The American Medical Association’ (AMA) has a series called, “What Doctors Wish Patients Knew™ which provides physicians with a platform to share what they want patients to understand about today’s health care headlines. (Frankly, I think the wound care community should create a list of “What doctors wish patients knew about… for wound care, but I digress).

One of the recent installments is from AMA President-elect Bruce A. Scott, MD, an otolaryngologist and facial plastic surgeon in Louisville, Kentucky, who discusses what patients need to know about Medicare physician payment.

The hope is to help patients advocate for Medicare payment reform. I confess that, at least in the field of wound care, we have a lot of Medicare payment abuse that we need to fix before we can advocate for payment reform. It’s hard to argue why we need a larger share of tax dollars without stopping the improper use of those tax dollars, but that is not a simple issue.

Most patients with non-healing wounds are Medicare beneficiaries (although an increasing percentage every year have Medicare Advantage plans). Wound care is shifting from the hospital-based outpatient clinic to the office and home based setting, both of which will be significantly affected by Medicare physician payment cuts, so Dr. Scott’s key points are worth sharing with patients:

Medicare physician payment is a complex formula based on a variety of datasets and formulas. Physicians don’t find out what next year’s payment rates will be until November, at the earliest.

  • Each year, physicians have to decide whether to participate in Medicare, which means that they will accept the Medicare payment rate — along with a 20% patient copayment they are required to charge — as payment-in-full for their services provided. They can decide not to participate in Medicare, in exchange for being able to charge patients a slightly higher copayment.

The current Medicare payment rates are unsustainable.

  • Quoting Dr. Scott, “One of the myths is that physicians, who are the face of the health care encounter, collect all those charges themselves when, in fact, they are often only a small part of that health care spend.”
  • Most patients would be surprised to learn that physician pay is actually less than 10% of the total health care expenditure for a service. Dr. Scott provides the following example: “If I perform a tonsillectomy, the bill will be for thousands of dollars and yet my practice receives about $300 for performing that surgical procedure. And that includes 90 days of postoperative care… but out of that $300, I pay my rent, the salaries for my staff, the expenses for my medical equipment, all of which are going up every year… and that $300 is less than my partner earned for the same tonsillectomy 25 years ago. It’s simply an unsustainable situation.”

Medicare physician payment isn’t adjusted for inflation.

  • Physicians are the only type of Medicare provider whose payment formula does not increase with inflation. With inflation at a record level, physician payment will be cut this year.
  • Per Dr. Scott, “If we go back to 2001, physician expenses, even by the government’s own calculation, have gone up 47%. Yet during that same period of time, physician pay from Medicare has been increased by only 8%,” Dr. Scott said. Adjusting for inflation in practice costs, Medicare “physician pay over the last 22 years has actually been cut 30%.”
  • Meanwhile, the cost of running a medical practice increased 54% between 2001 and 2024, or 1.9% each year.

Medicare cuts to physicians are decreasing access to care for patients. 

  • A recent survey by the AMA found that one in five physicians are seriously considering stopping practice altogether or pursuing a different career sometime in the next two years.
  • Other physicians will have to limit the number of Medicare patients that they see, and some physicians will decide that what they need to do is stop participating in Medicare altogether.

Medicare cuts to physicians have a ripple effect on all forms of insurance.

  • Private payers link payment contracts to some percentage of Medicare payment so the payment from private payers goes down every year in conjunction with Medicare.

Physicians have absolutely no negotiating power with Medicare.

  • The rates are fixed, the rates are defined, and doctors can either participate or drop out.

The AMA has created the Patients Action Network, which allows patients to go online and see the stories from other patients like them who are struggling to maintain the relationship with their physician because of the Medicare cuts. Note that this website has a place for patients to report delays in care that happen because of prior authorization, too.