Q&A: Why the future of physician payments is looking brighter

Physicians could soon see their payments tied to inflation, thanks to a recent recommendation and introduction of a bill that would make it happen for the first time.

The change would likely be a welcome one as physicians have faced payment cuts, strained resources and a burned out workforce for some time. The Medicare Payment Advisory Commission (MedPAC) released a recommendation in March that would tie physician payments to the Medicare Economic Index (MEI) and adjust payments to the inflation rate. In a time with historically high inflation, the move could improve the financial situation for physicians.

However, the recommendation would only tie payments to 50% of the MEI, leading healthcare industry groups’ concerns that physician payments might actually fall further behind. Despite this, the recommendation is still in the right direction, according to Claire Ernst, director of government affairs at the Medical Group Management Association (MGMA), who spoke with Health Exec about the impact of this potential payment model change.

MedPAC’s recommendation came before the Centers for Medicare and Medicaid Services (CMS) finalized its 2024 Medicare Advantage payment rule with a payment rate increase of 3.32% in 2024––higher than originally proposed. In addition, Congress introduced a bill, HR 2474, that would tie physicians payments to the MEI and effectively institute an annual inflation update. The legislation has ignited hopes that the payment change could come to fruition.

Check out the rest of the conversation with Ernst and Health Exec:

Health Exec: What are the top takeaways from MedPAC’s physician payment recommendations?

Claire Ernst, MGMA: One of the most significant takeaways from the March 2023 MedPAC report is that the commissioners finally recommended a positive payment update for physicians. It would be a permanent update built into subsequent years’ payment rates. For years, MedPAC has recommended a 0% update, despite the looming payment cuts. This is a welcome change.

HE: Why is tying payments to 50% of the MEI not enough? How does that change current payment rates?

CE: 50% of the MEI is certainly a welcomed recommendation, considering MedPAC has historically recommended a 0% update. Half of the MEI at the time the report was published would equate to a payment update of 1.45% in 2024. While this positive update is appreciated and critical, medical groups are likely facing reimbursement cuts next year, despite it.

HE: What is likely to come out of the recommendations in policy? Are MedPAC recommendations always followed?

CE: Congress is not required to follow MedPAC’s recommendations, and there are many cases in which they do not. However, MGMA along with other leading organizations, have built momentum in Congress to address this issue and get a positive update based on the MEI. HR 2474 in the House was recently introduced which would go a step further and provide a positive update based on the full MEI. MGMA supports this legislation and will urge for its passage as a first step to meaningfully address physician payment reform.