Doctors will likely get paid less next year for treating Tennessee’s 1.4 million Medicare beneficiaries.

The Centers for Medicare and Medicaid Services, or CMS, sets annual payment rates for providers like hospitals, drugmakers and doctors.

This month, the agency finalized its 2025 plans. Unless Congress steps in to force a change, doctors will see a nearly 3% cut in their pay. That’s to keep Medicare’s spending down so the budget stays neutral.

This will be the fifth consecutive year of physician pay cuts. And the decrease is taking place while high prices and inflation continue to make providing care more expensive. The Medicare Economic Index measures that cost growth and it’s expected to surpass 4% this year.

Russ Miller, CEO of the Tennessee Medical Association, says the proposal is insulting.

“Nowadays, most [doctors] are paying a quarter-of-a-million dollars in debt just to come out of school for the benefit of getting slapped in the face every year when the rates come out,” he said. “How much longer would you work for your current employer if they cut you 2-to-3% every year for the next 10 years? Yeah, you wouldn’t. And so I don’t know why Congress thinks the physicians of America will continue to work for the Medicare program.”

About one in five Tennesseans are enrolled in Medicare, but the cut will be even broader than that. Changes to the Medicare rate affect the payments that hospitals, doctors and other providers will get for treating other patients. Medicaid payments are tied to Medicare payments. Another 1.4 million residents are enrolled in TennCare.

Medicare rates also inform how much private insurance companies pay. The Kaiser Family Foundation published a paper in 2020 that found private insurers pay doctors about 143% of Medicare rates on average. Private insurance companies and providers nail down contracts for rates that last a few years at a time.

Miller says this leaves doctors in an impossible position.

“If I want to stay in business, what am I going to do?” he said. “I’m either going to increase rates where I can — but I can’t because I’m locked into (a contract with) every health care network and every health insurance network. I’m going to cut pay for my staff? Well, then I’m not going to have any staff. I won’t be able to attract any employees to help provide this care that I’m losing money on. I got it; I’ll sell my practice to the local hospital … Well, now you’ve just shifted your burden of bad pay to the hospital system. It just keeps going.”

TennCare — the state’s Medicaid agency — is raising similar concerns. In its budget request, the department asked lawmakers for nearly a billion dollars more than the year before.