Strengths And Weaknesses Of Introducing An Inflation Factor Into The Medicare Physician Fee Schedule

Health Affairs December 1, 2024
Michael E. Chernew, Ateev Mehrotra, Riya D. Doshi

Abstract

Unlike most other Medicare fee schedules, the Medicare Physician Fee Schedule does not include an automatic inflation update. We describe the history of Physician Fee Schedule update systems and present paradigms for evaluating the merits of adding an inflation-based adjustment factor to the schedule’s updating formulas. We adopt an incentive paradigm, which emphasizes how access to care and the consolidation of health care facilities are affected by fees. Although evidence suggests that the impact of fee changes on access has been small, it might not remain so. Moreover, the disparity in fees,...

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