Flawed Medicare physician payment system threatens patient access

Access to primary and specialized care is critical to improving patient outcomes and keeping communities healthy, safe and productive. That access is particularly important for older Americans and disabled individuals on Medicare, who often face unique barriers to care and live with higher rates of chronic health conditions requiring specialized treatments and services.

Unfortunately, our current Medicare physician payment system is unsustainable and threatens to intensify an already notable health care workforce shortage, undermining access to care for those patients who need it most. Congress and the Centers for Medicare and Medicaid Services (CMS) must work together to reform this system and fulfill the promise of access to high-quality, evidence-based care.

This year alone, Medicare reimbursements to physicians have been cut by 2.75 percent so far, and an additional cut triggered by congressional spending rules is scheduled to go into effect on Jan. 1, 2023. On top of these cuts, CMS is proposing additional cuts in the 2023 Medicare Physician Fee Schedule. While troubling, these cuts are just the latest in a series contributing to the destabilization of the Medicare physician payment system.

When taking inflation into account, Medicare physician payments have declined by a staggering 20 percent from 2001 to 2021, while the cost of operating a medical practice has gone up by 39 percent. Particularly for a field like rheumatology, which is one of the lowest-compensated medical specialties, these chronic underpayments create major administrative, financial, and logistical burdens that make it increasingly difficult to effectively serve patients living with rheumatic disease.

Altogether, this patient population includes an estimated 54 million adults across the country—or 1 in 4 adults nationwide—many of whom depend on the expertise of their rheumatologist to effectively manage their disease. By 2040, the number of Americans diagnosed with rheumatic disease is estimated to grow to 78.4 million, according to a report by the American College of Rheumatology.

Many of these patients rely on Medicare to access the consultations, treatments, and services they need to live full, healthy, and productive lives. Policies that reduce Medicare reimbursements to physicians and specialists like rheumatologists will have a negative downstream impact on patient access and quality of care. The increased financial instability that comes with these cuts will hit smaller, independent practices serving rural and underserved communities the hardest.

Proposed Medicare cuts to physicians will exacerbate an already significant health care workforce shortage that is particularly acute in rheumatology. Today, there is roughly one rheumatologist for every 40,000 people nationwide, and a recent ACR workforce study found that the U.S. would need an additional 4,700 rheumatologists by 2030 just to keep up with growing demand. However, high rates of retirement in the field and a rapidly aging patient population are increasing the gap between patient need and provider availability—and additional cuts to physician services will only further contribute to this growing problem.

So too will policies within the Medicare Physician Fee Schedule that undervalue the services rheumatologists provide. According to MedPAC—an independent, non-partisan group that analyzes and provides policy advice for Medicare—evaluation and management (E/M) visits have historically been underpriced in the Medicare physician payment system relative to other services and procedures.

Unfortunately, these E/M visits make up the lion’s share of services provided by primary care clinicians and specialists like rheumatologists. By setting up a system that reviews reimbursement codes for these other procedures more often than E/M codes, the Medicare Physician Fee Schedule increases and perpetuates these compensation disparities that contribute to the financial instability of primary care physicians and specialties like rheumatology.

Now, as we transition out of the pandemic phase that damaged our health care system infrastructure and exacerbated the longstanding flawed physician payment system, we face a perfect storm that could sink many practices. Congress must act now by passing the Supporting Medicare Providers Act of 2022 (HR 8800), bipartisan legislation introduced by physician Reps. Ami Bera, MD (D-Calif.) and Larry Buschon, MD (R-Ind.) that would help prevent the cuts to physician services set for 2023.

Looking forward, Congress should work to end a statutory freeze on Medicare physician fee payments related to inflation and provide an inflation-based update for the coming year. Lawmakers urgently need to press CMS to reform the Medicare Physician Fee Schedule to ensure it fully recognizes the value of care physicians and specialists provide for patients and set new policies and reimbursement levels that reflect the true cost of providing such care effectively to patients.

These reforms are absolutely necessary for ensuring long-term stability for physicians and specialists like rheumatologists, while securing a strong medical workforce and protecting patient access to care. There is simply too much at stake for the health of millions for Congress not to address these issues.

Elizabeth Blair Solow, MD, MSCS is Chair of the Government Affairs Committee for the American College of Rheumatology.