Senators working on legislation to reform how Medicare pays physicians

A bipartisan group of senators announced Friday that it is working on new legislation for “long-term reforms” to physician payments under Medicare and other program changes.

In a joint release, U.S. Sens. Catherine Cortez Masto, D-Nevada; Marsha Blackburn, R-Tennessee; John Barrasso, R-Wyoming; Debbie Stabenow, D-Michigan; Mark Warner, D-Virginia; and Minority Whip John Thune, R-South Dakota said they have formed a “Medicare payment reform working group.”

The lawmakers plan to proposes changes to the physician fee schedule and “make necessary updates” to 2015’s Medicare Access and CHIP Reauthorization Act (MACRA), they said, and “in the coming weeks” will be seeking feedback from stakeholders.

“As the health care system has evolved since the inception of the Medicare program, the physician payment system has failed to keep pace with the actual cost of care and the improvements in new services and technologies,” they wrote in the group statement released by Masto’s office Friday. “… Despite efforts like [MACRA], which made significant strides towards a value-based payment system, further action is needed to address reimbursement challenges and shift toward a system that aligns payment incentives with patient outcomes.”

The lawmakers said their working group will be working toward legislative changes that “ensure financial stability for providers, improve patient outcomes, promote access to quality care, and incentivize the utilization of emerging health care technology.”

The announcement comes after months of frequent messaging and lobbying from provider groups like the American Medical Association (AMA) for Congress to address a 3.4% Medicare payment rate cut that went into effect on Jan. 1. The Centers for Medicare & Medicaid Services (CMS) said the budget-neutral adjustment was needed to offset increases in payment for other specific types of services.

The AMA, however, said that the pay cut is problematic as “the cost of keeping independent practices open continues to soar.” More broadly, the group has also highlighted an inflation-adjusted 30% decline in Medicare reimbursement rates since 2001 and a payment freeze that won't end until 2026.

"This bipartisan approach is desperately needed to fix the flawed and outdated Medicare payment system," AMA President Jesse Ehrenfeld, M.D., said in an emailed statement. "For years, the [AMA] has been fighting for reform. Yet, this year again, physicians face a cut while other providers enjoy an annual automatic increase. We are eager to join this effort, bringing with us solid recommendations and a deep conviction that the current path is unsustainable."

The AMA and others had asked lawmakers to include relief for the payment cuts in recent stopgap funding bills, but to no success. They also threw their support behind a bipartisan House bill introduced in December, the Preserving Seniors’ Access to Physicians Act of 2023 (H.R. 6683), that would rewrite parts of the Social Security Act to cancel the cut.  

Last March, the Medicare Payment Advisory Commission recommended for the first time a physician payment update tied to the Medicare Economic Index. In a more recent meeting on draft guidance, the group's experts landed on a minor recommended pay increase of 1.3% for 2025.