Medicare plays a crucial role in providing comprehensive health care coverage for 1 in 6 Americans, many of whom have complex medical needs and long-term disabilities.
However, many Americans may not be aware that as of Jan. 1 Medicare physician payments were reduced by 3.4%. This as the Medicare Economic Index estimates a 4.6% increase in the cost of running a medical practice in 2024.
Physicians nationwide are sounding the alarm, calling on congressional lawmakers to swiftly reverse these cuts. Physician practices are already grappling with a 2% payment reduction in 2023 at a time of national inflation. The latest cuts on top of that will be devastating for the program and seniors.
As president of the California Medical Association, I witness firsthand the challenges physicians face. These substantial payment cuts are compounded by an already broken physician payment system. And I understand why many physicians are forced to stop seeing Medicare patients: It boils down to reimbursement rates that fall far below the cost to provide care.
For those in private practice, sustaining operations becomes impossible. After years of enduring losses for doctors and attempting to make ends meet, they are giving notice that they can no longer accept Medicare patients.
Congress has the power to fix this by passing recently introduced bipartisan legislation, the “Preserving Seniors’ Access to Physicians Act of 2023.” This legislation will stabilize physician practices and protect patient access to care. Another crucial bill, the “Strengthening Medicare for Patients and Physicians Act,” proposes an annual Medicare inflation adjustment.
We urge Congress to pass these bills to preserve Medicare and avoid worsening our physician-shortage crisis. Nearly 9 million Californians already live in areas lacking sufficient access to primary care doctors, and the state is projected to have a shortage of 32,699 physicians by 2030.
The combination of declining reimbursement rates and rapidly escalating costs is poised to drive more doctors out of the profession, precisely when we need more of them. We surveyed California physicians and found that nearly half of those who responded said they plan to retire early.
The impact is devastating for senior patients with complex medical needs, triggering a frantic search for replacement care. This upheaval often results in medical delays, transition oversights, and patients having to travel farther for essential health care services.
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This issue has been simmering for years. When adjusted for inflation, Medicare physician payment rates have fallen 26% since 2001, while practice costs have risen by 47%. Both inpatient and outpatient hospital payment rates have kept pace with inflation, increasing by 60% over the past two decades. Physicians are the only health care providers who don’t receive an annual inflation adjustment. It doesn’t make sense.
Ironically, failure to fully fund Medicare exacerbates a system of escalating health care costs and alters the delivery of health care to patients. When payment rates fail to cover the cost of care, physicians are compelled to seek hospital employment and private equity arrangements, contributing to increased consolidation and higher health care costs.
We must sound the alarm when denied the tools to care for our patients. Congressional action is overdue, and we implore our elected representatives to heed this urgent call to preserve Medicare.
Dr. Tanya Spirtos is the president of the California Medical Association. She is an obstetrician practicing in Palo Alto.
