The California Medical Association (CMA) and the American Medical Association (AMA) federation of national specialty societies and state medical associations sent a letter urging Congressional leadership to advance five key bills to reform the Medicare fee schedule.

As the letter states, the current Medicare physician payment system “is increasingly unsustainable and the necessary policy reforms can no longer be delayed without severe repercussions for patient access and quality of care. The foundational component of strengthening the current payment system is refining the Medicare Physician Fee Schedule (MPFS) to accurately reflect the fiscal and clinical realities of medical practice today.”

Medicare Economic Index (MEI) Inflation Update

The Problem: The Centers for Medicare and Medicaid Services (CMS) projects that the MEI practice expense for 2024 and 2025 will increase by 4.6% and 3.6%, respectively. Against this backdrop, physician payment rates were reduced by 3.37% in early 2024 and only mitigated for the remainder of year; and CMS released a proposed rule in July that would result in an additional 2.8% payment cut for 2025. Adjusting for inflation, Medicare physician payment has declined by 29% since 2001. The Medicare Trustees warned that the failure of Medicare to provide physician payments that keep pace with rising cost of practicing medicine could cause significant access to care issues for patients relying on the program.

The Solution: Passing the bipartisan H.R. 2474, the “Strengthening Medicare for Patients and Providers Act,” (Ruiz, D-CA/Bera, D-CA) would provide a permanent annual physician payment inflation update tied to the MEI and help stabilize physician practices.

Budget Neutrality Reform

The Problem: When payment for certain services are increased within the MPFS, current law requires that they be implemented in a budget-neutral manner, meaning that other services must be reduced. Sometimes the Centers for Medicare and Medicaid Services (CMS) has overestimated the utilization of these new services which has caused unnecessary reductions in payment. Frequent and large payment redistributions caused by budget neutrality adjustments erode physician pay and lead to compounding financial losses.

The Solution: Passing H.R. 6371, the “Provider Reimbursement Stability Act,” would mandate that CMS implement a two-year look-back period that allows CMS to correct inaccurate utilization predictions and make adjustments to the future MPFS conversion factor. CMA is also urging an amendment that exempts new benefits, services, and technologies from the budget neutrality law.

Merit-Based Incentive Payment System (MIPS) Reporting Reform

The Problem: The current reporting requirements of the MIPS program are clinically irrelevant and place an undue administrative burden on physicians, particularly for small and rural practices who are disproportionately penalized.

The Solution: The AMA Federation is proposing legislation that freezes performance thresholds for 3 years to allow physicians to fully recover from the pandemic and the Change Healthcare cyberattack; sets bonuses as a percent of annual updates consistent with the hospital program; holds CMS accountable to provide performance feedback to physicians; enhances measurement accuracy and clinical relevance; and reduces penalties that disproportionately harm practices that are small, rural, and care for minority communities.  

Alternative Payment Model (APM) Reform

The Problem: Beginning next year, current APM bonus payment will expire and the 50% revenue threshold that physicians in value-based care models must meet to qualify for the bonuses will jump to a nearly impossible-to-reach 75% threshold.

The Solution: Passing S. 3503/H.R. 5013, the “Value in Health Care (VALUE) Act,” would extend the original 5% APM incentive payments and freeze the 50% revenue threshold for an additional two years.