March 11, 2025- At a recent American Medical Group Association (AMGA) board meeting, several large, successful members shared something concerning to the group – they were running out of money. “These are seasoned leaders,” said Chet Speed, chief policy officer. “They’re not alarmists. They don’t panic. They’re reasonable. They take measured moves as far as their operation’s concerned. But this is what they say is happening.”
It’s happening in large part because over the past four years, medical groups and health systems have experienced almost 8% in cumulative cuts to Medicare Part B reimbursements, which is not factoring in the 2.8% cut that implemented in early 2025. That’s essentially a half-decade of cuts totaling 11% over those years.
“How many industries can take on 11% cuts over five years?” asked Speed. “This constant drip, drip of cuts is becoming problematic for our members.”
According to data from the recent AMGA 2024 Medical Group Operations and Finance Survey, medical groups continue to face challenges related to providing quality, cost-effective care in a constantly evolving healthcare environment. Medical groups are strained from internal and external pressures, such as rising labor costs, increasing demand/access issues, and regulatory changes, including those from the Centers for Medicare & Medicaid Services (CMS). With a stifled reimbursement environment and continued financial pressures, medical groups are forced to double down on operations and expense management, the AMGA said.
In the survey, respondents were asked what they did in 2024 because of the cuts, and what they might do in 2025 if the cuts were not eliminated. “We were actually surprised by the severity of the impact that these cuts are having on the group practices that we represent,” Speed said. “These aren’t just superficial cuts. These are getting into the meat of the operations of patient delivery and employment.”
Speed identified two areas where the cuts were forcing members to make particularly difficult decisions. The first is related to patient-level services. Approximately 42% of AMGA members surveyed revealed they had eliminated some type of patient-facing service in 2024; two-thirds indicated they might be forced to eliminate patient-facing services in 2025. A total of 15% of AMGA members stopped accepting new Medicare beneficiaries, and a quarter said they’ll do that in 2025 if nothing changes.
The second category affected is employment. Approximately 55% of AMGA members surveyed said they implemented hiring freezes in 2024, and 67% said they’d have to do it in 2025 if the cuts continued. What’s more, 25% of respondents furloughed administrative staff last year, and 40% said they’d do it this year.
“If you’re a member of Congress, you’re concerned about two things; one, your Medicare beneficiaries having access to care, and secondly, that there is robust employment in the health sector within your state or district,” Speed said. “It’s pretty clear these cuts are having the opposite impact, that you do have beneficiary access issues becoming a consistent problem and hiring and firing becoming an issue as well.”
Look for more on this topic in an upcoming issue of Repertoire Magazine.