Lame Duck: Fix Medicare’s Physician Reimbursement System
Another “lame duck” political season is upon us, in which the 118th Congress plays out its last five weeks.
This is the point in the legislative cycle where some try to shoehorn their pet bill into any available vehicle, while others are doing everything they can to stave off the passage of a bill they dread. But, in fact, usually nothing happens in a lame duck session except absolutely necessary omnibus funding bills or tax extenders, because legislators are more than ready to move on from current frustrations and try again next January.
This lame duck, however, there is a critical need to pass a fix to Medicare’s physician reimbursement system, since an automatic cut in payments to physicians takes effect January 1st.
Now, doctors’ salaries earn higher salaries than most workers, so you might not have much sympathy if they have to take a pay cut. But it’s Medicare patients, and the Medicare system itself, that face disaster if the automatic cuts aren’t addressed. There isn’t time in the lame duck session to reform Medicare—that should be a priority of the next Congress. But Congress can act now to forestall the automatic cuts that will jeopardize Medicare patients.
Medicare payment cuts to physicians threaten to worsen our nation’s growing physician shortage. Without enough doctors, our healthcare framework will be compromised and fuel arguments for a full government takeover under the banner of “Medicare for All.”
Doctors across the country are still recoiling from the 2024 round of Medicare physician pay cuts. Meanwhile, the costs of running a practice, like the cost of most things these days, continue to increase. As a result, many physician practices—particularly smaller, independent ones operating in rural and other underserved areas— face insurmountable financial challenges that make it more and more difficult to keep their doors open.
Problems within the Medicare physician payment system are not new. However, they have gotten notably worse in recent years with demographic shifts as the Baby Boomers retire, lower labor force participation, rising costs and high inflation. Policymakers must get to work to address longstanding issues that threaten to destabilize Medicare.
Unlike all other Medicare provider types, including hospitals, hospices, and skilled nursing centers, physicians are the only ones who do not receive annual, inflation-based Medicare payment updates. As a result of this unlevel playing field among providers, physicians actually experienced a 29% reduction in Medicare physician payments from 2001 to 2024, according to the American Medical Association. The impact of falling reimbursements, increasing medical costs, and rising inflation are only compounded by increasing government mandates, raising costs, and forcing physicians to spend more time on paperwork and less on patients.
As a result, many independent physicians and smaller practices feel they have little choice but to limit the number of Medicare patients they serve, or to stop seeing Medicare patients altogether.
Long term, Congress needs to pass long-term reform of the Medicare Physician Fee System (MPFS) to help stabilize the system. By tying physician reimbursement to inflation, as is the case with all other types of providers, lawmakers can address and correct current flaws in the Medicare system that undermine physician practices, raise costs, and reduce access.
But right now, in the next five weeks, Congress can begin the process by preventing a further automatic cut in MPFS payments on January 1st.
Medicare is a flawed program, and we have lots of ideas on how to fix the system. But if we do nothing, pressure will build to replace it with Medicare for All or a similar socialized health care scheme. A growing number of seniors will need care in the future as Americans live longer and the Baby Boomer Generation continues to age. Lawmakers need to protect physician practices, and increase patient access, and help keep our entire healthcare system strong. Instead of ceding the issue to Big Government progressives who call for socialized medicine, our leaders in Washington must fix the broken MPFS to strengthen Medicare for years to come.
Tom Giovanetti is the president of the Institute for Policy Innovation (IPI), a conservative, free-market think tank based in Dallas.
