A look at the Academy’s fight for fair payment

By Apoorva Stull, Senior Manager, Advocacy Communications, October 1, 2024

DermWorld breaks down the latest highlights of AADA advocacy activities at the federal and state legislative and regulatory level.

The Academy’s sole 2024 federal congressional advocacy priority is Medicare physician payment reform, which includes establishing a positive annual inflation adjustment and replacing or eliminating budget neutrality requirements to the current physician payment system.

The Academy lobbies to protect dermatologists’ ability to provide high-quality care, leveraging the expertise of more than 15 dedicated professionals with deep experience in lobbying and health care policy. Our efforts are bolstered by approximately 136 dermatologists — volunteer members of the Academy Government Affairs and Health Policy Council and its related committees — continuously tackling the issues important to dermatology.

The Academy leads the advocacy efforts on dermatology issues throughout the lawmaking process — from concepting a bill through revisions, passage, rulemaking, and real-world application.

Medicare physician payment reform

Reimbursements made by Medicare and other insurers ultimately affect the economic viability of your practice. The Academy has been intrinsically involved in ensuring representation for coverage and reimbursement issues facing dermatologists in the legislative and regulatory landscape as well as with private payers. We represent dermatologists’ interests in nearly every payment-related policy discussion.

Today, medicine stands at a critical juncture, with threats to Medicare reimbursement that will impact dermatologists’ ability to provide patients in need of care. Over the last 20 years, the failure of the Medicare physician fee schedule to keep up with inflation has been the greatest threat to maintaining health care access.

The Academy has advocated for fair Medicare reimbursement since 1997 with the enactment of the Balanced Budget Act and the Sustainable Growth Formula (SGR), which further reformed Medicare payments by extending per-case payment methodologies to all types of post-acute care. Congress moved to stop scheduled cuts with either small updates or Medicare payment freezes starting in 2003 and in each subsequent year up through 2015.

Then, in 2015, the Medicare Access and CHIP Reauthorization Act, or MACRA, repealed the SGR formula and established an alternative set of annual updates. In addition, MACRA introduced a new Merit-based Incentive Payment System (MIPS) increasing administrative burdens for physicians.

When adjusted for inflation, physicians have seen payments drop nearly 30% from 2001 to 2024, and those payments are further eroded by frequent and large payment redistributions statutorily required by budget-neutrality adjustments contained in the annual Medicare physician payment schedule.

This is why Congress must pass legislation to tie the Medicare physician fee schedule to the Medicare Economic Index, so physicians are not facing year-after-year cuts.

AADA’s position on Medicare payment reform

The Academy wants Congress to adopt a Medicare payment system that acknowledges the inflationary growth in the cost of delivering health care and ties the annual Medicare Physician Fee Schedule updates to inflation or the Medicare Economic Index (MEI). This is crucial for ensuring financial stability in the Medicare physician payment system and maintaining continued access to high-quality patient care. Additionally, we are seeking to eliminate budget neutrality requirements that mandate that increases in one area of the fee schedule are offset by cuts in another area.

To address the systemic issues within the Medicare physician payment system and safeguard physicians’ ability to provide patient access to care, the AADA urges members of Congress to:

• Co-sponsor H.R. 2474, the Strengthening Medicare for Patients and Providers Act, which would provide for an annual inflation update equal to the Medicare Economic Index (MEI) for Medicare physician payments.

• Co-sponsor H.R. 6371, the Provider Reimbursement Stability Act, which would revise budget neutrality policies that contribute to eroding Medicare physician reimbursement.

• Co-sponsor S. 4935, the Physician Fee Stabilization Act, which would update the budget neutrality thresholds in the Medicare physician fee schedule, so that new or updated services in the Medicare program will not cause payment cuts to other services.

Additionally, the Academy is focused on regulatory relief. We are working with stakeholders, policymakers, and the American Medical Association (AMA) to introduce legislation that would reform MIPS.

Medicare payment: A timeline

1992 – Medicare physician fee schedule established

1997 – Sustainable Growth Rate formula established

• The enactment of the Balanced Budget Act and the Sustainable Growth Rate (SGR) formula further reformed Medicare payments by extending per-case payment methodologies to all types of post-acute care. However, throughout the program, Congress intervened with updates and freezes and determined that the SGR would continue to produce cuts.

2002 – First 5.4% cut, leading to the annual cycle of projected cuts through 2015

2003 – 2015 – Congress intervened with small updates or freezes

2015 – Medicare Access & CHIP Reauthorization Act (MACRA) passed

• MACRA aimed to fix Medicare reimbursement and health care access, along with the Merit-based Incentive Payment System and the Quality Payment Program.

2020 – Changes in evaluation and management codes

• The changes in evaluation and management values triggered budget neutrality requirements resulting in cuts to specialists to offset increases for primary care physicians.

2021 – 10.2% cut, Congress intervened, largely mitigating cut

• Late in 2020, added 3.75% to the conversion factor largely averting the impact of cuts. Dermatology received a 5% increase in payment on average.

2022 – 9.75% cut, Congress provided partial relief, 0.75% cut in January 2022

• Late 2021, Congress added 3.0% to the conversion factor, waived 4% cut, phased in 2% sequester.

• Initially proposed a 0.75% cut, but the cut was increased to 2.75% with sequester phase-in, which is an automatic spending cut that occurs through the withdrawal of funding for certain government programs.

2023 – 8.5% cut, Congress only provided partial relief with a 2% cut in January 2023.

2024 – 3.37% cut, Congress only provided partial relief with a 1.69% cut in March 2024.

Additional DermWorld Resources