HomeHealth Care NewsCongress Agrees to Smaller Cut in Medicare Payments to Doctors

Congress Agrees to Smaller Cut in Medicare Payments to Doctors

The Centers for Medicare and Medicaid Services (CMS) cut payments to physicians two percent on January 1, but the reductions would have been deeper if Congress had not intervened.

CMS had proposed a phased reduction of 4.5 percent in payments to specialists, in addition to the 2 percent cut in physicians’ fees. Physician groups lobbied heavily to block or delay the larger cuts, citing the harm to providers and their patients in a letter to congressional leaders signed by medical associations in all 50 states and the District of Columbia.

“Burnout, stress, workload, and the cumulative impact of COVID-19 are leading one in five physicians to consider leaving their current practice within two years,” states the letter. “Payment cuts will only accelerate this unsustainable trend and undoubtedly lead to Medicare patients struggling to access health care services.”

The 2 percent reduction Congress agreed upon in the 4,000-page government spending package approved in December will rise to 3.5 percent in 2024. Adjusting for inflation, physician pay declined 22 percent from 2001 to 2021, the physicians’ letter states.

Physician Shortage

The fee cuts could reduce Medicare patients’ access to care, says health economist Devon Herrick, Ph.D., editor of the Goodman Institute Health Blog.

“There is already a shortage of physicians which is expected to grow worse in the coming years as Baby Boomers retire and qualify for Medicare,” said Herrick. “Some of those retiring Boomers will be doctors, who will stop treating patients and become patients themselves. The risk isn’t just doctors declining to accept Medicare patients, it is doctors reducing the number of new Medicare patients they accept or shortening appointments to squeeze in more patients.”

Medicare Spending Growth

In 2021, Medicare benefit payments totaled $829 billion, ups from $541 billion in 2011, according to the Kaiser Family Foundation. Funding comes from general revenue, payroll taxes, and premiums paid by beneficiaries. Spending growth is projected to be 5.4 percent between 2020 and 2030, in line with private health insurance. However, the Part A hospitalization trust fund is projected to be depleted by 2028.

The physician fee cuts could have the unintended consequence of increasing Medicare spending, says Herrick.

“Medicare needs reform but there are areas besides doctors’ fees that could be cut,” said Herrick. “Hospitals are the biggest cost driver—where the most Medicare funds are spent. Cutting physician fees could also have the opposite effect from saving money if physicians sell their practices to hospitals, which can charge higher fees for the same services.”

AnneMarie Schieber (amschieber@heartland.org) is the managing editor of Health Care News.

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AnneMarie Schieber
AnneMarie Schieber
AnneMarie Schieber is a research fellow at The Heartland Institute and managing editor of Health Care News, Heartland's monthly newspaper for health care reform.


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