But is that a ray of sunshine now emerging from the clouds—a glimmer of hope on the horizon? Perhaps. A new bill has just emerged this week from the U.S. House of Representatives’ Committee on Energy and Commerce that, if ultimately passed by Congress, would tie Medicare reimbursement for clinicians to the rate of inflation and, thereby, presumably, end the downward spiral in Medicare payments for years to come.
Medicare Payment Plan
The above-referenced committee passed its section of the federal budget reconciliation bill on a 30-24 party-line vote. The legislation would add $9 billion in new spending to the Medicare Physician Fee Schedule (PFS) by way of an inflation-based update to the conversion factor. According to the current language of the bill, the conversion factor will be updated by 75% of the Medicare Economic Index (MEI) in 2026 and updated by 10% of MEI every year thereafter. The legislation now advances to the House Committee on the Budget to add the Energy and Commerce Committee section in with sections advanced by other committees into one bill for a full House vote. House Speaker Mike Johnson (R-LA) indicated the floor vote will be prior to Memorial Day. Upon passage, the legislation would move to the U.S. Senate for consideration.
The American Medical Association (AMA) weighed in by offering its strong support for the proposal now making its way through Congress, noting that the bill “would adjust Medicare physician payment to rise with the rate of practice-cost inflation.” AMA Executive Vice President and CEO James L. Madara, MD stated that the legislation “provides the first Medicare physician payment update that is permanently built into baseline Medicare rates since the passage of the Medicare and CHIP Reauthorization Act (MACRA) in 2015.”
None Too Soon
According to a letter sent to House Energy and Commerce Committee Chair Brett Guthrie (R-Ala.) and Ranking Member Frank Pallone (D-N.J.) by Dr. Madara, “Physician practices have faced a 33% loss in purchasing power since 2001, severely straining their sustainability.” This loss in purchasing power has had a direct impact on the ability of some physicians to maintain their own independence. One major medical organization noted that decades of falling Medicare physician payment have coincided with a substantial decrease in the sustainability of independent physician practice. According to numbers provided by the AMA, while 61% of physicians were practice owners in 2001, less than half had ownership stakes in their practices by 2016, and physician employees have outnumbered physician practice owners since 2018.
So, it would seem that the Medicare reimbursement provision recently voted out of committee might just be what the doctor ordered to turn around the prospects of providers from a financial and overall practice perspective. But the bill doesn’t just deal with Medicare reimbursement.
Addressing Medicaid
The bill now making its way through the U.S. House also contains provisions that would reform the Medicaid program. These provisions include:
- Federal work requirements
- A moratorium on state provider taxes
- Reduction in certain federal medical assistance percentages (FMAP)
- Increased cost-sharing for adults with incomes between 100% and 138% of the federal poverty level.
The AMA warned that the Medicaid proposals in the House Energy and Commerce Committee’s budget-reconciliation text would add administrative complexity and lead to “coverage interruptions that especially affect Americans with low incomes and those living in rural areas.” The AMA’s Dr. Madara went on to write the following in his letter to the committee:
These provisions create additional administrative burdens for patients and could result in more patients being denied or losing coverage under Medicaid or CHIP for failing to comply with administrative requirements, despite meeting all substantive criteria for eligibility.
The hope is that with the input of so many stakeholders—both in government and the healthcare sector—the bill currently being considered will be honed and ultimately improved before final passage, to the benefit of the medical community, Medicare and Medicaid patients, and the American taxpayer.