More Money, Fewer Prior Auths Needed to Save Private Practices, Lawmakers Told

Two solutions to physicians’ private practice woes came up over and over during a House hearing Thursday: increasing physician payment rates and getting rid of prior authorization.

“One of the biggest things to keep us in business is just updating the [Medicare] Physician Fee Schedule so we can actually keep pace with the cost of running a practice,” said Timothy Richardson, MD, a urologist at a 12-physician practice in Wichita, Kansas, during a House Ways & Means Health Subcommittee hearing on the collapse of private-practice medicine. “Our employee overhead has gone up 30% in the last 2 years; our medical insurance goes up 10% to 20% every year. We literally just can’t keep pace with it, and we can’t keep hiring, so updating that fee schedule that keeps pace with that cost would be beneficial.”

Last November, CMS finalized a nearly 3.4% cut in physician payments for 2024, which took effect on January 1. Congress eventually passed legislation to lower the cut to 1.8% beginning in early March.

“The greatest challenge facing practices and patients is the failure of the Medicare Physician Fee Schedule to keep up with inflation, especially when physicians are the only Medicare providers that do not receive any inflationary updates,” said Seemal Desai, MD, president of the American Academy of Dermatology and a dermatologist in Dallas, Texas.

“Since 2001, the cost of operating a medical practice has increased almost 50% … and when adjusted for inflation, Medicare physician reimbursement rates declined by 30% from 2001 to 2024,” he said. “What business can survive under these circumstances? This payment structure disproportionately threatens the viability of all medical practices.”

As for prior authorization, it “has been an absolute disaster,” said Christine Kean, chief operating officer of a 41-physician orthopedics group in San Antonio, Texas. “It does absolutely nothing to improve care, but it does allow insurance carriers to deny care.”

“It is a billing game, because if you don’t have the prior authorization on the bill … then they can deny the care later that you have already performed,” she noted. “So I think prior authorization is a really big thing.”

Subcommittee members were sympathetic to those messages. “Nearly 90% of the medical groups reported increased operating costs last year, according to the Medical Group Management Association,” Committee Chair Rep. Vern Buchanan (R-Fla.) said in his opening statement. “Physician costs increased by over 63% from 2013 to 2022, making it harder to run a business, let alone own a practice.”

“So how can we get doctors to afford to stay in private practice, with costs skyrocketing and reimbursement rates continuing to get cut?” he asked. “Many times physicians are forced to sell their practice or consolidate with a larger system to stay afloat.”

Rep. Lloyd Doggett (D-Texas), the subcommittee’s ranking member, agreed. “Today, over 70% of physicians are employed by a healthcare system or a corporate entity,” he said. “This consolidation is creating greater obstacles for the few remaining independent practitioners who are struggling to compete.”

However, he added, “while I agree physicians are sometimes overregulated, the regulator that seems to be interfering the most for many comes in the form of private Medicare Advantage [MA] plans. MA plans continue to interfere with the doctor-patient relationship through burdensome prior authorization requirements, step therapy, and other management tools. Intended to reduce unnecessary healthcare utilization, these tools often lead to delays and denials of urgent medical care.”

Several of the physicians on the panel said it was hard to compete with practices owned by health systems because Medicare pays more for services provided on a hospital campus. Rep. Don Beyer (D-Va.) said he had sponsored several bills over the years to implement site-neutral payment — in which providers get paid the same amount no matter where a service is provided — but that hospital lobbyists would tell him that hospitals should get paid more for providing the same service because, unlike independent physician practices, they treat sicker patients and have to provide 24-hour, 7-day-a-week care. He asked the panel for their counterarguments.

“Site neutrality is critical,” said Ashish Jha, MD, MPH, dean of the School of Public Health at Brown University in Providence, Rhode Island. “Look, if the issue for hospitals is that they have to take care of a sicker, a more indigent population, we should figure out how to pay for that directly. But what [lack of] site neutrality does, is it totally perverts the healthcare marketplace where there is now this very large incentive for hospitals to buy up physician practices. And that doesn’t increase access; it doesn’t increase quality. All it does is allow Medicare to pay [hospitals] a lot more.”

Medicare’s Merit-Based Incentive Payment System (MIPS), which requires physicians to report on quality measures in order to get paid, also came in for criticism. “One estimate found physicians spend an average of $12,800 annually to comply with report measure reporting, devoting approximately 53 hours per physician,” said Rep. Blake Moore (R-Utah). “And a 2022 study in [JAMA] found that MIPS scores are inconsistently related to performance, and that physicians caring for more medically and socially vulnerable patients were more likely to receive low scores, despite providing high-quality care — kind of counterintuitive.”

Desai agreed. “MIPS has not shown to help make care better,” he said, noting that because of MIPS, “part of that office visit — the 20 minutes that I want to spend with you talking about your skin disease — [is spent] clicking buttons on an iPad that have nothing to do with what you’re there to see me for.”

Jha said that MIPS was well-intended and had bipartisan support when it began, “but it doesn’t work … Quality reporting is important as a concept, bu there should be a smaller number of [required] measures and they should be collected automatically.”

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