Why we must reform the Medicare physician payment system August 23, 2022

Diverting the Medicare physician payment system away from its current unsustainable path and steering it instead toward physician practice sustainability will protect patient access to quality, evidence-based care while easing administrative burdens.

The American Medical Association (AMA) and multiple state and national medical societies, including the Medical Society of the District of Columbia (MSDC), have outlined a practical, commonsense approach reforming Medicare physician reimbursement based on the principles of simplicity, relevance, alignment and predictability.

“Physicians are struggling, and change is needed,” says MSDC President Dr. Kirstiaan Nevin. Taking inflation in practice costs into account, Medicare physician payment plunged 20% from 2001 to 2021. Medicare spending on physician services per enrollee retreated by 1% between 2010 and 2020, even as spending per enrollee for other parts of Medicare jumped by between 3.6% and 42.1%.

“Inflation has soared to 40-year highs, statutory payment cuts are on the way, and physician practices are still recovering from pandemic-related financial burdens,” warns Dr. Nevin. “These stressors would be challenging enough on their own but combined they take a deep toll on physician practices and are unsustainable to ensure necessary care for patients in the District.”  Unfortunately, the current proposal from the Centers for Medicare and Medicaid Services (CMS) undermines the long-term sustainability of physician practices while threatening patient access to physicians participating in Medicare.

Leading the charge to reform Medicare physician payment is a core element of the AMA’s Recovery Plan for America’s Physicians, along with fixing prior authorization, supporting telehealth, reducing physician burnout and stopping scope of practice creep. MSDC has been a forceful advocate on these issues in the District.  MSDC launched a comprehensive physician wellness program with complimentary counseling, physician networking, and a convenient wellbeing app. Also, MSDC has led the fight to fix DC prior authorization by pushing legislation in the DC Council and leading a diverse reform-minded coalition, advocated for better telehealth reimbursement, and testified against scope overreach in the District on numerous occasions.

Physicians deserve payment models that recognize and invest in their contributions in providing high-value care to patients, while generating cost savings across all parts of Medicare and the broader health care system. In practical terms, this means directly rewarding the value of care that physicians offer to patients, as opposed to administrative tasks such as data entry that are often irrelevant to the service being provided.

Advancing value-based care also means encouraging innovation with practices and systems with an emphasis on continuous improvement, boosting the overall quality of care provided to the full spectrum of patient populations, including higher-risk and higher-cost groups. Ideally, a variety of payment models and incentives tailored to the distinct needs of different specialties and practice settings should be in place, along with a financially viable fee-for-service model.

And because the need to embed racial justice and advance equity across all aspects of medicine has never been greater, payment model innovations should be risk-adjusted and reflect the ongoing contributions of physicians to dismantle health disparities. Physicians who address social drivers of care need support as they provide care to historically marginalized, higher risk, and harder-to-reach patient populations. This support should extend to practices of all sizes and in all locations.

One of the biggest problems under the current payment system is the fact that other Medicare providers benefit from built-in updates, such as a medical economic index or an inflationary growth factor, that help offset increases in the cost of providing services – but no such offset exists for physicians.

Just as we didn’t get where we are overnight, we are unlikely to secure the massive, badly needed overhaul of the Medicare physician payment system tomorrow. The good news is that we can get there through single-minded determination and the collective efforts of our association, our counterparts in the Federation of Medicine, and the AMA.

Working together, we can place the Medicare payment system back on a sustainable path and ensure that our patients receive the quality care they deserve.