New bipartisan bill aims to tie doc pay to inflation amid industry concerns

A new bipartisan House bill seeks to tie physician payment rates to inflation as doctor groups have implored lawmakers to overhaul the federal pay process. 

The Strengthening Medicare for Patients and Providers Act (PDF), introduced Thursday, aims to address concerns amid the industry that Medicare payments have not kept pace with financial challenges such as inflation.

Doctor groups have sought in recent years to persuade Congress to make changes to the Physician Fee Schedule to make the payment rule more favorable.

“I am deeply concerned about the impact the outdated Medicare physician payment rate is having on health care access for my constituents,” said Rep. Raul Ruiz, M.D., D-California, one of the bill’s lead sponsors and a doctor himself. “That is why I am announcing legislation that will move us away from a system where every year seniors’ access to care is threatened due to uncertainty over potential cuts.”

Data compiled by the American Medical Association showed that after adjusting for inflation in practice costs, Medicare payments to physicians declined 26% from 2001 through 2023. 

If the legislation becomes law, it would transition to a single conversion factor equal to the percentage increase in the Medicare Economic Index, which is the impact of inflation on physician office costs and wage levels. 

Concerns over the level of doctor pay have been brewing since the onset of the pandemic. 

Lawmakers referenced the recent March 2023 report from the Medicare Trustees that said Congress needs to step in to bolster physician payments. Another recent report from the Medicare Payment Advisory Commission recommended linking payments to the Medicare Economic Index for the 2024 coverage year. 

Some physician groups have lauded the introduction of the bill. 

“Medical practices are in no way immune to record inflation, staffing shortages and across the board cost increases,” said Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association, in a statement. “This legislation would allow Medicare to more accurately reflect the impact of the broader economy on practices’ financial stability.”

This is the latest effort by physician groups to lobby Congress to update the physician payment system. In 2022, several groups sought congressional intervention to forestall a 4.4% cut to doctor payments for this year. 

An end-of-year spending package decided to instead install a 2% cut to payments for 2023 and bump it to 3.25% in 2024.