2024 AADA Legislative Conference: Overview of asks
What we're asking
Medicare Physician Payment Reform: Ensure Medicare stability for patients and physicians
Medicare physician payment has failed to keep up with inflation, threatening the viability of medical practices. The current payment structure has contributed to consolidation and increased hospital ownership of physician practices, which are more costly, reduce competition, and are less patient-centered. Annual cuts to Medicare payment jeopardize physicians’ ability to keep the doors open and care for patients in our communities.
Legislative ask
Take action to address the systemic issues within the Medicare physician payment system and safeguard physicians’ ability to provide patient access to care. We urge Congress to:
House:
Cosponsor the Strengthening Medicare for Patients and Providers Act (H.R. 2474), which would provide for an annual inflation update equal to the Medicare Economic Index for Medicare physician payments.
Cosponsor the Provider Reimbursement Stability Act (H.R. 6371), which would revise budget neutrality policies that contribute to eroding Medicare physician payment.
Senate:
Cosponsor the Physician Fee Stabilization Act (S. 4935), which would increase the budget neutrality threshold to $53 million with an increase every five years to keep pace with the Medicare Economic Index.
Support legislation like the Strengthening Medicare for Patients and Providers Act (H.R. 2474), if introduced or brought to a vote.
Background and messaging for Hill Day visits
Message to Capitol Hill
As a dermatologist, I am deeply concerned that the Medicare Physician Fee Schedule fails to reimburse physician practices adequately and threatens access to care for patients in our community. Medicare payment for physicians is not linked to inflation, yet facilities like hospitals and skilled nursing facilities receive annual inflationary updates.
In 2025, a proposed 2.80% cut to Medicare physician payment threatens to decrease dermatological reimbursement. This is in addition to cuts to Medicare physician payments over the past several years. Despite record inflation and workforce shortages, CMS is proposing another payment cut that further threatens patient access.
Use this opportunity to personally demonstrate the value of care in the dermatologist’s office setting.
Example: Compare the cost of treating your patient with melanoma or another complex skin disease in your office as opposed to an outpatient hospital setting and explain how treating your patient in your office is also better for patient outcomes.
Personalize how lack of adequate payment impacts your ability to maintain high-quality staff and, specifically, jobs in your community.
Example: Remind them your practice contributes to the economy in their community and their constituents. Explain that other industries have the flexibility to change the pricing of their products to reflect rising costs and increase staff salaries, while physicians do not have that ability because the Medicare Physician Fee Schedule sets the rate of reimbursement. What other profession or business would be able to sustain operating under such a structure?
Since 2001, the cost of operating a medical practice has increased by 47%, while economy-wide inflation has risen 73%. During this time, Medicare hospital facility updates increased by roughly 70%, significantly outpacing physician reimbursement.
Adjusted for inflation in practice costs, Medicare physician reimbursement has declined 30% from 2001 to 2024.
This structure threatens the viability of medical practices, especially smaller, independent, physician-owned practices. The current payment structure has contributed to consolidation and increased hospital ownership of physician practices, which are more costly, reduce competition, and are less patient-centered.
Practices rely on reimbursement to cover a multitude of practice expenses including:
Staff salaries and benefits,
The cost of federal and state regulatory compliance,
The costs associated with insurance mandates, such as step therapy and prior authorization.
Year-over-year cuts to Medicare physician reimbursement jeopardize our ability to keep our doors open and care for patients in our communities. Fewer physicians in our communities means longer wait times for patients to receive care. When those patients do receive care, their only option may be clinical staff with less training.
Inflationary Impact
Ask
House of Representatives: Cosponsor the Strengthening Medicare for Patients and Providers Act (H.R. 2474), which would provide for an annual inflation update equal to the Medicare Economic Index (MEI) for Medicare physician payments.
Senate: Support similar legislation if introduced or brought to a vote.
Additional resources:
American Medical Association: Medicare Physician Payment Inflation Chart
This chart shows Medicare physician payment updates compared to inflation. It is a great resource that illustrates our ask. A similar chart is included in your welcome packet and in your leave-behind folders for Capitol Hill.
American Medical Association: Payment Updates Chart
This chart shows Medicare payment updates across various providers including hospitals, skilled nursing facilities, and physicians.
Budget Neutrality
Ask
House of Representatives: Cosponsor the Provider Reimbursement Stability Act (H.R. 6371), which would revise budget neutrality policies that contribute to eroding Medicare physician reimbursement. Specifically, H.R. 6371 would:
prevent erroneous utilization estimates from leading to inappropriate cuts
update direct inputs for practice expense relative value units every five years
increase the budget neutrality trigger from $20 million to $53 million; and
limit the drastic variances in conversion factor from year-to-year.
Senate: Cosponsor the Physician Fee Stabilization Act (S. 4935), which would increase the budget neutrality threshold to $53 million with an increase every five years to keep pace with the Medicare Economic Index (MEI).
In recent years, physicians have experienced significant payment cuts due to statutory budget neutrality requirements applied to the MPFS because CMS must offset payment increases to some services with reductions to other services. Current statute requires CMS to redistribute payments across all physician services when the agency projects net pricing changes above $20 million, a threshold established in 1992 that has not been updated to reflect 2024 dollars. Every year CMS makes changes to reimbursement to reflect changes in billing codes for a set of services, new services added to the MPFS, or recently collected data indicative that services may be undervalued or overvalued. It is not uncommon for CMS to overestimate utilization. However, once redistributions are made, CMS does not reconcile the error and the funding is not added back into the MPFS even when utilization is lower than expected. This results in a permanent reduction in Medicare physician payments across all services.
For 2025, CMS’s proposed conversion factor is $32.36, down from $33.29 for 2024, representing a decrease of approximately 2.80% from the 2024 conversion factor. The Medicare conversion factor is the key component in determining Medicare physician payments. These cuts are unacceptable, and Congress must act to avert significant reductions in Medicare reimbursement in 2025. Congress must replace or eliminate budget neutrality requirements to the physician fee schedule.
Additional resource:
American Medical Association: Budget Neutrality Primer
This is an in-depth policy explainer on budget neutrality in Medicare physician payment. Revising budget neutrality is one of our main asks and reading more will help in your meetings.
Additional resources and reading material on Medicare payment policy:
American Medical Association: Medicare Physician Payment Inflation Chart
This chart shows Medicare physician payment updates compared to inflation. It is a great resource that illustrates our ask. A similar chart is included in your welcome packet and in your leave-behind folders for Capitol Hill.
American Medical Association: Budget Neutrality Primer
This is an in-depth policy explainer on budget neutrality in Medicare physician payment. Revising budget neutrality is one of our main asks and reading more will help in your meetings.
American Medical Association: Merit-based Incentive Payment System (MIPs) Primer
This is an in-depth policy explainer on the Merit-based Incentive Payment System (MIPS). Congressional staff are very unlikely to deep-dive into MIPS so it is okay if you’re understanding of the program is rudimentary. We are providing this as a resource should you be interested.
American Medical Association: Payment Updates Chart
This chart shows Medicare payment updates across various providers including hospitals, skilled nursing facilities, and physicians.
Congressional Research Service: Medicare Overview
This briefing was prepared by the Congressional Research Service. It provides an overview of the structure of Medicare including spending, eligibility, enrollment, financing and more. Published May 21, 2020.
Congressional Research Service: Medicare Primer
This briefing was prepared by the Congressional Research Service. It provides an in-depth overview of Medicare. Published May 21, 2020.
