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MedPAC: No Medicare Payment Bump for Physicians

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The Medicare Payment Advisory Commission (MedPAC) voted unanimously to support a recommendation of no change to the physician fee schedule for fiscal year 2023 on Thursday, provoking immediate backlash from the American Medical Association (AMA) and other medical groups.

A combination of inflation plus lost revenue during the COVID-19 pandemic sparked concern. Under current law, there is no increase in physicians’ base payment rate in 2023.

In 2020, Medicare paid $64.8 billion to 1.3 million clinicians, reflecting an $8.7 billion drop from 2019. However, as the commission’s technical staff noted, clinicians have received “tens of billions of dollars” in pandemic relief funds from programs such as the Provider Relief Fund and the Paycheck Protection Program.

CMS also significantly increased Medicare payment rates for E&M office and outpatient visits in 2021. As a result, physicians’ overall compensation from 2019 to 2020 actually increased in spite of the pandemic.

Jim Matthews, PhD, of MedPAC, said the commission takes its mission to assess payment adequacy seriously and uses the best data available at the time, “we try to make a decision based on the cold facts.”

“With respect to physicians, when we look at the preponderance of our payment adequacy indicators on a purely objective basis, they do not present an immediate sense that there is a problem with the adequacy of Medicare payments in the aggregate,” Matthews continued. “The commission is not tone deaf to the environment, we completely understand, and are aware of and are utterly empathetic to what has gone on in the clinician community in dealing with the pandemic over the course of the last two years.”

“These decisions are not made lightly or on the fly,” and while stakeholders may take issue with the data that’s used or the eventual decisions the commission makes, “everything that we do is in the best interest of the Medicare program and its beneficiaries and the tax payers who fund the program.”

Medicare payments per beneficiary fell in 2020 but later rebounded, and the Medicare Economic Index (MEI) is forecast to increase 1.8% in 2023. But MedPAC’s technical staff noted that the number of available clinicians was stable and beneficiaries’ care experiences were comparable to individuals with private insurance.

“When we look at beneficiary utilization of services, the decline that we observed in 2020 was clearly a function of the pandemic in the spring of 2020, and by June utilization of services bounced back to almost pre-pandemic levels,” Matthews said.

As for physician participation, the “vast majority of physicians” continue to participate in the Medicare program and accept Medicare payments, and according to Matthews, this suggests that payments are in fact adequate to maintain access to care.

Finally, with regard to beneficiary access, MedPAC fields a survey each year and asks beneficiaries if they’ve gone without care, if they were able to get timely appointments, and whether or not they could find a physician if they needed one, Matthews said.

“We continue to find that Medicare beneficiaries report high levels of satisfaction with the care that they are able to obtain,” he said.

There continue to be access challenges for some beneficiaries, in finding primary care physicians more so than specialists, but the commission has work underway to address that long-standing problem, Matthews noted.

CMS is expected to announce its update to current payment rates this summer.

Physicians, Medical Groups Fired Up

In a press release, AMA president Gerald Harmon, MD, said the recommendation “imperils patient access to high-quality care as the costs to practice medicine continue to rise.”

After adjusting for inflation in practice costs, physician payment under Medicare fell 20% from 2001 to 2020, according to the AMA. Moreover, the gap between payment and the cost of running a practice has increased consolidation and caused physicians to flee rural and underserved areas, Harmon said.

One in five physicians are now considering leaving practicing within the next 2 years, given the burnout, stress, unmanageable workload, and fear of COVID-19 infection.

“In addition to being asked to do more with fewer resources each year, physicians continue to face significant clinical and financial disruptions during the COVID-19 pandemic,” Harmon said, recalling the $13.9 billion drop in Medicare physician fee schedule spending due to patients delaying care.

“MedPAC’s analysis of payment adequacy relies on trailing indicators and does not account for these canaries in the coal mine,” he added. “A stable, annual physician payment update is necessary to keep pace with rising inflation and innovation in physician practices and to ensure all Medicare patients continue to have access to the care they need when they need it.”

The Medical Group Management Association (MGMA) was similarly dismayed.

“Hard to conceive of a more misguided recommendation to Congress at a time when practices face massive staffing shortages and skyrocketing expenses,” tweeted Anders Gilberg, senior vice president of government affairs for MGMA.

Gilberg also referenced the 7% increase in consumer price index, in light of the “0% payment update for physicians in Medicare for 2023.”

MedPAC Commissioners Weigh In

Despite voicing support for the policy stance, some commissioners had reservations due to rising inflation and physicians’ waning morale.

Lynn Barr, MPH, of Caravan Health in Kansas City, Missouri, said healthcare leaders are witnessing an “extraordinary amount of trauma” among physicians.

“It has gone beyond burnout … We’re starting to see evidence of PTSD. So I worry a little bit about a slap in the face to the people that are really on the front lines,” she said. “I hope that Congress continues to intervene as necessary, until we can fix the overall macro issue of not being able to adjust to inflation.”

Lawrence Casalino, MD, PhD, of Weill Cornell Medical School in New York City, had “mixed feelings” about the payment update, or lack thereof, but weighed the issue carefully.

He noted that MedPAC traditionally defers to current law and only recommends changes “when the need for change is clear.” He said that based on the commission’s staff report, “it’s not clear that a change from the current law is necessary in 2023.”

That said, the physician fee updates prescribed under the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015, will remain flat for “quite a few years,” he added.

When inflation is stable that’s not a concern, but in an environment where inflation is “unpredictable and quite high,” it becomes an issue, particularly for physicians who need to hire and retain nurses and other staff. Without any boost in payment, staffing could become even more difficult, Casalino said.

  • Shannon Firth has been reporting on health policy as MedPage Today’s Washington correspondent since 2014. She is also a member of the site’s Enterprise & Investigative Reporting team. Follow

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