Alarming Medicare survey results underscore need to reform physician payment system

September 07, 2022

Due to a confluence of statutory and budget neutrality payment cuts, lack of inflationary updates, significant administrative burdens and fiscal uncertainties physician practices are facing related to the pandemic, the Medicare payment system is on an unsustainable path.

Deeply alarmed about the growing financial instability of the Medicare physician payment system, the California Medical Association (CMA) recently surveyed physicians about the financial health of their practices and how Medicare payment rates are impacting access to care in their communities.

Since 2001, inflation has increased by 40%, yet physician Medicare payments have only increased by 7%. Today’s Medicare payments on average lag 40% behind the cost of providing care. While hospital and nursing home payments are indexed to inflation (and as a result have increased by 60% since 2001), the broken physician payment system has burdened physicians with an uphill fight just to stop statutory and budget neutrality payment cuts year after year.

According to the CMA survey results, 76% of physicians report that Medicare fee-for-service payments do not cover their costs to provide care, with 61% reporting average revenue losses between 11-50%. And, 13% of physicians even report average revenue losses over 50%.

These low payment rates are resulting in serious access to care issues for patients in California. Seventy-five percent of physicians report that their patients are experiencing challenges accessing both primary care and specialist physicians. Forty-one percent of physicians report they are considering closing their practices to new Medicare patients. And, 87% report that low Medicare reimbursement rates coupled with the high costs to practice in California are negatively affecting the ability to recruit and retain physicians in their communities. This is accelerating California’s worsening physician shortage and harming physicians’ ability to provide care to all patients, with 74% of physicians reporting the emergency rooms in their communities are busier because of physician shortages, while 82% of physicians say they are seeing patients with more complex medical conditions because care has been delayed due to reduced access to physicians.

CMA’s alarming survey results emphasize the need for Congress to take immediate action to reform the Medicare physician payment system and protect patients’ access to care.

View the full survey results.


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