Medicare’s Raw Deal for Doctors Threatens Rural Medicine

If we’re going to do Medicare in this country — and we’ve made quite a financial commitment to it to this point — then we have to ensure it is available to all Americans, even the 20% who live in rural areas.
And if we’re going to provide Medicare to the people in rural areas, we’re going to need to do more to attract qualified health professionals and to keep them there. That means making Medicare work better for the doctors who work there.

Those who operate in rural areas treat poorer populations that in general are older and sicker. Doctors won’t be able to operate in these areas without an efficient Medicare system. Already, a staffing gap exists of between 35,000 and 125,000 physicians in rural areas, and it figures to expand if something can’t be done to address the problems with Medicare.

It is complicated and difficult to obtain repayment for Medicare services. Worse, reimbursement amounts have not increased with inflation. This means that although doctors’ salaries in rural areas are competitive, their earnings decrease as the cost of producing their services goes up but the compensation does not.

Doctors are the only ones whose payments don’t go up with inflation. Inpatient hospitals, outpatient hospitals, skilled nursing centers, and even hospice facilities have their compensation rates adjusted annually for inflation. But doctors, on whom the whole system depends, do not.
As a result, reimbursement rates for physicians — but again, not for hospitals, clinics, etc. — actually fell 26% from 2001 to 2023. Why would anyone continue to treat the most vulnerable patients for diminishing returns?

Physicians increasingly don’t. Not only is there a physician shortage, but independent physicians — the lifeblood of their communities — often join up with big corporate providers, which decreases competition and increases costs for Medicare and, ultimately, taxpayers. And there’s even a freeze on increasing these payments until 2026, at which time they will continue on a 0.25% basis annually. Inflation, by comparison, has been as high as 9% during the BIden administration and is still above 3%.

So we’re not paying physicians any increase in inflation, which saves money to some extent. But we’re driving them out of independent practices, which will cost money in the long run. And we’re singling them out for this treatment, even though it will reduce competition and availability in areas desperate for more healthcare practitioners.

There is legislation in the House to address this. The Strengthening Medicare for Patients and Providers Act is sponsored by four medical doctors — Democrats Ana Berra and Raul Ruiz of California and Republicans Larry Buschon and Mariannette Miller-Weeks, both of Indiana — who represent districts hard hit by this problem.

Their legislation would address the classification system that limits the earnings of physician practices and provide for inflation-adjusted increases to physician reimbursement payments, based on the Medicare Economic Index, which is similar to the updates other healthcare providers receive. This would keep independent physicians working and growing their practices to the benefit of their communities.

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The legislation is not a panacea, but it is a good step toward stabilizing medicine in rural America. It would address payment inequalities, give physicians’ practices more financial stability, and ensure Americans in our hardest-to-reach places still have access to doctors in their communities.

At a time when little happens in Washington on a bipartisan basis, doctors who represent rural communities and understand these problems have come together across the aisle to identify a problem and offer a solution. The rarity with which such compromise occurs should by itself give other members of Congress a reason to take a closer look.