Physicians face Medicare pay cut in 2025 without congressional action

$500 million in expiring funding puts Medicare in jeopardy

Unless Congress takes action by 2025, physicians are facing more Medicare pay cuts. A report from the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds says while the MACRA program helped avoid the issues created by the flawed sustainable-growth rate formula, it has its own issues and will face a financial reckoning in 2025 as funding expires.

The expiring funding totals $500 million annually and the physician 5% annual bonus also expires, meaning most physicians are facing a further payment reduction if nothing changes.

In addition, the report notes that inflation creates another challenge. “The specified rate updates could be an issue in years when levels of inflation are high and would be problematic when the cumulative gap between the price updates and physician costs becomes large,” the report reads in part. "For physician services, not only are updates below the rate of inflation in all future years, but there are more immediate concerns because updates for these services are projected to be −2.9% in 2023 and 0% for 2024 and 2025 and certain bonuses paid to physicians are scheduled to expire in 2025. Should payment rates prove to be inadequate for any service, beneficiaries’ access to and the quality of Medicare benefits would deteriorate over time, or future legislation would need to be enacted that would likely increase program costs beyond those projected under current law in this report."

Inflation has steadily eaten away at Medicare physician payments in the last two decades, and with inflation rapidly rising, the gap between what physicians are paid and their actual costs will continue to increase. The report notes that the Medicare payment system is unsustainable as currently structured, if the projections prove accurate.

“The trustees previously estimated that physician payment rates under current law will be lower than they would have been under the SGR formula by 2048 and will be about 30 percent lower by the end of the projection period,” the report reads. “Absent a change in the delivery system or level of update by subsequent legislation, the trustees expect access to Medicare-participating physicians to become a significant issue in the long term.”