The United States Congress passed their year-end omnibus legislation last week, which includes a Medicare physician payment cut of 2% in 2023. Physicians had been staring down cuts as much as 8.5%, but a nationwide advocacy campaign by the American Medical Association, California Medical Association (CMA) and more than 150 organizations representing over 1 million physicians helped stave off many of the reductions. However, physicians who care for Medicare patients and CMA are very concerned about how the cut will impact patient access to care.

“Congress’ plan to cut Medicare demonstrates a lack of understanding of the access barriers already plaguing our health care system,” says CMA President Donaldo Hernandez, M.D. “Physicians are frustrated and demoralized because, at a moment when the entire health care system is stressed to its limits, both parties in Congress have decided to ‘thank’ physicians working on the frontlines with cuts that will have devastating impacts.”

This 2% cut, following two decades of flat payment rates with no inflationary updates, will cause irreparable harm to Medicare and our underserved communities. When adjusted for inflation, Medicare physician payments have dropped by 22% from 2001 to 2021. Physicians simply cannot afford to operate under the current payment system.

“Physicians and all health care providers are exhausted as California hospitals are at capacity and patients are experiencing long waits at overwhelmed emergency departments and urgent care centers, and even longer waits to see a primary care physician,” says Dr. Hernandez. “After three years of a difficult pandemic and 20 years of no Medicare inflation updates, many physicians are leaving Medicare and many others are choosing to retire early. As physicians, we want to continue to care for the families in our communities, but we cannot do that when Medicare no longer covers our costs to provide care and pay staff.”

CMA is urging Congress to return in January and immediately get to work on a long-term overhaul of the Medicare payment system that includes an annual automatic inflation update, addresses budget neutrality, and provides more alternative payment model (APM) opportunities. 

The omnibus budget deal also extends the Advanced APM incentive payment at a reduced rate of 3.5% for one year and delays for one year a scheduled increase in patient and revenue requirements to qualify for incentives.

Health Care Wins in the Omnibus Legislation

The omnibus legislation extends for two years all telehealth flexibilities provided during the COVID-19 pandemic and includes a massive funding package to improve access to mental health, maternal health and substance use disorder services. Additionally, the budget deal provides funding for 200 new graduate medical education residency positions, half of which will be dedicated to training more psychiatrists to meet the nation’s growing mental health crisis. It also addresses future pandemic preparedness and aggressively invests in improving medical supply chains and combating drug shortages. At CMA’s request, the legislation requires more contracts for urgent domestic manufacturing of antibiotics, which are currently in short supply.

Finally, the Biden Administration released two rules in December to streamline prior authorization processes for certain payors. CMA had been aggressively pushing for a legislative fix, which unanimously passed out of the U.S. House of Representatives in September and was hoped to be included in the year end omnibus package. 

For more details of the federal budget deal as it relates to health care, see CMA’s brief summary.