Hospitals, doctors bash Medicare proposals

The federal government has released proposed payments for doctors and some hospital services for 2025, and the plans were panned by clinicians and healthcare advocates.

Bruce A. Scott, MD, president of the American Medical Association, criticized Medicare's proposed payments for doctors in 2025. Hospitals are also unhappy with Medicare payments plans.

The Centers for Medicare & Medicaid Services released proposals for outpatient care and physician payments Wednesday. Healthcare advocates are pushing the Biden administration and Congress to do more. If past years are an indication, the final payments may be a bit bigger than the initial proposals.

Here’s a quick rundown on the proposals.

Hospital outpatient services

The CMS has proposed a 2.6% increase in outpatient services for 2025. Earlier this year, the agency also proposed a 2.6% bump in payments for inpatient care.

Ashley Thompson, senior vice president for public policy analysis and development for the American Hospital Association, said the CMS proposal represents “an inadequate update to hospital payments.”

“This proposed increase for outpatient hospital services of only 2.6% comes despite the fact that many hospitals across the country continue to operate on negative or very thin margins that make providing care and investing in their workforce very challenging,” Thompson said in a statement. “Hospitals’ and health systems’ ability to continue caring for patients and providing essential services for their communities may be in jeopardy, and we urge CMS to provide additional support in the final rule.”

Soumi Saha, senior vice president of government affairs for Premier, said the proposed outpatient payments “will continue to widen the chasm between Medicare reimbursement and hospitals’ actual operational costs.”

“It is no secret that the financial pressures hospitals are facing are being compounded by inflation, stubborn labor shortages and an aging demographic,” Saha said in a statement. “Payment policies should empower hospitals to deliver exceptional, patient-centric care, but the proposed update falls short on this objective.”

Saha said CMS should gather more information to gain hospitals’ actual costs, including costs for labor.

Hospitals have long complained that Medicare payments haven’t kept pace with their rising costs, or covered the true costs of the care that they provide.

Chip Kahn, president and CEO of the Federation of American Hospitals, denounced the CMS proposed payments for doctors and hospitals and called on Congress to take action.

“Doctors and hospitals are the backbone of patient care, but without adequate resources, patients suffer. At a time of high inflation and workforce challenges, it’s reckless to impose real cuts on physicians and for hospital rates to fall further below the cost of providing care for seniors," Kahn said in a statement.

Physician payments

Doctors are fuming over another proposed cut in Medicare’s physician fee schedule for 2025.

For 2025, the CMS has proposed a 2.8% cut in the conversion factor, the formula used to set payments for physicians.

Bruce A. Scott, MD, president of the American Medical Association, points out that it’s the fifth consecutive year Medicare has planned a reduction in payments for doctors. “The death by a thousand cuts continues,” Scott said in a statement.

Scott also contrasts that proposal with the projected 3.6% increase in the Medicare Economic Index, essentially the estimated cost of inflation.

“Facing this widening gap between what Medicare pays physicians and the cost of delivering quality care to patients, physicians are urging Congress to pass a reform package that would permanently strengthen Medicare,” Scott said in a statement.

Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association, said the Medicare proposal has “dangerous implications for beneficiary access to care.”

“A 2.8% reduction to the conversion factor would be alarming in the best circumstances, but to propose doing so at a time when 92% of medical groups report increased operating costs and are otherwise struggling to remain financially viable is critically short-sighted,” Gilberg said in a statement.

“Medicare physician reimbursement is on a dire trajectory and these ongoing cuts continue to undermine the ability of medical practices to keep their doors open and function effectively — the need for comprehensive reform is paramount,” he added.

Steven P. Furr, MD, president of the American Academy of Family Physicians, said the proposed reduction in payments "once again highlights the urgent need for congressional action to ensure that physician payments keep up with the costs of running a practice."

The AMA, MGMA, and AAFP are calling on Congress to approve legislation to pass legislation to ensure Medicare payments are tied to increases in the Medicare Economic Index.

“It's evident that Congress must solve this problem,” Scott said in a statement.