by Jack Resneck Jr, MD, President, American Medical Association

Two decades of stagnant physician payment rates in the face of rising practice costs, as well as proliferating administrative burdens, have put the Medicare program on an unsustainable path that threatens patient access to quality care. The American Medical Association (AMA) and multiple state and national medical societies – including the Colorado Medical Society – have outlined a practical, commonsense approach to reform based on the principles of simplicity, relevance, alignment and predictability.

The need for change is clear. Taking practice cost inflation into account, Medicare physician payment rates plunged 20 percent from 2001 to 2021. In the last decade, as spending per enrollee for other parts of Medicare jumped by 3.6 percent to 42.1 percent, spending on physician services per enrollee retreated by 1 percent. With inflation soaring to 40-year highs this year, statutory payment cuts looming, and many physician practices still dealing with pandemic-related financial issues, next year’s proposed cuts from the Centers for Medicare and Medicaid Services (federal CMS) undermine the long-term sustainability of physician practices while threatening patient access to physicians participating in Medicare.

Leading the charge to reform Medicare physician payment is a core element of the AMA’s Recovery Plan for America’s Physicians, along with fixing prior authorization, supporting telehealth, reducing physician burnout and stopping scope of practice creep. Physicians put their lives on the line responding to the COVID-19 pandemic and holding together a health care system stretched far too thin. It’s time our nation supports doctors and removes obstacles that interfere with what drew us all to medicine in the first place – caring for patients.

First, physicians need predictable, automatic, positive payment updates tied to practice costs – just like hospitals, skilled nursing facilities, and others already have in place. Annual payment rate adjustments should be tied to a measure of inflation, such as the medical economic index. We also must eliminate or replace the budget neutrality rules that penalize physicians for changes beyond their control, while offering no credit for cost savings that physician-led quality improvements have generated in other parts of the system, such as reduced hospitalizations.

Rather than layering on burdensome reporting requirements for measures that seldom feel relevant, physicians also deserve access to timely, actionable data, and incentives tailored to the distinct characteristics of different specialties and practice settings. While maintaining a financially viable fee-for-service model, we also need a diversity of voluntary alternatives that invest in practice transformation. Alternative payment models designed by physicians can remove barriers to the innovation required to address the multiple chronic disease epidemics our nation faces.

Payment reform must also be undertaken with a lens on health equity. Physicians need support as they care for historically marginalized and minoritized populations, address upstream and social determinants of health, and combat discriminatory practices in health care delivery. Quality and value measures should be risk-adjusted and reflect the ongoing contributions of physicians to dismantle health disparities. Ensuring that payment reform and innovations equip physicians to reduce inequities, rather than penalizing that work, will improve our health care system and the health of our nation.

Just as we didn’t get where we are overnight, we are unlikely to secure the massive, badly needed overhaul of the Medicare physician payment system in a day. The good news is that we are laying the groundwork for reform, and we can get there through single-minded determination and the collective efforts of physicians, the AMA, and our counterparts in the Federation like the Colorado Medical Society.

Working together, we can place the Medicare payment system back on a sustainable path and ensure that our patients continue to receive the quality care they deserve.


Categories: Communications, Colorado Medicine, Final Word, Resources, Initiatives, AMA