On Nov. 1, CMS finalized a 2.83% physician pay cut for its 2025 Medicare hospital outpatient prospective payment system and ASC payment system, marking the fifth consecutive year of cuts to physician reimbursements.
Physicians claim that additional reimbursement cuts, on top of inflation and other market pressures, have a ripple effect on their practices and patients.
"Unfortunately, physicians are losing money in multiple scenarios in medicine," Taif Mukhdomi, MD, interventional pain physician at Columbus, Ohio-based Pain Zero, told Becker's. "The most prominent loss of physician revenue is Medicare's consistent decreasing of physician reimbursement in office settings while supporting hospital-setting healthcare services. This trend affects all insurances, as Medicare is the benchmark of most if not all healthcare insurance reimbursement."
According to May 12 data from the Bureau of Labor Statistics, the Consumer Price Index, a common inflation metric, increased 3.4% in the last year. This means the 13 specialties that saw year-over-year pay increases of 3.4% or less — such as gastroenterologists, urologists and rheumatologists, all with pay increases of 2%, according to Medscape's "Physician Compensation Report" — essentially received pay cuts compared to their salaries last year, according to the report.
"This is a recipe for financial instability. Patients and physicians will wonder why such thin gruel is being served," American Medical Association President Jesse Ehrenfeld, MD, wrote in a Nov. 2 statement. "Physicians routinely have faced cuts in the last two decades. Yet, there is nothing routine about the past few years. Physicians have faced the COVID pandemic and subsequent burnout. They have seen the costs soar for running a medical practice, while Medicare payment updates have offered too little relief."
Unfavorable reimbursement rates from both Medicare and private payers, paired with skyrocketing costs of operation amid inflation, are often cited as factors pushing independent physicians toward employment.
"Many physicians face the challenge of effectively managing their practice's financial aspects," David Rosenfeld, MD, anesthesiologist and interventional pain specialist at Peachtree City, N.C.-based Alliance Spine & Pain, told Becker's. "This includes dealing with insurance reimbursements, understanding complex billing codes and controlling operational costs. Every year, many of us find ourselves working harder and longer hours just to maintain our incomes. The costs of practicing medicine — rent, equipment, employee costs — continue to rise, while reimbursement often declines year over year."
This push toward employment not only affects physicians and their autonomy, but can trickle down to affect patients, as well as the cost and accessibility of their medical care, as private practices gradually fold into corporate health systems.
"Continued cuts in the face of unprecedented consolidation, while at the same time facing high inflation, will lead to a continual collapse of private practice," Adam Bruggeman, MD, CEO and surgeon of San Antonio-based Texas Spine Care Center told Becker's. "This leads to reduced access, increased costs and lower quality. Physicians are rapidly leaving independent practice and this will only accelerate the run to the exits. Congress must stop putting the thumb on the scale of corporatized medicine."