Thirty years later—in 2022—the CF is $34.61. If the CF had increased with inflation, it would be $59.00. If the Proposed Rule is adopted, the 2023 fee schedule payment formula would decrease by 4.4% (to $33.08) relative to that of the 2022 fee schedule ($34.61), which is a decrease of 8.2% since 2019 ($36.04). This decrease is due to expiration of the 3% increase to Medicare fee schedule payments for 2022 required by the Protecting Medicare and American Farmers from Sequester Cuts Act and the required budget neutrality adjustment required by changes in RVUs. Medicare physician payment has declined 22% from 2001 to 2022 (Figure 2).4,5
FIGURE 2. Medicare physician payments compared with other provider types and inflation. CPI indicates Consumer Price Index; MEI, Medicare Economic Index. Reprinted with permission from the American Medical Association.5
The adjustments to the CF typically are made based on 3 factors: (1) the Medicare Economic Index; (2) expenditure target “performance adjustment”; and (3) miscellaneous adjustments, including those for “budget neutrality” required by law.
Medicare Physician Payments Compared With Other Provider Types and Inflation—The proposed Medicare physician payment policy is unsustainable for outpatient dermatologists. Practice overhead has increased markedly since 1992. Other service providers, such as those in skilled nursing facilities and hospitals (Figure 3), have received favorable payment increases compared with practice cost inflation and the Consumer Price Index.3-6 Flat reimbursement affects all physicians who accept insurance, as even private insurers base their reimbursement on Medicare.
FIGURE 3. Medicare physician payments compared with other provider types. ASC indicates ambulatory surgical centers; LTC, long-term care; SNF, skilled nursing facility. Reprinted with permission from the American Medical Association.5
In addition, there are other issues resulting in decreased physician payments when evaluation and management services are reported with same-day procedures using modifier −25 as well as preserving or finding alternative strategies for 10- and 90-day global period payments for medical procedures. When Medicare cuts physician payments, dermatologists find it difficult to own and operate their own practices, resulting in health market consolidation, limited competition, increased health care costs, limited patient access to care, and decreased quality of health care.
Medicare Payment Reform—Medicare payment reform is necessary to stop annual payment cuts and create a stable predictable payment system that ensures patient access to quality, value-based care. Medicare physician payment reform needs to happen at a national level. The American Academy of Dermatology Association (AADA) is working with the House of Medicine and the medical specialty community to develop specific proposals, such as “Characteristics of a Rational Medicare Physician Payment System,” to reform Medicare’s payment system.7 Advocacy groups, including the AADA, have been working to mitigate the proposed 2023 cuts by engaging with Congress and urging them to act before these changes go into effect on January 1, 2023.