Medicare Physician Pay Cuts Could Stymie Elderly, Disabled Patients’ Access to Needed Care

Thursday, November 15, 2012


LEAWOOD, Kan. — Pending Medicare physician pay cuts and sequestration budget reductions threaten elderly and disabled patients’ access to health care as family physicians struggle to make up for financial losses wrought by the reductions. That’s the conclusion that can be drawn from an analysis of pending cuts that will slash a typical family medicine practice’s annual revenue by more than $315,000 and each individual family physician’s total revenue by $105,000 in 2013, the analysis showed.

The analysis looked at the impact of the Jan. 1 pay cut of 26.5 percent resulting from the sustainable growth rate that determines Medicare physician payment and the Jan. 2 Budget Control Act’s Medicare sequestration payment adjustment that cuts 2 percent. It assumed a typical family medicine practice comprised three physicians with a $1.425 million in total practice revenue, $475,000 in total per-physician revenue and 20 percent of total revenue paid by Medicare.

“No business can sustain a reduction of nearly 30 percent and remain viable,” said AAFP President Jeffrey Cain, MD. “These cuts will devastate family physicians’ ability to care for elderly and disabled Americans. Not only will they see reductions from Medicare, but they’ll also see losses in Medicaid and private insurance, because their payment rates are tied to the Medicare payment.”

Family physicians in 2010 — when Medicare was scheduled to cut payment by 25 percent — reported such a severe reduction would force them to close their practices (12.8 percent), stop accepting new Medicare patients (61.8 percent) or limit the number of Medicare appointments they scheduled (72.5 percent).

“Those numbers represent a serious threat to elderly and disabled patients’ access to needed care,” Cain said.

The AAFP took that message to Congress last week in a joint letter signed by the AARP, the American College of Physicians, the Medicare Rights Center, the Center for Medicare Advocacy, Inc., and American Geriatrics Society. In the letter, the organizations call on Congress to pass “the longest possible SGR fix this year,” develop new payment systems that end annual threats to Medicare payment, ensure Medicare remains affordable for beneficiaries, and increase focus on quality of care. Funds to make these changes could come from redirecting the Overseas Contingency Operations fund that “the Pentagon says will never be spent.”

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Founded in 1947, the AAFP represents 136,700 physicians and medical students nationwide. It is the largest medical society devoted solely to primary care. Family physicians conduct approximately one in five office visits -- that’s 192 million visits annually or 48 percent more than the next most visited medical specialty. Today, family physicians provide more care for America’s underserved and rural populations than any other medical specialty. Family medicine’s cornerstone is an ongoing, personal patient-physician relationship focused on integrated care.  To learn more about the specialty of family medicine, the AAFP's positions on issues and clinical care, and for downloadable multi-media highlighting family medicine, visit For information about health care, health conditions and wellness, please visit the AAFP’s award-winning consumer website,