MedPAC Recommended Physician Payment Update

The Medicare Payment Advisory Commission (MedPAC) has released its March 2023 report to Congress on various Medicare Payment Policies. MedPAC analysis found that the current physician payment rate to be inadequate; therefore, it recommended a 1.45% physician payment update for 2024. MedPAC has recognized that physician pay has not kept up with the cost of practicing medicine. According MedPAC, this update is to come from an update to the Medicare base payment rate by 50 percent of the Medicare Economic Index (MEI).  While still insufficient, the recommended update represents the first time in 26 years that MedPAC has recommended a positive update.

The annual report includes MedPAC’s analyses of payment adequacy in traditional fee-for-service (FFS) Medicare and Medicare Advantage (MA) and the prescription drug benefit (Part D).

The report states that Medicare spending is projected to double in the next 10 years due to increase in the number of beneficiaries and increase in the volume and intensity of services delivered per beneficiary. MedPAC expects Medicare spending to grow 4.7% faster than inflation even though the Medicare prices are growing slower than inflation. 

MedPAC found that allowed charges per beneficiary fell by 7.3% for anesthesia services between 2019 and 2021.  During the same time, the allowed changes for Evaluation and Management (E&M) services increased by 6.1%. 

MedPAC also reported that the Medicare Advantage program will cost 6% more per beneficiary compared with traditional Fee for Service (FFS) program. Currently, Medicare Advantage accounts for 41% of Medicare spending and FFS accounts for 48% of Medicare spending.

ASA was one of the 134 health organizations that signed on to the American Medical Association (AMA’s) formal communication to Congress urging them to pass legislation that provides an annual inflation-based payment update.  The letter requested for a permanent solution to address the frozen physician payment rates and rising medical practice costs due to inflation. ASA recognizes this payment update that is being recommended by MedPAC is not enough to address the current medical practice cost increases and will continue to advocate for long-term solutions by educating legislators about the inadequate payments for anesthesia services and the potential for that to disrupt patient care.

Full March 2023 MedPAC Report