Last week, as part of its Affordability Series, the House Energy and Commerce Health Subcommittee held a hearing on physician payments under Medicare, focusing on reforms to alleviate payment instability, minimize administrative burdens, and address the challenges independent practices face amid escalating healthcare costs and inadequate payments for primary care providers. Legislators acknowledged that physician payments haven’t been adequate and that current statutory constraints, like budget neutrality (if one service gets paid more, another must get paid less), make it difficult to increase payments for primary care providers. Legislators also focused significantly on hospitals’ acquisition of physician practices, questioning witnesses on their impact on costs and patient care. Five physician witnesses shared their perspectives and recommendations, including the adoption of site-neutral payments and enhanced primary care reimbursement.

Physician Witnesses:

  • William Fox, MD, MACP: Chair Emeritus, American College of Physicians Board of Regents, Fox & Brantley Internal Medicine and Primary Care Physician
  • Steven Furr, MD, FAAFP: Family Medicine Physician
  • Dana Smetherman: MD, MPH, MBA, FACR, CEO, American College of Radiology
  • Rick Snyder, MD: President, HeartPlace – Interventionist in Dallas, Metropolitan Area
  • Farzad Mostashari, MD: CEO and Co-Founder, Aledade

Physician payments’ inability to keep up with inflation was recognized throughout the hearing. Ranking Member Rep. Louise Degette (D-CO) began by highlighting the importance of the Physician Fee Schedule (PFS), noting that 95% of physicians are paid through the PFS and care for 70 million Medicare recipients. PFS spending hasn’t kept up with inflation, driving many primary care providers out of practice and disincentivizing new medical school graduates from entering the field. Dr. Snyder shared that Medicare physician payments have declined by 33% since 2001, while practice costs have increased 63% over the same period.

The Committee and witnesses discussed the 2015 repeal of the Sustainable Growth Rate (SGR) under MACRA, recognizing that the legislation didn’t provide the stability it was intended to create. Dr. Smetherman highlighted three key structural difficulties with the current payment system:

  • The lack of an inflationary update — although providers, such as hospitals, receive Medicare inflationary adjustments, physicians do not.
  • Budget neutrality requirements can create instability and volatility in the market, making it challenging to invest in new technologies and pitting specialties against each other.
  • The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) uses a one-size fits all approach for quality metrics, which can be limiting for different specialties, especially radiology.

Regulatory burden, lack of adequate Medicare payments, and hurdles with payers have contributed to hospital acquisition of independent practices. When asked by Congressman Bilirakis (R-FL) how the current Medicare reimbursement structures affect independent physician practices, Dr. Snyder replied, “Our staff are going to other hospital-employed models because they can offer more because of reimbursement.”

Hospital acquisition of independent practices accused of driving healthcare costs. Multiple legislators focused on this issue, asking witnesses for their opinion. When asked by Representative Dr. John Joyce (R-PA) if witnesses agreed that having more physicians in independent practices would help reduce costs nationwide, all witnesses raised their hand in the affirmative. Dr. Snyder highlighted the differences in payments between hospitals and independent practices, saying treatment in his office can cost $100, while the same procedure in a hospital outpatient facility can cost more than $400. He emphasized that from 2018-2026, hospitals gained over 180,000 physicians and 33,000 practices.

Rep. Degette emphasized the need for Congress to create legislation that increases the healthcare workforce and incentivizes medical students to enter specialties that prioritize whole person care. Dr. Fox emphasized that primary care providers are the backbone of a healthy workforce. Yet, new patients sometimes must wait 6-10 months to see a primary care doctor.

Policy Recommendations from Witnesses:

  • Adopt site-neutral payments to eliminate reimbursement disparities between independent practices and hospital outpatient departments.
  • Adjust physician payments for inflation, tying them to the Medicare Economic Index (MEI).
  • Enhance PFS payments for primary care, including bonus payments under Merit-Based Incentive Payment System (MIPS) for exceptional performance metrics.
  • Extend parity to independent practices by tying their fee schedule to a percentage of outpatient hospital cost data.

Legislative proposals discussed during the hearing include:

  • House Resolution (H.R.) 6160 (Strengthening Medicare for Patients and Providers Act): Introduced by Representatives Raul Ruiz (C-DA) and Representative Gus Bilirakis (R-FL). The bill would tie Medicare physician payment rates to the Medicare Economic Index, providing inflation-based updates; witnesses voiced unanimous support. AHPA strongly supports this bill and has been advocating for it.
  • Senate Bill (S) S.1692 (Radiology Outpatient Ordering Transmission Act (ROOT)): Introduced by Representative Diana Harshbarger (R-TN): Modernizes Section 218 of the 2014 Protecting Access to Medicare Act (PAMA) to enable real-time clinical decision support for imaging appropriateness, projected to save $2 billion over 10 years.
  • R.10136 Promoting Fairness for Medicare Providers Act (2024): Reintroduced by Rep. Bilirakis: Addresses outdated reimbursement structures that make it difficult for physicians to offer high-supply cost procedures in office-based settings.
  • R.8622 (Medicare Physician Data-Driven Performance Payment System Act): Introduced by Representative Mariannette Miller-Meeks (R-IA): Would repeal and replace MIPS with a new payment system designed to support small, rural, and safety net practices.
  • 2426 (Equitable Community Access to Pharmacist Services Act): Allows pharmacists to receive Medicare payment for essential testing and treatments for a limited set of diseases consistent with state law. When asked by Representative Dr. John Joyce (R-PA) about whether witnesses agreed that having more physicians in independent practices reduced costs nationwide and empowered docs to spend more time with their patients. All witnesses raised their hand in the affirmative.