10 notes on physician pay cuts

Medicare pay cuts are making it difficult for many smaller, independent physician practices to meet margins. 

Here are 10 notes on physician pay cuts:

1. In March, Congress released a $460 billion spending package that halves 2024's 3.4% Medicare pay cut for physicians to approximately 1.7%. 

2. The cut, which is not retroactive, comes on top of last year's 2% Medicare physician pay reduction. 

3. Physicians were disappointed by Congress' move, with many saying more needed to be done to protect physician pay. The American Medical Association said in a blog post that the cost of running a practice is becoming unsustainable for many physicians as they deal with the effects of the COVID-19 pandemic, inflation, staff shortages and burnout.

4. The original pay cut, released in CMS' 2024 Physician Fee Schedule Final Rule Nov. 2, cut overall physician pay by 1.25% and updated the Medicare conversion factor to $32.74. 

5. Some physicians are facing additional pay cuts from the cost-performance category of the merit-based incentive payment system. It could reduce Medicare payments by up to 9%, according to a report from the American Medical Association.

5. When Medicare released its proposal to cut physician pay in July, physicians expressed concerns to Becker's about the effect the cuts would have on the industry. 

"This is a slap in the face to physicians," Sri Sundaram, MD, cardiologist at South Denver Cardiology, told Becker's in July. "There is already a physician shortage in the United States. This is easily gonna make this worse. Why would anyone want to go into medicine knowing they're gonna make decreased pay, despite having to work long hours and place their own personal health in jeopardy?"

6. In March, the Medicare Payment Advisory Commission released a report to Congress recommending a roughly 3% year-over-year pay increase for physicians. The report estimates physicians would receive 3% higher Medicare payments the year following the update. 

7. Medicare physician payment has declined 26% since 2001 without factoring inflation and the finalized pay cut for 2024. 

8. Adjusted for inflation in practice costs, Medicare physician payment declined 22 percent from 2001 to 2022.

9. Additionally, because commercial payers typically base their reimbursement rates on Medicare rates, their physician payments have also declined over this period.

10. The cost to run a practice increased by 47% from 2001 to 2023, according to the American Medical Association. 

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