MEDICARE REIMBURSEMENT AND INFLATION: A Perfect Storm that Threatens Medicare Beneficiaries’ Access to Care
Lafayette Parish Medical Society Welcomes State Officials and Elects 2025 Leadership
Medicare Economic Index (MEI). It is a significant step towards recognizing the inadequacy of the current Medicare physician payment system and paves the way for short and long-term solutions in reforming Medicare, offering a brighter future for all stakeholders. Physicians, are not immune to the impact of inflation. The overhead cost of running a practice has skyrocketed by 47% in the past 20 years, while Medicare reimbursement, when adjusted for inflation, has plummeted by 26% in the same period. This alarming trend, coupled with CMS’s projected increases in the MEI and a reduction in the MPFS, is placing an unbearable strain on our healthcare economic environment. The gravity of this situation, which directly affects the healthcare providers we rely on, cannot be ignored. In the short term, the Strengthening Medicare for Patients and Providers Act (H.R. 2474) provides a means of updating the annual MPFS equal to the MEI, which is vital in offsetting inflationary costs. However, we must address the provision included in the Omnibus Budget Reconciliation Act of 1989, which mandates any estimated increase of $20 million or more to the MPFS created by upward payment
Medicare, signed into law by President Lyndon B. Johnson, has provided insurance to millions of American families and has served to save lives and provide economic security to our nation through access to care. 1 Nearly sixty years later, it has non- sustainable flaws that Congress must address to ensure those tasked with providing care to beneficiaries can do so sustainably. Despite the United States spending more on healthcare, in total per capita, than other developed countries and the growth of healthcare expenditures outpacing average gross domestic product (GDP) growth consistently, physician reimbursement continues to decline, creating an economic environment that poses a risk to beneficiaries’ access to care and our nation. 2 Original Medicare, formally known as Part A and Part B, includes hospital stays and medical services coverage. Medicare Part B utilizes a fee-for-service model (FFS) responsible for physician reimbursement through the Medicare Physician Fee Schedule (MPFS), updated annually. 2 In contrast, Part C, or Medicare Advantage, provides benefits through private insurers via federal contracts. Part D grants prescription drug benefits through stand- alone plans or as part of Medicare Advantage plan benefits.
The Lafayette Parish Medical Society (LPMS ) held its annual meeting and social on Thursday, November 21, at Marcello’s Restaurant . LPMS was honored to welcome Dr. Ralph Abraham , the newly appointed Louisiana Surgeon General , and Dr. Wyche Coleman , the Deputy Surgeon General . Dr. Abraham and Dr. Coleman discussed their roles in these newly established positions within the state. The event followed a Q&A format , allowing LPMS members to engage directly with both officials. Members asked insightful questions, which Dr. Abraham and Dr. Coleman answered to the best of their ability. Given that
these positions are new, both doctors were also eager to hear from attendees about what support Louisiana physicians hope to receive from their offices. This gathering was a valuable opportunity for members, and many took full advantage of it. In addition to the discussion, LPMS also elected new officers for 2025 :
President : Dr. Frankie Rholden Vice President: Dr. Philippe Prouet
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Secretary: Dr. Kim Drew
The MPFS uses relative value units (RVUs) and a conversion factor (CF) to formulate reimbursement rates for professional services rendered by physicians in the FFS model. RVUs account for physician work, practice expenses, and professional liability insurance. Given that resource components of a practice vary based on locality, the Centers for Medicare and Medicaid Services (CMS) assign a Geographic Practice
adjustments or the addition of new procedures or services be offset by cuts elsewhere. 5 Though Medicare covers slightly less than 20% of the population, CMS policies affecting physician reimbursement impact the entire economic environment of healthcare as commercial payers often decrease reimbursement as well. CMS’s attempt to curb spending poses a potential
“Medicare reimbursement has dropped 26% in 20 years—while practice costs have soared by 47%.”
Cost Index (GPCI) to the parts of an RVU. Each current procedural terminology (CPT) code is assigned an RVU multiplied by a CF. It translates to a locality-adjusted maximum allowable amount that Medicare will reimburse a provider for a particular service to a Medicare Part B beneficiary. 2 Despite the use of the MPFS, objectivity in physician reimbursement is absent due to budget neutrality requirements by statute and a nonexistent mechanism to account for inflation. The Strengthening Medicare for Patients and Providers Act (H.R. 2474), introduced by Rep. Raul Ruiz, MD [D-CA-25], and original cosponsors Rep. Ami Bera, MD [D-CA-6], Rep. Larry Bucshon [R- IN-8], and Rep. Mariannette Miller-Meeks [R-IA-1], is a beacon of hope in the current Medicare landscape. This critical piece of legislation, currently under review by the Subcommittee on Health, aims to amend Title XVIII of the Social Security Act to provide a single conversion factor under the MPFS based on the
unintended consequence of decreased access to care for Medicare beneficiaries. Some physicians will be forced to see a higher volume of commercial payers to offset the continued decreased reimbursements by CMS and inflation that threatens the vitality of their practices. Physicians must advocate for the systemic reform of Medicare to ensure that access to care for all Americans remains unhampered. Solutions, targeting waste, fraud, and abuse, must be highlighted in our efforts to protect the integrity of our profession and American families dependent on Medicare for access to care. Previously identified waste domains by the Institute of Medicine and Berwick and Hackbarth highlight the failure of care delivery, care coordination, overtreatment and low-value care, pricing failure, fraud, abuse, and administrative complexity. The estimated cost of waste in the U.S. healthcare system ranged from $760 to $935 billion, and the estimated potential cost
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J LA MED SOC | VOL 177 | SPRING 2025
J LA MED SOC | VOL 177 | SPRING 2025
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