LUGPA Policy Update:
MedPAC Indexing Medicare Base Payment Rate

Jan 24, 2024 

Ensuring precise and consistent Medicare reimbursement rates is essential for the sustainability of independent medical providers. This factor plays a vital role in their ability to provide top-notch patient care. Independent practitioners, who often operate independently of large hospital systems, encounter unique challenges in a healthcare environment where reimbursement rates significantly influence their financial well-being.

These providers specifically face the challenge of dealing with reimbursement rates that are inherently lower than those received by their counterparts based in hospitals. The financial strain resulting from such variations poses a significant obstacle, constraining their ability to invest in advanced technologies, hire skilled personnel, and uphold optimal medical services. In this context, the pressing need for fair reimbursement rates becomes apparent. This ensures that independent medical providers can continue making invaluable contributions to healthcare delivery without compromising the quality of care provided to their patients.

On January 12, the Medicare Payment Advisory Commission (MedPAC) convened to discuss "Assessing Payment Adequacy and Updating Payments: Physician and Other Health Professional Services." The Commission unanimously approved a draft recommendation for CY2025, emphasizing the importance of updating the Medicare base payment rate and establishing safety-net add-on payments for services delivered to low-income beneficiaries.

The MedPAC draft recommendation for CY2025 focuses on updating the Medicare base payment rate for physicians and other health professional services. The proposed update includes the amount specified in the current law plus 50 percent of the projected increase in the Medicare Economic Index (MEI). Additionally, MedPAC recommends enacting safety-net add-on payments for services to low-income beneficiaries, aligning with their March 2023 recommendation.

MedPAC's assessment revealed positive trends in beneficiaries' access to clinician care, with a notable increase in the number of clinician encounters per fee-for-service beneficiary. The quality of clinician care, while challenging to assess, showed stable patient experience scores. However, concerns were raised about consolidation and physician employment, prompting the Commission to consider broader changes to the Physician Fee Schedule (PFS) structure.

The proposed MedPAC recommendation, if implemented, is estimated to cost between $2 billion to $5 billion in the first year and $10 billion to $25 billion over five years.

MedPAC’s recommendations are not the only proposals in Washington seeking to move toward utilizing the MEI. One piece of legislation that LUGPA supports is the Strengthening Medicare for Patients and Providers Act (H.R.2474). The key provisions of the bill include utilizing the MEI, repealing sequester cuts, promoting Physician-Focused Payment Models (PFPMs), transitioning to value-based care, and reforming the Medicare Physician Fee Schedule (MPFS).

The incorporation of the MEI and other key provisions aligns with LUGPA's mission to ensure fair and accurate reimbursement, financial stability, and the delivery of high-quality care. LUGPA urges policymakers to consider and support the adoption of H.R.2474 for the betterment of independent medical providers and the patients they serve.