Medicare expansion greatly worsens the current doctor shortage

However, the RUC does not have the ability to push prices up to whatever level its members wish, because Part B is subject to a budget-neutrality rule, meaning that any changes to the MPFS that result in an increase or decrease in Medicare Part B outlays exceeding $20 million will trigger automatic adjustments. Consequently, if the RUC recommends payment increases for certain services, it is forced to recommend cuts for other services. A long-standing problem stemming from the budget-neutrality rule is that it encourages the RUC to propose cuts on relatively low-priced, high-volume services, namely E/M codes that broadly apply to all physician visits and services intended to evaluate and manage a patient’s health. Although E/M services are billed by all physicians, they constitute a larger share of primary care physicians’ bills, because specialists perform procedures more frequently than primary care doctors do. Conversely, procedure-code rates are easier to increase, because they are billed less often than E/M codes and increasing them is less likely to cause Medicare spending to balloon out of control. In addition, most of the members of the RUC are specialists, and just a handful are primary care physicians; this has been cited as a factor that may contribute to procedure-code rate increases. Analyses have shown that Medicare reimburses physicians three to five times more for common procedural care than for E/M care, and some have warned that this could exacerbate the current shortage of primary care providers.

Payment cuts are generally reflected through the RVUs for PW and ultimately the CF. In calendar year (CY) 2023, the CF announced in the MPFS final rule was $33.067, down from $34.6062 in 2022.21 The proposed cut was met with considerable opposition from physician groups, which warned that it threatened the financial stability of practices in the face of soaring inflation and growing rates of physician burnout. Congress subsequently passed the Consolidated Appropriations Act of 2023, which mitigated the cuts set to begin on January 1, 2023. Consequently, CMS announced on January 5, 2023, that the conversion factor would be $33.8872 in CY 2023, a reduction of $0.72 from the CY 2022 rate.

The MPFS is based on an FFS payment mechanism that reimburses physicians for the more than 10,000 individual services in the CPT set. Therefore, if there is no code, there is no billing—and if there is no billing, physicians have no incentive to provide the care. Consequently, Medicare’s administrative pricing undermines innovation in the practice of medicine, because there is likewise no incentive to coordinate care, even when such coordination would be more efficient and would lead to higher quality health outcomes. The necessity for each procedure to be reimbursable by Medicare also encourages innovators to prioritize the development of products and services that Medicare will agree to add to the MPFS. This administrative payment system also offers no incentive for providers to compete based on the quality of their care.