Medicare payment cuts looming
By Jarrod Fowler, MHA/FMA Director of Health Care Policy and Innovation |  Updated Oct. 19, 2022

As many of you know, an 8.42% cut to Medicare physician payment is poised to take effect in 2023, including a 4.2% budget neutrality cut and a 4% sequester triggered by the American Rescue Plan Act.

The impact of these cuts would be particularly severe in Florida, where an estimated 21.5% of the population is 65 and olderi, the age at which individuals typically become eligible for Medicare. By comparison, 14.1% of Texans and 15.6% of Californians are estimated to be in this age cohortii. In addition, between 2010 and 2030, close to 50% of Florida’s population growth is projected to be driven by seniors 65 and olderiii. Therefore, any cuts to Medicare physician payment will have an outsized impact on the Sunshine State.

The impact of these cuts will also extend beyond the Medicare Fee-For-Service program. Since commercial payment rates are generally a function of Medicare rates, any reduction in the value of Medicare payments will also likely spill over to the commercial rates paid to many physician practices. Thus, these cuts could substantially harm physician practices, irrespective of their dependence on Medicare as a payor.

These cuts illustrate that the Medicare payment system is deeply in need of systemic reformiv. Adjusted for inflation, the real value of Medicare physician payments declined 20% between 2001 and 2021v. And, even if all of the aforementioned cuts are averted, the current state of high inflation will further erode the real value of Medicare physician payments.

Preventing these cuts is a top priority for the FMA. Our advocacy team has been meeting with members of Congress, working with our allies to amplify our efforts, and keeping our members informed. Please join us in this effort contacting your members of Congress today. Simply use this link and submit the prewritten letter contained within.

i Kaiser Family Foundation State Health Facts, Population Distribution by Age (CPS)
ii Id
iiiFlorida: An Economic Overview, Florida Office of Economic and Demographic Research
ivAMA Characteristics of a Rational Medicare Payment System
v AMA letter to Congressional leadership, September 22, 2022