RWJBarnabas Health executive says lawmakers should enact a permanent, annual inflation-based update to Medicare physician payments.
Congress should intervene to block a 2.8% physician payment cut in the 2025 Medicare Physician Fee Schedule, the CMO of a New Jersey-based health system says.
On July 10, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule for the 2025 Physician Fee Schedule that included a reduction in the conversion factor for physician reimbursement from $33.29 this year to $32.36 next year. The conversion factor is the number of dollars assigned to a relative value unit (RVU), which is a key element of physician payment by Medicare.
CMS issued the Final Rule for the 2025 Physician Fee Schedule last week, including the 2.8% physician payment cut.
Congress should adopt a proposal from the American Medical Association to enact a permanent, annual inflation-based update to Medicare physician payments, says Andy Anderson, MD, MBA, executive vice president and chief medical and quality officer at RWJBarnabas Health.
"An annual inflation-based update would provide predictability, and this increased certainty would enable more financial resources to invest into both physician practices and into the recruitment and retention of physicians who are in short supply," he says.
If the physician payment cut is allowed to stand, it will have a severe negative impact on health systems, hospitals, and physician practices, according to Anderson.
"Cutting physician reimbursement will put added financial strain on the healthcare industry and limit the ability to recruit and retain the best and the brightest physicians and staff," he says. "Pay cuts will increase physician burnout, put strain on physician practices, and impede the ability for healthcare organizations to shift to value-based care and focus on health and prevention."
This physician payment cut comes despite CMS estimating a 3.5% increase in the Medicare Economic Index, which is the government’s measure to gauge increases in the costs of physicians delivering care to Medicare patients. The 2.8% pay cut is unsupportable given the estimated increase in care costs, Anderson explains.
"A 2.8% pay cut is not sustainable given the ongoing increases in the costs of healthcare," he says.
The pay cut will prompt healthcare organizations to make hard decisions, according to Anderson.
"Hospitals, health systems, and physician practices will have less resources available and will be challenged to provide needed services and access," he says. "Physician practices will have a harder time retaining staff, will have to cut services, and will be unable to purchase equipment and supplies."
Christopher Cheney is the CMO editor at HealthLeaders.
KEY TAKEAWAYS
The Centers for Medicare & Medicaid Services has enacted a reduction in the conversion factor for physician reimbursement from $33.29 this year to $32.36 next year.
Cutting physician reimbursement will hamper efforts to recruit and retain physicians and staff, the CMO of RWJBarnabas Health says.
The cost of physicians delivering care to Medicare patients is expected to increase 3.5%, which makes the 2.8% payment cut unsustainable, the CMO says.