Blue credit card next to stenoscope and calculator
By IHPL - January 1, 2024

The Centers for Medicare and Medicaid Services (CMS) determines how much doctors get paid for services when they treat patients with Medicare insurance using a price calculator called the Medicare Physician Fee Schedule (MPFS).1 These amounts are determined by how much work it takes a doctor to perform the services and the expenses for running the practice and covering malpractice. Payments are adjusted according to the geographic location of the patient, as costs can vary across the nation based on where someone lives. Every year, the physician fee schedule (MPFS) is updated with new rates going into effect every January. By federal law, the new rates must be published in the Federal Register by November of the preceding year.2

On November 2, 2023, CMS released the fee schedule starting January 1, 2024, which will result in an overall decrease of 1.25% to physician payments compared to rates from 2023.3 Last year, CMS cut physician payments by 2% from the year prior.4 While there are some improvements in rates for elements of primary care and mental health, health related social needs, and dental care for certain cancers, the overall payment CMS provides for doctors’ services will decrease again this January unless Congress acts to mitigate it. Unlike other areas in healthcare that CMS pays for like hospital care and skilled nursing facilities, physician fees are the only element that are not adjusted for inflation. Adjusted for inflation in practice costs, it has been estimated that Medicare payments to physicians have decreased by 26% from 2001 to 2023.5

While some people may think that doctors are wealthy and can afford to get a pay cut, the truth is that payments from CMS are used by physicians to run their practices, pay their employees, and keep their offices open so that they can continue to take care of patients. Doctors’ businesses are not unlike other shops that need to stay open in the face of rising inflation and labor costs. Furthermore, it is very expensive to pay for all the years of education required to become a doctor (typically four years of college plus four years of medical school); on average, a doctor graduates medical school with over $250,000 in total student loan debt.6 These financial stresses have contributed to physician burnout, especially post-pandemic.7

In order to save our physician workforce and keep the lights on in doctors’ offices so Medicare patients can continue to receive care, Medicare payments for physicians need to be adjusted for inflation. There is ongoing work in Congress to address this neglected issue, such as H.R. 2474, the Strengthening Medicare for Patients and Providers Act.8 Much work is still needed to preserve Medicare patients’ access to care.

Author Bio:

Sharon Lum, MD, MBA, FACS

Dr. Lum is Professor and Chair of the Department of Surgery for the School of Medicine. She is Vice Chair of the Legislative Committee for the American Society of Breast Surgeons and was a founding member of the American Society of Breast Surgeons Health Equity Advisory Group. Her research interests include quality measures and disparities in breast and other cancer outcomes and incorporation of patient reported outcomes in clinical decision-making for patients with breast diseases.