AMA's Medicare Basics series

The AMA's Medicare Basics series provides an in-depth look at important aspects of the Medicare physician payment system. Through straightforward explanations, policymakers and physician advocates can learn about key elements of the payment system and why they are in need of reform.  

1. Medicare physician payment adequacy—Budget neutrality

   1. As one of the few Medicare providers without a payment update tied to inflation, physicians have watched their inflation-adjusted payments decline 26% from 2001 to 2023. Physician payments are further eroded by frequent and large payment redistributions caused by budget neutrality adjustments.

2. Merit-based Incentive Payment System (MIPS)

   1. Although the Medicare Merit-based Incentive Payment System (MIPS) is well-intentioned, its reporting requirements are burdensome to physician practices and often appear to be clinically irrelevant. Congress must step in and act to prevent unsustainable penalties, invest in and enable the move to value-based care, and increase transparency and oversight in the program.

3. The Medicare Economic Index (MEI)

   1. Since 1992, the role of the Medicare Economic Index (MEI) in shaping Medicare physician payment has diminished dramatically, first under the sustainable-growth rate (SGR) and then under the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015. Physicians need an annual inflationary update, which will allow practices to better absorb other payment redistributions triggered by budget neutrality rules and performance adjustments, as well as periods of high inflation and rising staffing costs.

4. Advancing value-based care with alternative payment models

   1. Alternative payment models (APMs) are a key approach to achieving value-based care by providing incentive payments to deliver high-quality and cost-efficient care for a clinical condition, a care episode or a patient population.

5. Transitioning to value-based care: Clinical data registries

   1. The Centers for Medicare & Medicaid Services’ (CMS) clinical data registry approval process under the Merit-based Incentive Payment (MIPS) program is complex and cumbersome, and the lack of accessible cost data inhibits progress toward true value-based care. As a result, physicians’ ability to leverage their participation in these quality improvement efforts for MIPS and engage in continuous learning has been limited.

6. MIPS data problems

   1. Value-based care relies on data. To be successful, physicians in Medicare’s Merit-based Incentive Payment System (MIPS) need access to a wide range of information on a timely basis to understand gaps in care and identify opportunities to improve health outcomes, reduce variations in care delivery or eliminate avoidable services—all steps that can lower costs for patients and the Medicare program.

• FixMedicareNow.org
• Advocacy in action: Leading the charge to reform Medicare pay
• AMA leads on Medicare reform
• AMA advocacy efforts

Learn more about how the AMA fights against Medicare cuts, defending practices & access to care.

Find materials and contact your members of Congress to let them know the Medicare physician payment system needs reform to better meet the needs of patients and physicians.

The AMA and the Federation of Medicine have developed a set of principles to guide advocacy efforts on Medicare physician payment reform. Learn more.