Physicians are dropping Medicare patients. Here's why

Medicare physician payment has effectively declined 26% since 2001 — and that is before inflation and the finalized pay cut for 2024 are factored in, according to the American Medical Association.

As the cost of practicing medicine increases and reimbursement declines, many physicians have considered how to cut costs. One way is to no longer accept Medicare patients. 

"For the last two years, relative to reimbursement for surgical evaluation and healthcare, we, as an independent practice, had paid six-figure losses for the privilege of taking care of this very special group of patients," Robert Masson, MD, of Masson Spine Institute in Orlando, Fla., told Becker's.

"I historically had provided this service happily and understood that the margins were slim.  Unfortunately, as the price deterioration has continued, costs and inflation skyrocketed, layers of clinical practice management more complicated, more staff members at a higher cost and the need to maintain physician extenders to cover the administrative and clinical burdens, we do not have a way to put Medicare patients in the black. Regrettably, I [made] the choice to drop Medicare [as of] October.

"It is stunning to me that as CPI is sustainably increasing, costs of services and resources are increasing, surgical fees have already been reduced, while the cost of liability protection and the risk is greater than ever, that organized healthcare has not been able to move the needle. I am near the end of a 35-year career, but I hope that this gets sorted out before the next generation of healthcare has no other options."

The idea that Medicare reimbursement for physicians is in need of an overhaul is not unique — or new. Five years ago, 71% of physicians said they would continue to treat Medicare and Medicaid patients, according to Medscape's "Physician Compensation Report" for 2018. However, 16% indicated they were undecided. 

But according to Medscape's 2023 survey, only 65% of physicians confirmed they would continue to treat and take new Medicare and Medicaid patients. Eight percent said they would not take new such patients.

Come 2024, physician pay will shrink further. CMS' finalized fee schedule will reduce overall physician pay by 1.25% in 2024 and update the conversion factor to $32.74, a 3.4% decrease over last year.

"With higher costs for everything associated with practicing medicine, another year of Medicare payment cuts jeopardizes patient access and imperils the physician practices on which so many seniors rely," AMA President Jesse Ehrenfeld, MD, said of the cuts in a Sept. 11 organization news release. "These cuts are unsustainable and unconscionable."

The looming pay decrease and continuous rise in costs may contribute to even more physicians dropping out of Medicare and Medicaid programs, spurring physicians, organizations and patients to rally for change.

Orthopedic surgeon Adam Bruggeman, MD, is prioritizing fixing the payment system in 2024; he will meet with legislators in Washington, D.C., to address reform options. 

"My top priority is working toward a permanent fix to the Medicare physician payment system.  We have gained significant momentum and awareness on the topic in Washington, D.C., and recently had the chair of the Senate Finance Committee state that their committee would need to address the issue next year," he told Becker's. "Meaningful reform with a tie to the actual cost of providing care is needed to ensure access for patients and the long term viability of physician practice."

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