FMA Joins 133 Organizations in Calling for Higher Medicare Payment Updates
By Jarrod Fowler, MHA, FMA Director of Healthcare Policy and Innovation | Mar. 23, 2023

The Medicare Payment Advisory Commission (MedPAC), a body that advises Congress on Medicare payment issues, recently called for providing a 1.45% Medicare payment update for physicians in 2024. This amount is equal to half of the Medicare Economic Index (MEI), a measure of practice cost inflation.

The FMA believes that this recommended payment update is completely inadequate, and we have joined with our partners in medicine  in asking Congress to provide physicians with annual payment updates equal to the full MEI in perpetuity. As our joint letter to U.S. House and Senate leadership states, “This inflation-based update is the principal legislative solution to the ongoing problems plaguing the Medicare Physician Fee Schedule (MFS).” Collectively, organizations cosigning the letter represent approximately 900,000 physicians nationwide and across nearly every specialty.

The letter highlights the need for action to address Medicare physician fees, as Medicare physician pay effectively declined 26% from 2001 to 2023 after adjusting for inflation in terms of practice costs. The letter goes on to state, “Medical practices across the country are experiencing unprecedented financial pressures stemming from higher staffing needs, rent, liability insurance premiums, and other practice costs due to record-setting rates of inflation, the ongoing COVID-19 recovery, and significant administrative burden. At the same time, physician practices are seeing their payments eroded year-after-year due to a combination of budget neutrality adjustments and Medicare sequestration.”

This, in turn, is driving physician burnout and potential retirements. Furthermore, future Medicare payments are not expected to keep pace with inflation at any point in the future. That is, the real value of Medicare physician payments will continue to fall indefinitely, contributing to a completely unsustainable payment system.

This challenge is also unique to physicians. Other Medicare-participating entities, such as hospitals and skilled nursing facilities, automatically receive an annual inflation-based update. While those updates may be inadequate as well, physician payment updates are uniquely low by comparison.

This is just the most recent attempt by the FMA and our partners in medicine to encourage Congress to take on Medicare payment reform and create a more sustainable payment program. Access to care for vulnerable seniors and the future of medical practice are at stake.