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AMA Presses Congress to Update Medicare Physician Payment System

Letter Urges Congress to include a stable annual payment rate

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March 17, 2022  – In a letter addressed to Congress and dated March 15, 2022, the American Medical Association urged Congress to update the Medicare Physician Payment System. The letter came in response to the recently released Medicare Payment Advisory Commission (MedPAC) report.

According to the AMA, the MedPAC report did not adequately reflect the systemic shortcoming of the existing Medicare physician payment system. The report recommends a continued free on the Medicare physician payment, but AMA believes this would reduce patients’ ability to access high-quality care. 

“Physicians have been enduring an increasing financial instability of the Medicare physician payment system due to a confluence of fiscal uncertainties related to the COVID-19 pandemic, statutory payment cuts, consistent lack of inflationary updates, and significant administrative barriers,” the letter stated.

AMA also stressed that MedPAC’s recommended freeze cannot be justified when looking at other plans and rates.

Medicare Physician Payment Lags Behind

As the chart below shows, Medicare physician pay has increased just 11% over the last 20 years. This is just 0.5% on average.

Chart 1

During that same timeframe, Medicare hospital updates totaled roughly 60% increase and Medicare skilled nursing facility updates totaled over 60%. 

With economy-wide inflation at 51% over this period, roughly 2.1% a year, Medicare physician pay does not go as far as it used to. In fact, adjusted for inflation in practice costs, Medicare physician pay declined 20 percent from 2001 to 2021.

Based on its analysis, AMA urged Congress to work with physicians and the community to develop solutions that will address the systemic problems with the Medicare physician payment system so consumers can still get access to quality care. 

To read the entire AMA letter, click here.

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