MedPAC recommends physician pay bump, but not enough for provider groups

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Dive Brief:

  • The group that advises Congress on Medicare policy is recommending updating base physician payment rates by 1.45% for 2024, according to its annual March report out Wednesday.
  • The Medicare Advisory Payment Commission, or MedPAC, did not make recommendations for ambulatory surgery center payment updates or for Medicare Advantage plans.
  • The commission did note concern with MA plan coding intensity, and said Medicare now spends more on MA enrollees than it would have spent had those enrollees remained in fee-for-service plans.

Dive Insight:

Last year, the commission didn’t recommend any payment increase for physicians under the Medicare program, irking groups like the American Medical Association that cited continued pandemic-related pressures.

Provider groups and others were upset with the increase amount this year, citing record inflation and heightened expenses.

“In the best of times such a nominal increase would not cover annual medical practice cost increases,” the Medical Group Management Association wrote in a statement. “In the current inflationary environment, it is grossly insufficient.”

The American Medical Association also pushed back, saying the payment update doesn’t fully reflect the impact of inflation in health care costs, and the boost will still “cause physician payment to chronically fall even further behind increases in the cost of providing care,”AMA President Jack Resneck said in a release. 

Commission members said on a Wednesday call with reporters that they remain cognizant of those pressures especially for clinicians in private practice, though inflation is affecting all parts of the economy.

MedPAC made other payment update recommendations for physicians, specifically those who serve a safety net function for Medicare patients.

Physicians who serve dual eligible patients often receive a lower net payment rate due to some state programs regarding Medicaid payment as payment in full at 80% of the Medicare fee schedule amount, and physicians in such states can’t collect the equivalent of cost sharing, MedPAC’s Executive Director Jim Mathews said on the call.

The commission recommended a 15% payment adjustment for services provided to low income Medicare beneficiaries by primary care physicians, and a 5% bump for services provided by other physicians to low income patients.

MedPAC did not make a recommendation on updating MA payments, even as the plans have seen rapid growth in recent years, and in 2022 covered 49% of the eligible Medicare population, Matthews said.

MedPAC estimated Medicare payments will be 106% of fee-for-service in 2023, even after accounting for coding adjustments, resulting in about $27 billion in excess payments to MA plans in 2023 alone, Matthews said.

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