Health plans and providers alike are disgruntled with a new report (PDF) to Congress released by the Medicare Payment Advisory Commission (MedPAC) Friday.
The American Medical Association (AMA) and the Medical Group Management Association (MGMA) said the recommendations it gives for physician payments are flawed, while America's Health Insurance Plans (AHIP) defended Medicare Advantage (MA).
"On the heels of Congress allowing a 1.69% cut to Medicare physician reimbursement to stand for the remainder of 2024, today's MedPAC recommendation to provide a 50% inflationary update for physician servics in 2025 is woefully inadequate," said Anders Gilberg, senior vice president of government affairs for the MGMA, in a statement. "I am mystified why MedPAC even bothers to make an annual recommendation while it ignores the signficant Medicare cuts to physicians in 2024 and recent years."
AMA President Jesse Ehrenfeld, M.D., praised the commission's opinion to tie physician payments to the Medicare Economic Index but said its current proposal is lacking.
"MedPAC’s decision recognizes that physician pay is lagging far behind the cost of practicing medicine," said Ehrenfeld in a statement. "Yet, an update tied to 50% of MEI—as MedPAC recommended—will cause physician payment to fall even further behind increases in the cost of providing care."
The AMA has wanted Congress to pass legislation requires the MEI to better reflect inflation, a contrast from the current environment where rates have continued to fall and providers are dealing with rising costs across the board, particularly after the COVID-19 pandemic.
MedPAC's recommendation calls for updating the base payment rate "by the amount specified in current law plus 50% of the projected increase in the MEI." It also wants to establish safety-net add-on payments under the physician fee schedule for services delivered to low-income Medicare members.
"Based on [the Centers for Medicare & Medicaid Services’ (CMS')] MEI projections at the time of this publication, the recommended update for 2025 would be equivalent to 1.3% above current law," the report added. "Our recommendation would be a permanent update that would be built into subsequent years’ payment rates, in contrast to the temporary updates specified in current law for 2021 through 2024, which have each increased payment rates for one year only and then expired."
The Biden administration cut payments to physicians by 1.25% compared to 2023, totaling a 3.34% decrease to the Medicare Physician Fee Schedule, used to calculate Medicare payouts to docs. In the latest spending bill passed by Congress, lawmakers chipped away at this by giving a payment increase of 1.68%, alongside another increase from the end of 2023, for 2.93%, though that is still less than the initial decrease from the final rule.
AHIP CEO Mike Tuffin took issue with MA estimates in the proposal.
A majority of MedPAC members are calling for urgent reform because members lack quality information when choosing plans, Medicare is paying more for MA beneficiaries than fee-for-service counterparts, MA members have more limited networks and encounter stricter utilization management practices, there is limited oversight of supplemental benefits offered, MA organizations are becoming more vertically integrated and members that remain in traditional Medicare may end up being the most high-risk members.
The commission has called for fixing coding intensity, improving encounter data, replacing the quality bonus program and establishing more fair benchmarks, the report says.
"These estimates double down on speculative assumptions about MA and overlook basic facts about who MA serves and the value the program provides," said Tuffin in a statement. "At a time when more than 33 million MA beneficiaries are counting on stability in their costs and benefits, policymakers should seek to strengthen and build on the value of the program—not undermine it."
AHIP counters (PDF) that MA enrollment data show the program enrolls people with greater healthcare needs and that MedPAC's analysis doesn't even include the right metrics to adequately assess the situation.
Further, the association predicts CMS' new risk adjustment model will reduce payments far more than MedPAC believes and that MedPAC ignores studies showing MA plans outperform traditional Medicare in quality of care and clinical outcomes. Lastly, AHIP stresses that MA plans inherently offer more value.
MA benchmark payments decreased by 0.2%, CMS revealed in January, though the feds argued payments to MA plans would ultimately increase by 3.7% in 2025, a $16 billion increase over 2024.