The Medical Group Management Association (MGMA) recently sent a letter to the119th Congress, demanding immediate action on Medicare physician payment after the 2.83% cut to the conversion factor went into effect on January 1, 2025. MGMA notes that negative impacts have already started as a result of the decrease in reimbursement, including uncertainty and financial shortfalls from Medicare and commercial contracts that are tied to Medicare rates and/or Medicaid reimbursement rates in states that use Medicare as a benchmark.
MGMA notes that “without retroactively addressing the cut and providing a modest update, medical groups will endure an untenable further reduction to physician reimbursement that will compound other financial pressures, such as staffing shortages and rising operational costs.” MGMA conducted a regulatory burden survey that found a whopping 87% of medical group practices believe reimbursement is not keeping up with inflation and that it is likely to impact current and future Medicare patient access.
The letter also cites MGMA data that says physician practices saw total operating cost per FTE physician increase by 63% from 2013 to 2022 while the Medicare conversion factor increased by 1.7% during that same period. A vast majority of medical groups (92%) also reported increased operating costs in 2024. MGMA notes that while stopping the current cut is of utmost importance, a permanent reform is necessary to the Medicare payment system.
In the letter, MGMA is not only asking Congress to retroactively address the cut to the Medicare conversion factor, but is also calling for a positive inflationary update to 2025 Medicare reimbursement rates and action on other important issues, including prior authorization reform, extending the Advanced Alternative Payment Model (APM) incentive payment for 2025, and further extending the 1.0 work Geographic Practice Cost Index (GPCI) floor and telehealth policies that are set to expire at the end of March 2025. MGMA Notes that the extension to the 1.0 work GPCI floor through at least the end of 2025 is critically important to “avoid needless additional payment reductions and the associated negative repercussions for medical groups in primarily rural areas impacted by the floor.”
MGMA also referenced its support for the Strengthening Medicare for Patients and Providers Act (H.R. 2474) introduced in the 118th Congress, which would provide an annual Medicare physician payment update tied to inflation, as measured by the MEI, and for the Provider Reimbursement Stability Act (H.R. 6371 in the 118th Congress), which would increase the triggering threshold from $20 million to $53 million (while adding an update to keep pace with inflation) and institute new utilization review requirements to reflect better the reality of providers using certain services compared to CMS’ estimates.