the Medicare program. Both reports describe major challenges facing the Medicare program that could impact how Medicare reimburses allergists.
The first is MedPAC’s June Report to Congress. This report includes MedPAC’s analysis of different Medicare payment systems and provides policy recommendations to Congress. MedPAC’s policy recommendations are influential, but Congress is not required to act on them.
The report recognizes that inflation has outpaced annual updates to Medicare physician payments and assesses that medical inflation [measured by the Medicare Economic Index (MEI)] will outpace Medicare payments by higher margins in the future. MedPAC reiterates its recommendation to Congress to make an annual inflationary adjustment to the Medicare Physician Fee Schedule (PFS) Conversion Factor (CF). MedPAC specifically recommends an inflationary update equal to MEI minus 1%.
MedPAC also criticizes the AMA’s process for determining relative value units (RVUs) that are used to calculate reimbursement rates for medical items and services. CMS is not required to adopt the AMA’s code values, but it defers to the AMA’s RVU recommendations in most cases.
In addition, MedPAC takes issue with the timeliness and accuracy of the data used to inform RVU determinations. MedPAC is particularly critical of how indirect expense values are determined as well as AMA’s use of outdated data from 2006. MedPAC uses global surgery codes as an example where actual postoperative utilization is below the code’s assumptions.
The second report is the annual Medicare Trustees Report. The Trustees’ Report is typically known for assessing Medicare’s financial state and estimating the date at which Medicare will reach insolvency. Assuming current policies remain unchanged, rising Medicare costs will result in the Medicare Trust Fund – the fund that finances Medicare Part A – being unable to cover 100% of its costs in 2033. Medicare Part A’s Trust Fund is financed through the Medicare payroll tax.
This analysis does not apply to Medicare Part B, which is financed by premiums. The Trustees’ Report finds that Medicare Part B’s finances are overall healthy but acknowledges they are facing increased strain due to rising costs for physicians. According to the report, regarding Medicare payments to physicians:
“These amounts do not vary based on underlying economic conditions, and they are not expected to keep pace with the average rate of physician cost increases. These rate updates could be an issue in years when levels of inflation are high and would be problematic when the cumulative gap between the price updates and physician costs becomes large.” (Page 3)
“If the health sector cannot transition to more efficient care delivery and if the provider reimbursement rates paid by commercial insurers continue to be based on the same negotiated process, then the availability, particularly with respect to physician services, and quality of health care received by Medicare beneficiaries will, under current law, fall over time compared to that received by those with private health insurance.” (Page 3)
It is noteworthy that both MedPAC and the Medicare Trustees agree that Medicare payments to physicians are not adequate. To partially address this, Congress passed a one-time 2.5% increase to the 2026 Medicare Conversion Factor as part of the One, Big, Beautiful Bill Act. However, this does not address the long-term viability and sustainability of Medicare payments.
Fighting for sustainable Medicare reimbursements for allergists remains our top priority.
The Advocacy Council – ADVOCATING FOR ALLERGISTS AND THEIR PATIENTS.
