Dear Speaker Pelosi, Majority Leader Schumer, Leader McConnell, and Leader McCarthy:
The American Medical Association (AMA) and undersigned national specialty and state medical societies representing the vast majority of physicians practicing in the United States continue to be deeply alarmed about the mounting financial instability of the Medicare physician payment system.
This instability is being driven by a confluence of fiscal uncertainties physician practices face related to statutory payment cuts, perennial lack of inflationary updates, significant administrative barriers, and the cumulative impact of the pandemic. The Medicare payment system remains on an unsustainable path threatening beneficiaries’ access to physicians.
According to an AMA analysis of Medicare Trustees data, Medicare physician payment has been reduced 20% adjusted for inflation from 2001–2021. The Medicare physician payment system lacks an adequate annual physician payment update, unlike those that apply to other Medicare provider payments. Physicians are the only Medicare provider not receiving an inflationary update in 2023. In fact, a continuing statutory freeze in annual Medicare physician payments is scheduled to last until 2026, when updates resume at a rate of 0.25% per year indefinitely, well below inflation rates.
The discrepancy between what it costs to run a physician practice and actual payment combined with the administrative and financial burden of participating in Medicare is incentivizing market consolidation. The physician community stands ready to work with Congress to develop long-term solutions to the systemic problems with the Medicare physician payment system and preserve patient access. We appreciate the action late last year that Congress took to delay a “perfect storm” of Medicare payment cuts that, if enacted, would have severely impeded patient access to care. Unfortunately, these delayed cuts, and some new ones, will take effect in 2023.
Before the end of the year, we strongly urge Congress to:
- Provide relief from the scheduled -4.42 percent budget neutrality cut in Medicare physician fee schedule payments.
- End the statutory annual freeze and provide a Medicare Economic Index (MEI) update for the coming year.
- Extend the 5 percent Advanced Alternative Payment Model (AAPM) participation incentive and halt the impossible-to-meet revenue threshold increase for five years to encourage more physicians to transition from fee-for-service into APMs.
- Waive the 4 percent PAYGO sequester triggered by passage of the American Rescue Plan Act.
We appreciate your consideration and look forward to working with you and your colleagues to end the destructive cycle of annual Medicare cuts and to establish a permanent Medicare payment system that improves and preserves patient access to physician care.
Sincerely,
American Medical Association
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