Update: Physician Medicare Payment Cuts on the Horizon

Due to multiple legislation expirations, physicians are facing some of the worst Medicare reimbursement cuts ever, up to 9.75% in reductions unless new legislature is approved. There are actually four separate Medicare financial reductions pending, and each will need to be addressed. With the worst pandemic in history still impacting physician practices and hospitals, now is not the time for reducing medical funding.

The first looming reduction comes from the pending expiration of 3.75% in payment cuts to the Medicare physician fee schedule. The budget neutrality adjustments in the fee schedule were stopped by Congress last year, but that expires December 31, 2021. There is a bipartisan bill currently before Congress, the “Supporting Medicare Providers Act of 2021” introduced by Rep. Ami Bera, M.D. (D-CA) and Rep. Larry Buschon, M.D. (R-IN), that proposes extending the 2021 Medicare physician payment adjustment of 3.75% for one year. Hopefully Congress will recognize that the same needs that physicians faced last year still apply this year.

The next Medicare reimbursement reduction that physicians are facing is the sequestration cut waiver set to expire December 31, 2021. Medicare is a fee-for-service program, and the sequestration reduction of federal spending calls for a 2% reduction in payments for services. Any Medicare claims filed by physicians after January 1, 2022, will face a 2% reduction if this waiver is not extended. With the ongoing COVID-19 health care emergency, it is important that this sequestration cut waiver is extended.

Another looming 4% reduction in Medicare benefit payments comes from the Statutory Pay-As-You-Go-Act (Statutory PAYGO) of 2010. The Office of Management and Budget is required to implement sequestration (across the board reductions) in mandatory federal spending to ensure the federal budget deficit over a 5- or 10-year period not be increased, unless there is legislation offsetting those reductions. The Congressional Budget Office has estimated that the Statutory PAYGO sequester in 2022 will result in a 4% reduction due to the American Rescue Plan Act of 2021. Historically, Congress has always passed legislation increasing the deficit, so the Statutory PAYGO has never been implemented. Hopefully, that will continue to be the case this year.

The final pending funding impact comes from the freeze in annual inflation updates for Medicare physicians. Since inflation has been severely on the rise, this reduction can be significant. For example, a 5.9% COLA increase will take place this year due to the increased CPI from out-of-control inflation. Our physicians have been faithfully on the front lines since this pandemic began, putting themselves and their families at risk. Any financial cuts made places further strain on their practices and impacts their ability to serve their patients.

Genesis Medical Management encourages Congress to protect the medical needs of our communities by ensuring these four looming reductions in Medicare funding do not further strain our healthcare system. Protect the physicians who have been at the forefront in protecting us during these trying times.