MedPAC Members Supportive of Upping Medicare Pay Rates Close to the Inflation Rate

Members of the Medicare Payment Advisory Commission (MedPAC) seemed favorable Thursday to a proposed recommendation to Congress that Medicare should pay physicians based on the rate of medical inflation and give primary care doctors who serve low-income beneficiaries an extra pay bump.

“I think the chair’s recommendation is directionally correct,” said commission member Cheryl Damberg, PhD, MPH, of the RAND Corporation in Santa Monica, California.

“I really support the idea of this being paired with the Medicare safety net add-on payment; I think that’s a critical factor, and I hope that policymakers will seriously consider that piece of it,” she said. “The data around access issues for low-income beneficiaries is really spotlighting the need to do more targeted payments to this group of physicians.”

Commission members were discussing a proposed “chairman’s recommendation” that called for Congress to:

• Update the 2025 Medicare base payment rate for physicians and other health professional services by the projected increase in the Medicare Economic Index (MEI) — a measure of medical inflation — minus one percentage point. The rate would take effect in 2026.
• Enact the commission’s March 2023 recommendation to establish safety-net add-on payments under the Medicare Physician Fee Schedule for services delivered to low-income Medicare beneficiaries. Under that recommendation, primary care clinicians would get a 4.4% increase, while all other clinicians would get a 1.2% increase.

Commissioner Larry Casalino, MD, of Weill Cornell Medical College in New York City, also supported the recommendation, with some reservations.” I don’t believe that in the short term, a percentage point or two above or below inflation in the Physician Fee Schedule will have much effect, one way or the other, on the beneficiaries’ access to care or on the quality of care,” he said. “But I do believe that over time, the cumulative effect of annual payment increases that are less than inflation are very likely to affect both beneficiaries’ access to care and the quality of care, primarily because I think that over time, this sends an extremely negative message to physicians…. No one likes to be told that their annual pay each year, indefinitely, year over year, is not going to keep up with inflation over time. I think that’s likely to affect the morale of physicians and other clinicians.”

“If our recommendation for 2026 was simply MEI inflation minus 1%, I wouldn’t vote for it,” said Casalino. “But I do think that the two-part recommendation that the chair has made — that’s the MEI minus 1% and the higher payment rate for care for low-income patients — is quite reasonable,” he added.

Commissioner Brian Miller, MD, MBA, of Johns Hopkins University in Baltimore, focused on a survey taken by MedPAC researchers that found that 31% of beneficiaries who looked for a new specialist in the past year had to wait 3 to 5 weeks for an appointment, while 13% had to wait 6 to 8 weeks and 16% had to wait more than 8 weeks. “Objectively, access for many Medicare beneficiaries is terrible,” he said. (The survey also showed similar numbers for those with private insurance; 29% had to wait 3 to 5 weeks, 16% had to wait 6 to 8 weeks, and 22% had to wait more than 8 weeks.)

“If you are 75 and you have a lot of health problems, [3 to 8 weeks or more] is a long time to wait to get prescription refills established with a new doc, to try and get things done,” said Miller. “If you have a new diagnosis of cancer, if you fractured something and are in a sling waiting for your post-hospital follow-up to see an orthopedic surgeon — if the discharge instructions tell you to see someone within 14 days, but half [of beneficiaries] have to wait 3 to 8 weeks, that’s objectively terrible, just on a clinical basis.”

Miller added that not enough attention was being paid to non-physician primary care providers such as nurse practitioners and physician assistants. “We should have a specific chapter [in an upcoming report to Congress] on the role of non-physician providers in the Medicare program,” he said.

Commission member Stacie Dusetzina, PhD, of Vanderbilt University School of Medicine in Nashville, Tennessee, said that although she agreed that long wait times for beneficiaries were a concern, “Medicare beneficiaries aren’t necessarily waiting longer than commercially insured people, and in some pieces, a little bit less. So there is a question of how much more payment fixes that, versus this is really a market constraint issue that I think is a problem for everyone who needs healthcare services.” Dusetzina expressed support for the recommendations, especially the one concerning safety-net providers.

Commissioner Robert Cherry, MD, MS, of UCLA Health in Los Angeles, said he supported the recommendations only for the short term. “Continuing on below inflation is really not sustainable if we want to maintain a viable physician workforce for the next generation,” he said. “It’s not unreasonable to make this recommendation, but [doing it] year after year is not a sustainable model for us.”

MedPAC chair Michael Chernew, PhD, of Harvard Medical School in Boston, tried to reassure the commission members. “Our charge for now is just 2026,” he said. “I understand the concern that what we’ve done in the past is not what we want going forward.” He noted, however, that “higher payments to providers of any type means higher premiums and higher beneficiary cost-sharing…. When we pay more [we] have to think about what we’re getting for that. The cost is ultimately borne by beneficiaries, taxpayers, and others — so there’s this balance.”

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