Medicare Payment Cuts: Updates & Information


As of March 9th  CMS has updated its website to reflect the new Medicare Physician Payment Schedule conversion factor. This is a result of the Consolidated Appropriation Act, which starting March 9, included an additional 1.68% update to the 2024 conversion factor that offset a portion of the 3.37% cut that went into effect on January 1, 2024. CMS has now established the new conversion factor of $33.2875 for dates of service 3/9/24 through 12/31/24. The can be found here:  Physician Fee Schedule | CMS 



As Congress prepares to pass legislation that reverses only half of the 3.37% Medicare physician payment cut implemented on January 1, 2024, the ACCMA and CMA are exasperated that for the fourth straight year physicians will face a payment cut. While the cut is 1.68%, coupled with medical inflation, physicians will experience a devastating 6% cut in 2024. Adjusted for inflation, physicians have experienced a 30% decline in payment since 2001, while other Medicare providers received 60% increases during the same time period. According to a CMA physician survey, two-thirds of physicians said Medicare payments do not cover their costs to provide care, with the result that nearly half are planning to retire early, and 70% are limiting the number of Medicare patients they can treat. In many California communities, no primary care physicians can accept new Medicare patients. According to a recent Definitive Health care study, 117,000 physicians nationwide left the workforce in 2021. Because patients cannot access physicians, wait times in California emergency departments average eight hours.

Words from ACCMA Physicians

"To say that COVID 19 was a burden is a gross understatement of the effects it has had on physicians. These paycuts are a huge slap in the face...Physicians work quietly in the background with no voice to be heard regarding the burdens we face often with no breaks, no increase in pay for the extra time we spend and great sacrifices on our family and our own health."

"Staff wages are increasing even more in order to retain good employees able to help us deliver care in this increasingly complex environment. This 2.5% pay cut will force us to reevaluate our relationship with Medicare and potentially to close our clinic to new Medicare patients."

"We have severe staffing shortages throughout all of our medical departments.  In my specialty as a child psychiatrist we have been unable to find a single psychiatrist to fill our two open slots for over a year despite the growing child mental health crisis...Medicare physician payment cuts during a time of economic challenges and severe inflation is going to further threaten our fragile and overstretched health systems."

"The government is unfortunately providing disincentives for physicians offices to accept publicly insured patients, who often are in great need of care and face more negative social determinants of health."

The Continued Fight: Advocating for Long-Term Payment Reform

Diverting the Medicare physician payment system away from its current unsustainable path and steering it instead toward physician practice sustainability will protect patient access to quality, evidence-based care while easing administrative burdens.

The American Medical Association (AMA) and multiple state and national medical societies – including the California Medical Association – have outlined a practical, commonsense approach to reforming Medicare physician reimbursement based on the principles of simplicity, relevance, alignment and predictability.

The need for change is clear. Taking inflation in practice costs into account, Medicare physician payment plunged 20% from 2001 to 2021. Medicare spending on physician services per enrollee retreated by 1% between 2010 and 2020, even as spending per enrollee for other parts of Medicare jumped by between 3.6% and 42.1%.

With inflation soaring to 40-year highs this year, statutory payment cuts looming, and many physician practices still dealing with pandemic-related financial issues, the current proposal from the Centers for Medicare and Medicaid Services (CMS) undermine the long-term sustainability of physician practices while threatening patient access to physicians participating in Medicare.

Leading the charge to reform Medicare physician payment is a core element of the AMA’s Recovery Plan for America’s Physicians, along with fixing prior authorization, supporting telehealth, reducing physician burnout and stopping scope of practice creep.

Physicians deserve payment models that recognize and invest in their contributions in providing high-value care to patients, while generating cost savings across all parts of Medicare and the broader health care system. In practical terms, this means directly rewarding the value of care that physicians offer to patients, as opposed to administrative tasks such as data entry that are often irrelevant to the service being provided.

Advancing value-based care also means encouraging innovation with practices and systems with an emphasis on continuous improvement, boosting the overall quality of care provided to the full spectrum of patient populations, including higher-risk and higher-cost groups. Ideally, a variety of payment models and incentives tailored to the distinct needs of different specialties and practice settings should be in place, along with a financially viable fee-for-service model.

And because the need to embed racial justice and advance equity across all aspects of medicine has never been greater, payment model innovations should be risk-adjusted and reflect the ongoing contributions of physicians to dismantle health disparities. Physicians who address social drivers of care need support as they provide care to historically marginalized, higher risk, and harder-to-reach patient populations. This support should extend to practices of all sizes and in all locations.

One of the biggest problems under the current payment system is the fact that other Medicare providers benefit from built-in updates, such as a medical economic index or an inflationary growth factor, that help offset increases in the cost of providing services – but no such offset exists for physicians.

Just as we didn’t get where we are overnight, we are unlikely to secure the massive, badly needed overhaul of the Medicare physician payment system tomorrow. The good news is that we can get there through single-minded determination and the collective efforts of our association, our counterparts in the Federation of Medicine, and the AMA.

Working together, we can place the Medicare payment system back on a sustainable path and ensure that our patients receive the quality care they deserve.