Medicare was initially developed to provide health insurance to address the health care needs of Americans aged 65 and older, many of whom lacked adequate insurance coverage and the capacity to keep up with general workforce requirements. Medicare has long been the cornerstone of health care for millions of Americans and, therefore, often sets the benchmark for health care reimbursement.

Currently, approximately 67.7 million people are enrolled in Medicare.¹ The number of elderly adults in the United States continues to increase, resulting in higher utilization of Medicare. Recent reports project that the number of Americans aged 65 and older will increase by about 47 percent by 2050, which would concurrently represent approximately 23 percent of the population.² 

Medicare not only affects the lives of those who utilize it, but also the ability of the health care system to provide care. For context, Medicare and Medicaid accounted for 54.4 percent of emergency department (ED) visits and 55.3 percent of aggregate costs.³ EDs are the safety nets for the health care system and rely heavily on Medicare reimbursements, making them particularly vulnerable to funding reductions.

Recent proposals by Centers for Medicare and Medicaid Services (CMS) to further decrease Medicare reimbursements threaten the financial and operational capacity of emergency medicine. These cuts have far-reaching implications for emergency physicians, including decreased compensation, increased workload, and compromised wellness, and have even broader effects on patients and the stability of the health care system.

Proposed Cuts and Their Implications

CMS has proposed reductions in Medicare reimbursement rates as part of broader cost-containment measures. These cuts will result in a 2.9 percent decrease in reimbursement rates, for the fifth consecutive year, significantly affecting emergency physician income.^4,5 Generally, emergency physicians are compensated through a combination of fee-for-service, relative value unit (RVU)-based models, and, occasionally, salary. Medicare reimbursement predominantly relies on RVUs, which are calculated using an intricate and often convoluted conversion factor system.⁶ These payments continue to decrease because of insufficient inflation adjustments.

Reimbursement for emergency physician services decreased by 29 percent between 2000 and 2020.⁷ Even private insurers set payment rates based on Medicare’s fee structure, further emphasizing the influence of CMS on overall reimbursement.⁵ Emergency physicians also face challenges with uncompensated care because EMTALA, which requires all persons presenting to an ED be medically screened by a qualified medical professional, also mandates treatment regardless of patients’ insurance status.⁸

In addition, emergency medicine compensation has not kept pace with increasing inflation, growing administrative burden, or surging patient volumes.⁹ The 2024 MGMA Provider Compensation and Production Report showed that emergency medicine had the biggest five-year decrease in compensation (inflation-adjusted) among specialties in the United States.¹⁰ Although emergency physicians’ pay continues to decrease, the work burden and burnout rates continue to increase.¹⁰

How can emergency physicians keep up with an aging and overall sicker population, and increasing patient volumes?

Medicare cuts disproportionately affect specialties like emergency medicine and may compel hospital systems to renegotiate contracts, cut physician pay, or reduce staffing, creating an unsustainable workload.⁶ According to recent surveys, burnout rates among emergency physicians exceeded 50 percent, driven by long hours, high stress, and insufficient resources.¹¹ Pay reductions may exacerbate these issues, undermining morale and threatening physician retention.

Smaller and rural EDs face the greatest risks from Medicare cuts.⁵ These facilities are often disproportionately reliant on Medicare reimbursement and struggle to attract and retain emergency physicians. Financial strain may force closures or service reductions, further limiting access to emergency care in underserved areas.¹²

Primary care services also continue to be burdened by Medicare cuts.⁵ Decreasing reimbursement, rising overhead costs, and the advancing medical complexity of patients often make private practice unsustainable.⁵ Difficulty seeing a primary care physician or getting preventative care further results in patients seeking primary care services in the ED, because they have no other option.

Effects on Patient Care

The implications of Medicare cuts extend well beyond physicians and onto patients and the broader health care system.

1. Reduced access to emergency care and longer wait times. Cuts in reimbursement lead to staffing shortages and closures of EDs, particularly in rural and underserved regions. This can lengthen ED wait times, delay critical interventions, and potentially worsen health outcomes, especially among vulnerable populations. According to the American Hospital Association (AHA), Medicare cuts disproportionately affect older adults and those in underserved communities.¹³
2. Compromised quality of care. Financial constraints may force hospitals to cut costs, compromising quality of care. For instance, reduced diagnostic testing could mean fewer tests for early detection of diseases, less frequent staff training opportunities could lead to less updated medical practices, and reliance on less experienced clinicians could compromise quality of care. A 2021 systematic review found that financial strain reduced care quality, leading to poorer outcomes.¹⁴
3. Increased costs for patients. Although Medicare cuts aim to control spending, this may inadvertently increase patient costs.⁹ Hospitals sometimes shift costs from Medicare shortfalls onto the privately insured. For example, reduced reimbursement may prompt hospitals to offset losses by charging private insurance more, implementing facility fees, or increasing premiums and out-of-pocket expenses, thereby increasing the financial burden on patients.¹⁵
4. Strain on the health care system. A poorly funded emergency care infrastructure can ripple through the health care system. When patients can’t access timely emergency care, conditions may worsen, requiring more intensive and costly inpatient care and further straining the system.¹⁶

