Unsustainable Medicare cuts

| August 14, 2023

Unsustainable Medicare cuts

An editorial from J. Allen Meadows, MD, FACAAI – Executive Director of Advocacy and Government Affairs

According to the profit impact of marketing strategy (PIMS), an important lever of business success is growth. Among 37 variables, growth is mentioned as one of the most important variables for success: market share, market growth, marketing expense to sales ratio or a strong market position. Wikipedia

For many years, Medicare used its “Sustainable Growth Rate” (SGR) formula when developing physician fee schedules. Going to Congress each year and asking them not to cut our payments has been a never-ending story. The flawed SGR formula (that we were promised would adjust our annual payments for inflation) cut our fees while other parts of the health care system – like hospitals and nursing homes – were protected. Over the years, the SGR was so obviously broken, it was dissolved for the “new and improved” Quality Payment Programs – shifting Medicare’s physician payment strategy (fee-for-service) to payments based on quality, value, and outcomes.

In 2015, we were told the passage of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) would solve the SGR problem – if we agreed to draconian reporting of “value” through the Merit-Based incentive payment System (MIPS). (MIPS does not measure value, but that’s an article for another day.) Looking at the data, our fees continue to be cut, while the non-physician parts of medicine increase. When discussing this with the House Ways and Means Committee, we were told a solution would cost 110 billion dollars a year, and thus would not be considered.

Unfortunately, the administrative burden and thresholds to qualify for the MIPS program’s incentives have limited its use and could result in fewer providers participating in value-based care models. Under the 2024 proposed rule, solo practitioners and practices with fewer than 100 eligible clinicians are extremely likely to face a MIPS penalty. The ACAAI Advocacy Council urges more flexibility to set MIPS performance thresholds based on current data and circumstances, rather than a strict pre-set formula.

The 2024 proposed Medicare Physician Fee Schedule (PFS) purports a 3.36% reduction to the Medicare conversion factor as the Medicare Economic Index (MEI) increases to 4.5%. The PFS is not adjusted for the ongoing increases in the costs to practice medicine, and we, as physicians, cannot afford to continue absorbing these costs while payment rates decrease. The PFS is subject to budget neutrality – taking from one “pot” to fill another – causing some providers to face significant decreases in their reimbursement. These factors are adding to physicians’ financial instability and encouraging the consolidation of providers. It diminishes our opportunity for growth.

The College’s Advocacy Council strongly supports R. 2474: The Strengthening Medicare for Patients and Providers Act, which provides a permanent, annual update equal to the increase in the MEI, allows physicians to invest in their practices, and implements new strategies to provide high-value care. It also urges Congress to work with the Administration to increase providers’ opportunities to voluntarily participate in well-designed, patient centered APMs, such as those recommended by PTAC.

As I see it, there are two root problems with the reimbursement system that are related, but not identical. First, Medicare has been purchasing services from us below our real costs for decades. Second, years ago, Congress made Medicare a “budget-neutral game,” meaning the total cost is capped. Every time another group expands their scope of practice, doctors lose. Every time an expensive life-altering technology or drug is approved, physician fees are cut.

I say it’s time for us to rise up and say, enough is enough. Physicians only receiving a 2% cut instead of a 9% cut is nothing to celebrate. While I have always been opposed to the unionization of physicians – thinking we are not laborers – some may feel they have few other options. Ending the “budget-neutrality game” that Medicare is playing has to be our goal. Continuing to oppose the appropriate expansion of the scope of practice and approval of innovation is morally bankrupt. We need to quit fighting over who gets a slice of the pie, and as the house of medicine, demand a bigger pie.

To keep our patients safe, to keep access to care available, and to keep the healthcare workforce strong, members of Congress must urgently work together to enact MACRA reforms and establish a stable payment mechanism that appropriately pays for health outcomes.

The Advocacy Council, along with the AMA and other medical societies, strongly urges Congress to pass common-sense modifications to the statutory budget neutrality requirements to reduce the severity and frequency of payment cuts stemming from these rules.