Medicare, the federal health insurance program for individuals aged 65 and older, plays a crucial role in providing healthcare access for millions of Americans. However, in recent years, there has been a notable decline in the number of physicians who accept Medicare. After an increase in Medicare acceptance rates from 2019 to 2020, fewer physicians report accepting this form of insurance in a recent survey (1). In 2019, 71% physicians reported accepting new Medicare patients, compared to only 65% in 2023 (1). Additionally, in 2023, 22% of physicians disclosed that they remained unsure about accepting Medicare (1). Major factors behind this decrease include recent trends in reimbursement rates, administrative burdens, and the lack of physician flexibility.
First, the Centers for Medicare and Medicaid Services (CMS) announced cuts to the Medicare physician reimbursement program beginning in January 2023 (2). The new budget schedule included a 4.4% reduction in reimbursements, a significant drop that caused physician organizations to anticipate decreases in the number of physicians who would accept Medicare (3). The American Medical Association (AMA) condemned this reduction, claiming that the unsustainable pattern of pay cuts will lead to reduced access to healthcare for Medicare beneficiaries (3). As predicted by the AMA, fewer physicians reported participation or acceptance of Medicare after the new reimbursement plan started in 2023 (1).
Second, administrative burdens associated with Medicare precludes physicians from accepting this form of insurance. Administrative functions — including billing, scheduling, compliance, documentation, and other nonclinical tasks — pose significant challenges to physicians. In contrast to some other healthcare insurance programs, Medicare requires physicians to complete specific filing guidelines, manage prior authorizations, and verify coverage (4). As administrative tasks often require hours to complete every shift, administrative burden accounts for the most common cause of physician burnout (5); many physicians seek ways to reduce this load in their clinical practice. Additionally, with administrative costs comprising 8% to 34% of total healthcare spending, the United States exhibits a substantially higher proportion of administrative costs compared to other countries due to the unique complexity of its federal healthcare systems (6). As administrative burdens increase, physicians lose the ability to accept new patients, especially patients with complex Medicare plans.
Third, Medicare rules can be inflexible. Medicare requires physicians to comply in multiple aspects, from electronic medical record (EMR) practices to fee stipulations to prior authorization specifications. Additionally, Medicare incentive programs such as MACRA, MIPS, and PQRS each pose unique requirements that physicians must satisfy at the risk of penalties otherwise (4). With stringent guidelines and strict regulations, Medicare can reduce the flexibility that physicians have to run their practices, deterring them from accepting beneficiaries. As a result, psychiatrists, plastic surgeons, and other physicians in niche fields are most likely to opt out of Medicare (7).
The decrease in reimbursement rates, administrative burdens, and lack of flexibility associated with Medicare contribute to the declining proportion of physicians who accept Medicare beneficiaries. To combat this problem, some physicians have called for reform in the Medicare system, starting with increased reimbursement rates, streamlined requirements, and increased flexibility (3). Changes in the Medicare system could secure healthcare access for Medicare beneficiaries by increasing incentives for participating physicians.
References
1: Kane, L. 2023. Medscape physician compensation report 2023: your income vs. your peers’. Medscape. URL: https://www.medscape.com/slideshow/2023-compensation-overview-6016341?faf=1#16.
2: Centers for Medicare and Medicaid Services. 2023. Calendar year (CY) 2023 Medicare physician fee schedule final rule. Centers for Medicare and Medicaid Services. URL: https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2023-medicare-physician-fee-schedule-final-rule.
3: O’Reilly, K. 2023. New Congress brings new call for Medicare physician pay overhaul. American Medical Association. URL: https://www.ama-assn.org/practice-management/medicare-medicaid/new-congress-brings-new-call-medicare-physician-pay-overhaul.
4: Feke, T. 2022. Why some healthcare providers don’t accept Medicare or other insurance. VeryWell Health. URL: https://www.verywellhealth.com/doctors-accept-medicare-insurance-3976280.
5: Kim, A. and Novinson, D. 2022. Administrative burden remains the biggest driver of burnout, doctors say. Doximity. URL: https://opmed.doximity.com/articles/administrative-burden-remains-biggest-driver-of-burnout-doctors-say.
6: Kyle, M. and Frakt, A. 2021. Patient administrative burden in the US health care system. Health Services Research, vol. 56. DOI: 10.1111/1475-6773.13861.
7: Ochieng, N., Schwartz, K., and Neuman, T. How many physicians have opted-out of the Medicare program? Kaiser Family Foundation. URL: https://www.kff.org/medicare/issue-brief/how-many-physicians-have-opted-out-of-the-medicare-program/.
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