Congress Fails to Stop Medicare Physician Payment Cut

December 22, 2022

Congress has reached an end-of-session agreement that results in a 2% cut in physician Medicare payment for 2023, and at least another 1.5% cut in 2024.   

This cut, which had been originally proposed at 4.5%, is on top of a system that does not provide any annual cost of living adjustments for physician payments. The Medicare physician payment system lacks an adequate annual physician payment update, unlike those that apply to other Medicare provider payments. From 2001 to 2021, Medicare physician pay fell 22% after adjusting for inflation in practice costs.  

The larger projected cuts included a 3% reduction caused by an expiring increase to the conversion factor and a 1.5% reduction caused by a budget neutrality provision. While some members of Congress are touting that they provided relief by reducing the size of the cut, it is still a cut. 

“The Medicare physician payment system is broken, and Congress needs to fix it,” said Will Nicholson, MD, MMA president. “We cannot have a system that provides no annual adjustments, where physicians are facing end-of-year cuts annually and expect that Medicare patients will continue to have needed access to care. This has to stop and we plan to work with Congress to do just that in 2023.” 

The MMA joined the AMA and all 50 state medical societies to send a letter on December 8 stressing the need to stop the entire cut. 

The MMA also sent a letter to Minnesota’s members of Congress on December 21 expressing disappointment in Congress’s failure to stop the cut. It also challenged the elected officials to commit in 2023 to fix the flawed Medicare payment system that results in annual payment cuts.  

The Medicare changes are part of a larger budget package that Congress is expected to act on before the end of the year. The package also included other reforms of note including: 

• Extending Medicare expanded coverage of telehealth through the end of 2024. Without this extension, telehealth would have reverted to pre-COVID coverage once the public health emergency ended, limited only to rural areas and requiring patients to be at a healthcare facility. 

• Several provisions to combat the opioid epidemic including $1.575 billion in state grants for prevention and removal of a DEA requirement for extra certification to prescribe buprenorphine. 

• Moving up the date to end COVID-related expanded Medicaid funding. As of April 1, 2023, increased Medicaid payments to states will end, as well ending a requirement to allow people to stay on Medicaid even if their incomes exceed the limits. This was scheduled to end on July 1, 2023.