The Medicare Patient Access and Practice Stabilization Act would, if passed, boost physician pay by 4.7%, replacing Medicare’s planned 2.8% pay cut.
A bipartisan bill introduced in the House aims to provide much-needed relief for physicians by proposing a pay increase to replace scheduled Medicare reimbursement cuts set to take effect in 2025.
The Medicare Patient Access and Practice Stabilization Act would give a 4.7% payment update in 2025 and eliminate the 2.8% Medicare physician payment cut that is set for January 1.
The bill, sponsored by Reps. Greg Murphy, R-N.C., and Jimmy Panetta, D-Calif.,
is designed to address the growing financial pressures on providers, especially physicians, who have faced years of stagnating reimbursements despite rising operational costs.
The Industry POV
At the core of this bill is a provision that would raise physician reimbursement rates under Medicare. In addition, it would delay or entirely block the automatic Medicare payment cuts triggered by the "Sustainable Growth Rate" (SGR) formula, which was originally implemented to control Medicare spending, but has since been criticized for threatening to undercut providers' financial stability. The cuts are scheduled for 2025 unless Congress intervenes.
The American Medical Association has been urging Congress to take action, emphasizing that Medicare reimbursement for physician services, when adjusted for inflation, has steadily declined 29% since 2001.
Jason Marino, director of congressional affairs at the American Medical Association, said in a statement: “We are ruffling some feathers in Washington. Some of them want to just give us a little fix, maybe reduce the cut a little bit, but still give us some cut and want us to go away. And this is not the time to shrink away. This is a time to be fully engaged with the Hill, with Congress and really push this issue.”
MGMA' Senior Vice President of Government Affairs Anders Gilberg also commented:
"We urge Congress to quickly return from recess to pass this critical legislation, stopping the full 2.8% proposed cut to the Medicare physician conversion factor and providing a modest inflation update for 2025. These annual cuts represent an ever-present creeping decline that threatens the viability of our nation's medical groups. The fact that physicians must rely on Congress each year for a last-minute payment fix underscores just how broken the Medicare reimbursement system is. Moving forward, Congress must enact permanent, commonsense reforms that enable medical groups to keep their doors open and protect patients' access to care."
In July, CMS proposed a 2.8% reduction in the conversion factor for the 2025 Medicare Physician Fee Schedule final rule.
On top of this, CMS projects a 3.6% increase in provider expenses for 2025, and physicians would be faced with a 6.4% cut, unless Congress intervenes.
The CFO POV
Considering the bill’s uncertain path through Congress, CFOs will need to prepare for multiple scenarios. If the bill is passed, CFOs should assess how the increased reimbursements will impact their financial projections, especially in terms of cash flow and budget forecasting.
Increased physician compensation could improve recruitment efforts and reduce turnover costs, but it may also lead to higher operational expenses, which need to be balanced against other revenue streams.
If the bill fails to pass and Medicare cuts are enacted in 2025, CFOs will need to have contingency plans in place. They could consider renegotiating contracts with Medicare Advantage plans, exploring alternative revenue streams, or looking into cost-saving initiatives like technology adoption or more efficient resource allocation.
Additionally, CFOs should keep an eye on the political landscape, as changes in policy could prompt rapid shifts in reimbursement rates or regulatory guidelines.
Marie DeFreitas is the CFO editor for HealthLeaders.
KEY TAKEAWAYS
A bill introduced to the House last week would raise physician pay while blocking Medicare cuts.
Many groups, like the AMA and MGMA are advocating for the bill which would improve stagnating physician payments.
CFOs need to prepare for both scenarios and carefully strategize around the implications of his policy.