Practice managers demand ‘immediate action’ on physician Medicare pay cut

Practice managers are advocating the new Congress take “immediate action” to reverse the physician Medicare pay cut, which took effect on Jan. 1. 

The Medical Group Management Association made its demands in a letter to newly appointed leaders in the U.S. House and Senate sent Tuesday. Physician practices are already beginning to “feel the adverse effects” from the 2.83% cut to the conversion factor used to calculate payments. 

Commercial payers also tie their rates to Medicare, MGMA noted, and some states use the federal payment program as a benchmark for Medicaid. 

“Lawmakers are playing a dangerous game that will ultimately damage patients’ access to physicians who can no longer deal with the chaos caused by congressional inaction…,” the association, which represents over 15,000 medical group practices in radiology and other specialties, wrote Jan. 8. “Congress cannot wait until the March 14 federal government funding deadline—swift action is required.”

Legislators had reached a deal in December to partially blunt the cut, adding a 2.5% increase under the physician fee schedule. However, at the urging of President-elect Donald Trump and tech billionaire Elon Musk, Congress quashed the measure in favor of a slimmed down alternative. Lawmakers now have until mid-March to reach a new continuing resolution and continue funding the government. 

MGMA also asked legislators to revisit other measures in the original bill that didn’t reach the final version. These include a radiologist-supported measure to reform prior authorization in the Medicare Advantage program, along with extending the Advanced Alternative Payment Model incentive for 2025. Beyond this, the MGMA, ACR, American Medical Association and others are lobbying for permanent reform to the physician fee schedule. Physicians do not receive an annual inflationary update to payments, which has resulted in costs continuing to outpace Medicare reimbursement. 

About 87% of group practices surveyed said reimbursement failing to keep up with inflation could impact access to care for Medicare beneficiaries, a 2023 MGMA survey found. Physician practices saw total operating costs per full-time employee jump by 63% between 2013-2022, during a time when the conversion factor increased by 1.7%. About 92% of practices polled said operating costs increased last year, MGMA reported. 

“In the face of these serious financial tensions, another reduction to Medicare reimbursement is simply untenable—it is imperative to address the cut as quickly as possible,” the association wrote. “While stopping the current cut and providing a positive update to account for inflation in 2025 is of foremost importance, permanent reform to the Medicare payment system is needed to sustainably support medical groups and avoid these yearly threats to their financial viability.”

The Society of Nuclear Medicine and Molecular Imaging also voiced its opposition to the conversion factor cut on Wednesday. SNMMI noted that the final continuing resolution included a small 0.33% increased to CF, reducing the actual cut to about 2.5%. 

“Lawmakers emphasized this measure as a compromise to sustain the viability of medical practices serving the Medicare population while balancing fiscal constraints,” the society, which represents over 15,000 nuclear professionals, said Jan. 8. “Despite this small reprieve, many within the medical community view the adjustment as a temporary fix rather than a long-term solution to the systemic issues in Medicare payment structures. Sustained cuts to the MPFS will only impact physicians and patients more, as the cost of healthcare rises."