Final federal spending bills allow half of 3.37% Medicare cut to remain in effect

March 18, 2024

On March 9, 2024, after an intense lobbying effort by the California Medical Association (CMA), American Medical Association (AMA) and others in organized medicine, President Biden signed a package of government funding bills to avert a partial government shutdown. Unfortunately, the legislation included a directive to the Centers for Medicare and Medicaid Services (CMS) to only stop half of the 3.37% Medicare physician payment cut mandated by the physician fee schedule. Therefore, the total cut for the rest of 2024 will be 1.68% below 2023 payment levels, rather than the full 3.37% cut.    

Coupled with medical inflation, that means physicians will experience a devastating 6% real cut in 2024. Adjusted for inflation, physicians have experienced a 30% decline in payment since 2001, while other Medicare providers received 60% increases during the same time.

CMA issued a statement, expressing anger and frustration with Congress’ failure to stop the entire Medicare physician payment cut.

“Make no mistake: These difficult cuts will further jeopardize physician practices, forcing more physicians into consolidation with larger, more expensive health care systems or private equity, into limiting the number of Medicare patients or into earlier retirement,” CMA president Tanya W. Spirtos, M.D., said in the statement. “While CMA appreciates the support from many lawmakers in Congress, this legislation will continue the staggering ‘death by a thousand cuts’ that Congress has allowed for the last two decades.” 

Physicians can no longer weather these cuts and CMA is urging Congress to immediately address Medicare’s woefully inadequate physician reimbursement rates and the growing access to care crisis it is causing.

Other Health Care Issues in Spending Bill

There were additional health care issues in the legislation – mainly extensions of expiring health programs. The bill provides the following:

  • Extends the Alternative Payment Model (APM) bonus at 1.88%, down from the original 5%. However, Congress agreed to freeze the APM threshold at 50% which is a positive action. 
  • Extends funding for community health centers, with a $270 million increase.
  • Extends the National Health Service Corps that funds scholarships for physicians practicing in underserved areas.
  • Extends the Teaching Health Center Graduate Medical Education program for primary care physicians.
  • Extends the work Geographic Practice Cost Index floor, which helps rural areas but does not impact California.
  • Extends funding for the Food and Drug Administration at current levels.
  • Increases funding for the Veterans Administration to treat toxic exposures. 
  • Requires Medicaid plans to cover medication-assisted treatment for opioid use disorders and provides Medicaid options to allow treatment of substance use disorders at institutions. 
  • Stops the Disproportionate Share Hospital payment cuts for hospitals with heavy Medicaid patient caseloads.

CMA appreciates the CMA physician leadership and all California physicians who contacted and worked with their Members of Congress urging them to stop the cuts. It was an amazing effort across the state. 

CMA will continue to fight to reform this destructive cycle of cuts and enact a more stable, less burdensome, and appropriate Medicare payment system that protects physician practices and preserves patient access to care.

Physicians are the only Medicare providers without an automatic annual inflation update to keep pace with rising costs and there is widespread bipartisan support in Congress for an annual inflation update for physicians.

Congress Starts the 2024 Process to Enact Long-Term Medicare Payment Reform

In response to CMA and AMA urging Congress to overhaul the payment system, Congressional leadership has the process to enact long-term Medicare physician payment reform. 

A bipartisan group of U.S. Senators recently announced the formation of a Medicare payment reform working group to explore policy solutions to reform and stabilize the Medicare physician payment system and ensure sustained access to quality care for patients. Additionally, the Senate Finance Committee is expected to take up the issue of long-term Medicare physician payment reforms this year. They are aiming to pass legislation before the end of 2024.

The House committees with health care jurisdiction have also said they will start to hold hearings this spring to discuss long-term Medicare physician payment reforms. 

CMA and AMA are urging Congress to enact an annual inflation update for physicians tied to the Medicare economic index, reform the fee schedule budget neutrality rules that require some services to be cut if others are increased, overhaul and reduce the administrative burdens in the clinically irrelevant quality reporting programs, and provide a greater variety of alternative payment model options for more physicians to participate in value-based care.


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