In conclusion, one “small” cut is enough to change the entire fabric of the health care system, especially emergency care, posing significant challenges for emergency physicians and threatening their pay, wellness, and ability to provide high-quality care. Emergency physicians, health care leaders, and advocacy organizations must work collaboratively to shape reforms that protect the financial viability of emergency medicine while safeguarding patient care. ACEP continues to stand at the frontline of advocating for improved Medicare reimbursement and the stability of the intricate wefts that are critical to holding health care together.

References

1. Centers for Medicare and Medicaid Services. Medicare Monthly Enrollment. https://data.cms.gov/summary-statistics-on-beneficiary-enrollment/medicare-and-medicaid-reports/medicare-monthly-enrollment. Updated September 2024. Accessed January 12, 2025.
2. United States Census Bureau. 2023 National Population Projections Tables: Main Series. https://www.census.gov/data/tables/2023/demo/popproj/2023-summary-tables.html. Accessed January 12, 2025.
3. Moore BJ, Stocks C, Owens PL. Trends in emergency department visit costs, 2006–2014. Healthcare Cost and Utilization Project (HCUP) Statistical Brief #227. https://hcup-us.ahrq.gov/reports/statbriefs/sb227-Emergency-Department-Visit-Trends.pdf. Published September 2017. Accessed January 12, 2024.
4. Centers for Medicare and Medicaid Services. Calendar Year (CY) 2025 Medicare Physician Fee Schedule Proposed Rule. https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2025-medicare-physician-fee-schedule-proposed-rule. Published July 10, 2024. Accessed January 12, 2025.
5. Zarefsky M. Latest proposed cut—2.8%—shows need for Medicare pay reform. AMA News. https://www.ama-assn.org/practice-management/medicare-medicaid/latest-proposed-cut-28-shows-need-medicare-pay-reform. Published July 10, 2024. Accessed December 30, 2024.
6. Kuzel AR, Cozzi N, Hiestand B, et al. Overview: what every EM resident needs to know about reimbursement in 2023. Emergency Medicine Residents’ Association. https://www.emra.org/emresident/article/reimbursement-july-2023. Published July 15, 2023. Accessed January 12, 2025.
7. Venkatesh AK, Janke AT. Emergency physician reimbursement: getting shortchanged or shrewdly negotiating? Ann Emerg Med. 2020;76(5):621-624.
8. U.S. Department of Health and Human Services. Office of Inspector General. The Emergency Medical Treatment and Labor Act (EMTALA). https://oig.hhs.gov/reports-and-publications/featured-topics/emtala. Lasy updated September 11, 2024. Accessed December 30, 2024.
9. Patients Rising. Medicare Physician Fee Schedule Reform: Addressing Doctor Shortages and Ensuring Access to Care. https://www.patientsrising.org/medicare-physician-fee-schedule-reform-addressing-doctor-shortages-and-ensuring-access-to-care. Published November 17, 2024. Accessed December 30, 2024.
10. Medical Group Management Association. Provider Compensation and Productivity Data Report. https://www.mgma.com/getkaiasset/252744ee-c63b-4a96-9211-8a5d6b908b39/MGMA-2024-Provider-Compensation-Data-Report.pdf. Published May 2024. Accessed December 30, 2024.
11. Stehman CR, Testo Z, Gershaw RS, et al. Burnout, drop out, suicide: physician loss in emergency medicine, part I [published correction appears in West J Emerg Med. 2019;20(5):840-841]. West J Emerg Med. 2019;20(3):485-494.
12. National Rural Health Association. Preserving Rural Health Care: The Impact of Site-Neutral Payments. https://www.ruralhealth.us/getmedia/256de3dc-0833-4387-9c84-b5e4f4909873/NRHA-site-neutral-policy-brief-2024.pdf. Published November 2024. Accessed December 30, 2024.
13. Pollack R. Proposed Medicare cuts jeopardize access to care for patients and communities. American Hospital Association. https://www.aha.org/news/opinion-editorial/2023-07-07-proposed-medicare-cuts-jeopardize-access-care-patients-and-communities. Published July 7, 2023. Accessed January 12, 2025.
14. Dubas-Jakóbczyk K, Kocot E, Tambor M et al. The association between hospital financial performance and the quality of care—a scoping review protocol. Syst Rev. 2021;10(1):221.
15. Frakt AB. How much do hospitals cost shift? A review of the evidence. Milbank Q. 2011;89(1):90-130.
16. Risko N, Chandra A, Burkholder TW, et al. Advancing research on the economic value of emergency care. BMJ Glob Health.2019;4(Suppl 6):e001768.