Medicare physician pay fell 26% since 2001. How did we get here? ] Things you do not know

Physician reimbursement left behind since 2001.  Despite inflation payment to physicians has been regressive due to the budget neutrality features in the Federal Budget.

Physicians have been on the road fighting for Medicare physician payment reform for well over a decade, and the system remains on an unsustainable path. Temporary patches and ongoing cuts to the Medicare physician payment system have left physician practices and patient access to care at serious risk.

Payment cuts, freezes and redistributions have further exacerbated the challenge. When adjusted for inflation, Medicare physician payment has effectively declined (PDF) by 26% from 2001 to 2023.

Despite that stark reality, Congress and the administration are still not focused on fixing the root of the problem—the payment system itself. But it’s time for that to change. It's essential that leaders in Washington work with the physician community on immediate, preventative measures, as well as long-term solutions that will reform the payment model once and for all.

A bill has been introduced in Congress to tie the Medicare physician payment schedule to the Medicare Economic Index, a move that is essential to protecting access to high-quality care for the 65 million older adult Americans covered by Medicare.

By instituting an annual inflation-based update, the legislation would put physicians on equal footing with virtually all other health professionals and organizations paid by Medicare. Physician payment rates have been subject to a six-year payment freeze that will last until 2026 and are seeing 2% across-the-board Medicare pay cuts that started in January.

This Medicare payment policy failure came as physicians had to deal with inflation, COVID-19, burnout and the rising cost of running a practice. When the freeze ends, the statutory update for most physicians will be limited to 0.25% indefinitely, far below even normal rates of inflation. 

Physicians and patients can no longer allow Medicare to kick the can down the road, as it has done with the national debt ceiliing.

Medicare physician pay fell 26% since 2001. How did we get here? | American Medical Association: Medicare’s unsustainable pay system threatens access to care. The failure to update physician pay for inflation is a huge part of the problem.