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HomeBusiness of MedicineProposed Medicare Bill Would Raise Docs' Pay With Inflation

Proposed Medicare Bill Would Raise Docs’ Pay With Inflation

Doctors’ groups are lining up to support new federal legislation to permanently tie Medicare physician payment updates to inflation.

Introduced by four physician US House representatives, HR 2474 would link Medicare fee schedule updates to the Medicare Economic Index, a measure of inflation related to physicians’ practice costs and wages.

That’s a long-sought goal of the American Medical Association, which is leading 120 state medical societies and medical specialty groups in championing the bill.

The legislation is essential to enabling physician practices to better absorb payment distributions triggered by budget neutrality rules, performance adjustments, and periods of high inflation, the groups wrote in a joint letter sent this week to the bill’s sponsors. The sponsors say they hope the legislation will improve access to care, as low reimbursements cause some physicians to limit their number of Medicare patients.

Physicians groups for years have urged federal lawmakers to scrap short-term fixes staving off Medicare pay cuts in favor of permanent reforms. Unlike nearly all other Medicare clinicians including hospitals, physicians’ Medicare payment updates aren’t currently tied to inflation.

Adjusted for inflation, Medicare payments to physicians have declined 26% between 2001 and 2023, including a 2% payment reduction in 2023, according to the AMA. Small and rural physician practices have been disproportionately affected by these reductions, as have doctors treating low-income or uninsured patients, the AMA said.

Last month, an influential federal advisory panel recommended permanently tying Medicare physician pay increases to inflation. Clinicians’ cost of providing services, measured by the Medicare Economic Index, rose by 2.6% in 2021 and are estimated to have risen 4.7% in 2022, significantly more than in recent years, the Medicare Payment Advisory Commission said.

Barbara Feder Ostrov is editorial director, business of medicine for Medscape/WebMD.

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