Physician payment reform re-enters the spotlight

By Jarrod Fowler, MHA, FMA Director of Health Care Policy and Innovation

The recent release of a white paper by U.S. Senate Finance Committee ranking member Mike Crapo (R-Idaho) and Chair Ron Wyden (D-Oregon) on May 17 signifies a significant step towards addressing budget neutrality and the Medicare Physician Fee Schedule’s diminishing value. Both senators articulated in a press release their willingness to tackle these challenges, with Sen. Wyden stating, “The way Medicare pays doctors for their work has not kept up with the times, and if it’s not working for doctors, it’s not working for the patients they help.”

The white paper doesn’t advocate for any specific reform measures but acknowledges the prevailing issue of physician remuneration failing to keep pace with inflation. It highlights the consensus among influential bodies such as MedPAC and the Medicare Trustees, who have underscored the urgency of rectifying this trend. Furthermore, the paper delineates various potential approaches to mitigate the problem, emphasizing the Committee's commitment to fiscal responsibility while ensuring fair compensation for physicians.

Key insights outlined in the Committee's white paper include the disparate treatment of physicians compared to other healthcare providers and facilities in terms of inflationary adjustments. The paper also points out that physicians have witnessed a substantial decline in Medicare reimbursements over the past two decades, and that the Medicare fee schedule can fluctuate dramatically from year to year.

Moreover, the white paper evaluates the assumptions underpinning budget neutrality and its implications on fee schedule adjustments. It acknowledges the unintended consequences, wherein certain services may receive inflated reimbursements at the expense of others, leading to across-the-board payment reductions for all physicians. Additionally, the white paper highlights concerns about the efficacy of the Merit-based Incentive Payment System (MIPS) in accurately measuring quality improvement among physicians.

While the white paper and accompanying Senate Finance Committee press release signify a positive development, it is imperative to recognize that they do not constitute a legislative proposal or guarantee imminent reform. However, they serve to remind lawmakers that the current Medicare Physician Fee Schedule is unsustainable and unfair to physicians and patients. Heightened awareness increases the likelihood of meaningful congressional action on this issue.