Proposed Changes to Medicare Physician Fee Schedule Sparks Criticism from Medical Industry Groups
Introduction:
The Centers for Medicare and Medicaid Services (CMS) recently proposed a series of changes to the Medicare physician fee schedule for 2025. One of the key components of the proposal is a 2.8 percent cut to physician payments, which has drawn criticism from various industry groups. These groups argue that the cut is burdensome, particularly in light of increased operating costs due to inflation and worker shortages.
Concerns Over Increased Operating Costs:
Medical industry groups, including the Medical Group Management Association (MGMA) and the American College of Rheumatology (ACR), have voiced their concerns over the proposed cut to Medicare physician fees. They argue that this reduction comes at a time when medical groups are already struggling to remain financially viable due to rising operating costs.
According to a recent report from the MGMA, higher labor costs were a key factor driving up expenses for medical practitioners. Additionally, the prices of medical supplies and various types of service and maintenance fees have also been on the rise. The report revealed that the median net income/loss, excluding financial support per full-time equivalent physician, fell from $11,223 in 2021 to a negative $343 in 2022, the year when inflation peaked above 9 percent.
Anders Gilberg, senior vice president of government affairs at the MGMA, emphasized that a 2.8 percent reduction to the conversion factor is alarming, especially when 92 percent of medical groups are already experiencing increased operating costs. He called on Congress to pass laws that would implement an annual inflation-based physician payment update, highlighting the need for comprehensive reform.
Calls for Adjustments for Inflation:
The ACR also expressed its concerns over the decline in Medicare physician payments by 29 percent since 2001. ACR President Dr. Deborah Dyett Desir highlighted the challenges physicians currently face, including rising overhead costs, workforce shortages, and increasing administrative burdens. She called for Medicare reimbursement levels that accurately reflect the cost of providing care and adjust for inflation.
CMS Defense and Factors Behind the Fee Cut:
CMS defended the proposed fee cut, stating that its hands were tied by factors specified in law. A CMS spokesperson explained that Medicare programs are required to be “budget neutral,” meaning that any increase in reimbursement for one service must be offset by a decrease in reimbursement for another service. This ensures that there is no overall increase in spending.
The spokesperson noted that the change to the conversion factor is predominantly due to factors specified in law and not at CMS’ discretion. The update incorporates the overall update required by law, as well as the expiration of a one-time 2.93 percent increase in payment that was in effect for most of 2024. Additionally, adjustments were necessary to account for changes in relative value units (RVUs) due to proposed changes in work RVUs.
Conclusion:
The CMS proposal for changes to the Medicare physician fee schedule has sparked criticism from medical industry groups who argue that the proposed fee cut is burdensome given the already increased operating costs. The debate highlights the ongoing challenges faced by medical practitioners, including rising labor costs, inflation, and workforce shortages. As the proposal is subject to a 60-day comment period, stakeholders have the opportunity to provide feedback and potentially influence the final decision. Ultimately, finding a balance between fair physician reimbursement and budget neutrality will be crucial for ensuring access to quality care for Medicare beneficiaries.
