‘Devastating’: Medicare’s projected cuts would hurt medical groups, MGMA says

More than half of all practices said they’d consider reducing staff or accepting fewer Medicare patients. Hospitals are also dreading the prospect of cuts.

Doctors and medical groups say they’re worried about the potential of looming cuts in Medicare next year.

Very worried.

The Medical Groups Management Association released a report Wednesday highlighting the impact of the projected 8.5% cuts in Medicare payments next year. Health advocates are pressing lawmakers and President Biden’s administration to provide more funding.

“MGMA urges Congress to act expeditiously to prevent the looming 2023 Medicare physician payment crisis,” said Anders Gilberg, MGMA’s senior vice president of government affairs.

The MGMA surveyed 517 medical group practices in 45 states to gauge their impact on how the cuts would affect them.

Among those surveyed, 58% said they would limit the number of new Medicare patients, and 58% also said they would consider reducing the number of clinical staff. Almost a third of the practices (29%) said they would consider closing satellite locations. Two-thirds (66%) said they’d think about reducing charity care.

Virtually all of the medical groups surveyed (92%) Medicare rates are already inadequate in covering the cost of care, and that’s before the projected cuts go into effect.

About the cuts

Part of the cut arises from the projected reduction in the complex conversion factor determining payments. The conversion factor is estimated to drop 4.4% in 2023, compared to 2022.

However, healthcare advocates such as the MGMA and other groups are worried about another 4% cut for Medicare due to sequestration, which refers to federal limits on spending.

Federal law states that spending can’t add to the deficit. It’s often called “PayGo” sequestration, referring to the pay-as-you-go statute requiring spending to be offset by reductions elsewhere to avoid adding to the deficit.

In 2022, practices endured a 2% reduction in Medicare payments with the reintroduction of sequestration.

Health advocates such as MGMA, the American Medical Association, and the American Hospital Association contend it’s the worst time for such cuts, especially when medical practices are already dealing with inflation.

Hospitals are already reeling due to financial pressures with the pandemic. Hospitals are losing billions, and more than half of all hospitals could finish the year with negative margins, the AHA said in a report issued last week.

“Now is not the time for reductions in Medicare payments to providers,” the AHA said in a statement earlier this month. “Congress should pass legislation to again suspend Medicare sequester cuts, so that hospitals and health systems can continue to care for patients, families and communities.”

The MGMA is asking Congress for a 4.5% increase in the conversion factor and to waive the sequestration cuts. The MGMA is also pressing lawmakers to include adjustments for inflation in the Medicare Economic Index.

Congress managed to stall some Medicare cuts last year, to the relief of healthcare advocates.

What practices are saying

The MGMA compiled a host of responses from medical groups that participated in the survey.

One rural California practice employing 1,000 physicians said, "This would constrain already strained areas that have experienced staffing shortages. Our costs have increased already, so we might close more of our clinics which would reduce access to care."

A practice in suburban Maryland said, "This would be devastating.”

“We are a hospitalist/intensivist/post-acute practice. We have to maintain enrollment with Medicare and Medicaid, but we cannot be selective in our patient population. We would need to increase our support payments from the hospital to maintain appropriate provider to patient numbers and continuity of care. The reduction last year hurt the practice,” the Maryland group said.

A Louisiana practice with 500 physicians said the cuts “would mean tougher decisions on how and what services we continue to offer-- which includes breakthrough research as well." The practice said it is still struggling to get back to volumes to 2019, before the emergence of the COVID-19 pandemic.

An urban practice in Alabama that employs 1,800 physicians said it couldn’t handle additional Medicare cuts.

“As a regional safety net academic Health System in one of the poorest regions of the country, we will not stop caring for our Medicare patients,” the Alabama practice said. “However, our ability to maintain a sustainable financial situation will be so challenging. We are already stretched due to increasing labor and supply costs – a cut in Medicare would be beyond anything we could manage.”