Impact of Continued Medicare Pay Cuts on Rural American Physicians
TL/DR –
The article discusses recent Medicare pay cuts and their impact on physicians and patients, particularly in rural America. The House of Representatives recently voted for a deal to fund the government that does not address the 2.83% Medicare pay cut that took effect earlier, marking the fifth consecutive year of Medicare pay cuts. These cuts are having a devastating impact on practices and leading to decreased availability of care, especially in rural areas which are already struggling with health inequities.
Medicare Cuts: The Devastating Impact on Rural Healthcare
In Pierre, South Dakota, internist Dr. Robert Allison describes the effect of Medicare cuts on his rural practice as “devastating”.
For over two decades, physicians like Dr. Allison have seen a consistent decline in their Medicare payments. After adjusting for practice-cost inflation, physicians are making 33% less today than in 2001, according to AMA data.
Adding to this, the House of Representatives recently voted in favor of a government funding deal that ignores a 2.83% cut in Medicare physician pay that came into effect on January 1. This legislation now awaits Senate approval to prevent a government shutdown before March 14.
Dr. Allison, along with other physicians, reports difficulties in caring for patients due to these cuts. His comments echo the sentiments of many doctors in rural areas facing the realities of decreasing Medicare payments.
For 2025, a 2.83% cut marks the fifth consecutive year of such reductions. This cut deepens the financial wound for physicians, as the Centers for Medicare & Medicaid Services project a 3.5% increase in the Medicare Economic Index – the measure of the cost of running a medical practice.
A bipartisan group of House members introduced a bill in late January to halt the 2.83% cut and provide a 2% payment update. This legislation, which the AMA supports strongly, seeks to reform the Medicare payment system.
Increasing Healthcare Inequities in Rural Areas
Medicare cuts are poised to deepen already alarming health inequities in rural areas. These locations, already disadvantaged, face higher mortality rates from health conditions like heart disease and cancer compared to urban areas.
Medicare cuts constrain the ability of practices to pay overheads, leading to closures. This reduces access to care for Medicare patients as some practices can no longer afford to take them on.
Family physician in Winner, South Dakota, Dr. Mary S. Carpenter, highlighted that the closure of practices makes it harder for patients to receive local care – or any care at all. This is already causing issues, with patients requiring subspecialty care enduring waits of several months.
The Downstream Impact on Rural Employment
Medicare cuts not only affect patient care but also impact rural employment. The amount physicians are paid dictates what they can pay their skilled workers. With too many physician offices closing, small community hospitals may also be forced to shut, which can have a disastrous effect on the community.
Physicians like Dr. Clarke are calling for Congress to address these issues by stabilizing and subsequently increasing reimbursement rates, to ensure the survival of rural hospitals and physician practices.
The AMA’s Medicare Basics series offers a comprehensive look at key aspects of the Medicare physician payment system.
Voices from the AMA Leadership
Speaker of the AMA House of Delegates, Dr. Lisa Bohman Egbert, recently detailed the heartbreaking closure of her Centerville, Ohio, practice after 27 years due to physician payment cuts. She highlights that private insurance companies also mirror Medicare’s rate decreases when renewing contracts.
AMA President Dr. Bruce A. Scott explained how Medicare physician pay cuts have impacted his otolaryngology private practice. Despite increasing patient volumes, his clinic struggles to remain financially viable due to stagnant Medicare reimbursement over the past 20 years.
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