House Spending Bill Excluded Fix for Medicare Physician Fees. What’s Next?

Now that the House has passed a spending bill that doesn’t include a reversal of the 2.83% cut to the Medicare physician fee schedule, congressional supporters and physician groups are trying to figure out their next move.

The spending bill, which passed Tuesday by a vote of 217-213 almost entirely along party lines, keeps the government funded through the end of the fiscal year on Sept. 30. It keeps funding the same for most government programs, and also included extensions of telehealth flexibilities and the “Hospital at Home” waiver program. The measure still must be approved by the Senate, where its fate is uncertain.

Members of Congress who support the reversal of the cuts have several options to choose from, explained Chet Speed, chief policy officer at the American Medical Group Association (AMGA) in Washington, D.C., during a Zoom interview Wednesday at which a press person was present. The first option is to include it in a reconciliation bill that Congress will take up later this year in order to extend President Trump’s 2017 tax cuts and pass other items dealing with defense and border issues.

Rep. Greg Murphy, MD (R-NC), who has been leading the charge to reverse the cuts, posted on X (formerly Twitter) on Tuesday that House Speaker Mike Johnson (R-La.) and House Majority Leader Steve Scalise (R-La.) “agree for Doc Fix to be in Reconciliation. Hopefully long term.”

Murphy’s last sentence referred to getting a fix for the problem that would last for several years. Ideally, Speed said, the cut would not only be reversed but physicians would also get automatic annual fee updates based on the Medicare Economic Index (MEI), a measure of healthcare inflation.

The question is, how soon would the reconciliation bill be considered? “I know House Republicans want to get this done by Easter, and the Senate Republicans are taking a more deliberate approach to it, and some of them are talking about summer — late summer, August — so the time to pass the bill is up in the air,” said Speed. “From our perspective, the time to pass the ‘doc fix’ is now, not August.”

The 2.83% cut, which became effective Jan. 1, is already having an impact on physician practices, according to a survey of 131 AMGA members taken Feb. 24-28. The survey found that 25% of respondents said they had laid off or furloughed clinical staff; 31% had laid off or furloughed non-clinical staff, and 13% said they were no longer accepting new Medicare beneficiaries.

Another option Congress has is to separately pass a measure championed by Senate Democrats Ron Wyden (Ore.) and Patty Murray (Wash.) that would include the fee schedule fix as well as an extension of a bonus payment for physicians who sign up for alternative payment models, and a 2-year extension of the hospital-at-home model. “We’d like to see that legislation put on the floor for a vote,” Speed said.

But a standalone bill doesn’t seem very likely, according to Michael Abrams, managing partner of Numerof & Associates, a consulting firm in St. Louis. “Depending on what’s in it, it could spark a fight and really distract from the reconciliation bill where the extension of tax relief is going to go, and that’s key to the whole thing,” he said in a Zoom interview. “My guess is the leaders on the Republican side are not going to buy the idea of a separate bill; they need to keep everybody in line and focus on the reconciliation bill because that’s what it’s all about.” As for his prediction on the timing of the reconciliation bill, Abrams said he is “betting on May.”

Why has it taken this long to solve the physician fee schedule problem? “It’s because they have to come up with an additional $2 billion” to pay for the higher fees, and that’s just for a year, Abrams said. “And that does not take into consideration extending it” beyond that time. On the other hand, “it’s kind of crazy to expect that anybody who is smart enough to get into medical school and goes through 6 to 7 years of education so they can come out and practice medicine would want to do so in a profession where the amount they get reimbursed for at least half of their patients comes up every year, and every year it gets a cut — especially in the inflationary environment like we’ve been in.”

Although the continued cuts hit all Medicare providers hard, it’s the independent physicians who suffer most, especially if they’re in rural areas, he said. “If you just look at demographics, roughly half the population is insured through Medicare, but in rural areas, that could be as much as 85%, where you have substantially [more] people who are aging in place,” he said. “They all have Medicare and that’s what makes up the panel for the few hardy independent physicians that are practicing in those towns.”

Physician groups are none too happy with what has happened so far. “Physicians across the country are outraged that Congress’s proposed spending package locks in a devastating fifth consecutive year of Medicare cuts, threatening access to care for 66 million Medicare patients,” Bruce Scott, MD, president of the American Medical Association, said in a statement issued on Sunday, before the final vote was taken in the House. “Despite repeated warnings, lawmakers are once again ignoring the dire consequences of these cuts and their impact both on patients and the private practices struggling to keep their doors open.”

“Congress has failed physicians, and Medicare patients will pay the price,” Scott added. “Lawmakers must explain either why protecting access to quality healthcare is not a priority or how they plan to fix it.”

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