The Medicare Payment Advisory Commission (MedPAC) released a new recommendation to tie physician payments to the Medicare Economic Index (MEI)––a move that would adjust payments to inflation.
However, the move has been already criticized by healthcare stakeholders for keeping payments too low. MedPAC is a 17-person, independent congressional agency created in 1997 to recommend Medicare policy to Congress.
The American Medical Association (AMA) was quick to support MedPAC’s recognition that the costs of practicing medicine have increased over the years, and the group voiced its content that MedPAC called for a physician payment update tied to the Medicare Economic Index (MEI). Recognizing that the current physician payment framework in adequate is a good first step, according to the AMA. However, MedPAC’s proposal to tie payments to 50% of the MEI is not enough.
“Having surveyed the healthcare landscape, MedPAC recognized that physician pay has not kept up with the cost of practicing medicine,” AMA President and CEO Jack Resneck, Jr., MD, said in a statement. “Yet, we feel strongly that an update tied to just 50% of MEI will cause physician payment to chronically fall even further behind increases in the cost of providing care. Congress should adopt a 2024 Medicare payment update that recognizes the full inflationary growth in healthcare costs.”
In particular, physicians are facing higher costs due to the COVID-19 pandemic, high inflation and the growing cost of running a practice. Plus, physicians effectively took a 2% Medicare payment cut for 2023.
The Medical Group Management Association (MGMA) also agreed that the update tied to the MEI was not enough as proposed by MedPAC.
“Today’s MedPAC report recommends Congress provide an inflationary update to the Medicare base payment rate for physician and other health professional services of 50[%] of the Medicare Economic Index (MEI), an estimated annual increase of 1.45% for 2024,” said Anders Gilberg, MGMA’s senior vice president of government affairs. “In the best of times such a nominal increase would not cover annual medical practice cost increases. In the current inflationary environment, it is grossly insufficient. Medical practices have been suffering from significant staffing shortages and cost increases across the board. An update of any amount less than the full MEI will not adequately remedy the negative impact of the broader economy on practices’ financial stability.”
The AMA also joined 134 other healthcare organizations in a letter to urge Congress to tie the payments to the full rate of the MEI rather than half the rate.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."