For years, independent physicians have been asked to do more with less. Delivering high-quality care is getting more and more difficult. Rural communities, in particular, are getting hammered with worsening doctor shortages while Americans are experiencing higher rates of chronic disease. Medicare payment policies are only making an already dire situation that much worse.
It might sound technical, but it’s a textbook example of how Washington bureaucracy can create a Main Street calamity.
For many years, payments to independent physicians through the Medicare Physician Fee Schedule have fallen well below the actual cost of providing care. Repeated cuts and constant instability are making it more difficult for many local practices to stay afloat and operating in these underserved communities.
That needs to change if we want to make Americans healthier.
The Centers for Medicare and Medicaid Services (CMS) is expected to release its Medicare physician payment rule for 2027 this summer. Independent doctors across the country are watching closely — and for good reason. Many of them cannot afford yet another round of payment reductions.
This matters everywhere, but it is especially acute in rural America where local physicians play an outsized role in people’s lives. They’re the primary care doctor treating generations of a single family, the “specialist” managing follow-up care, and the person patients trust when something feels off. There’s not always a backup option nearby if practices are forced to scale back services, or worse yet, close.
At the same time, rural Americans continue to face higher rates of chronic conditions like heart disease, diabetes, and COPD, all of which require steady, accessible care over time. Patients do not improve when they have to drive farther, wait longer for appointments, or delay treatment because their local doctor can no longer serve them.
Independent physicians are also small business owners. They employ nurses, receptionists, technicians, and office staff. They rent office space, buy equipment, and support local economies. But unlike large hospital systems, small practices operate with very little margin for error. When Medicare payments fall behind while costs keep climbing, the pressure becomes impossible to ignore.
In the past 25 years, Medicare physician reimbursement has dropped by 33% when adjusted for inflation in practice costs. Meanwhile, staffing costs, medical supplies, and administrative burdens have all continued to rise. That kind of imbalance isn’t sustainable for any small business. It would be better if Medicare reimbursement followed inflation.
However, there is some good news. Lawmakers on both sides of the aisle are beginning to recognize there is an issue. Several pieces of legislation introduced this year would stabilize the MPFS and strengthen independent practices.
One proposal would finally modernize Medicare’s outdated budget neutrality rules. Under current policy, if Medicare increases spending in one area by more than $20 million, it must offset those increases with cuts elsewhere. That threshold hasn’t changed since the early 1990s, despite decades of inflation and enormous growth in the Medicare program.
The bipartisan legislation, spearheaded by Reps. Greg Murphy, MD (R-NC) and John Joyce, MD (R-PA), co-chairs of the GOP Doctors Caucus, would raise the threshold. It would also reduce the cycle of automatic cuts that has created so much instability for physicians. These are practical reforms that Congress should move on to quickly.
Rep. Mariannette Miller-Meeks (R-IA), who proudly served as an ophthalmologist in the U.S. Army, recently introduced another important proposal aimed at broader Medicare physician payment reform. Her bill would help create a more predictable reimbursement system and better account for the real-world costs physicians face. That kind of stability is sorely needed.
CMS also has a role to play here. The agency should recognize the strain practices are already under and avoid imposing yet another round of cuts on independent physicians in the upcoming rulemaking process for this year. Instability will only accelerate consolidation, worsen shortages, and make access problems harder to solve.
CONGRESS MUST CURE THE CORPORATE HOSPITAL BILLING EPIDEMIC
Doctors should be able to plan ahead, hire staff, and invest in their communities without a flawed Medicare reimbursement formula pulling the rug out from under them.
This shouldn’t be a partisan issue. Supporting independent physician practices means supporting local access to care. It means helping seniors stay healthier. And it means preserving the community-based practices that remain the backbone of healthcare in much of the country.
Peter Mihalick is former Legislative Director and Counsel to former Reps. Barbara Comstock (R-VA) and Rodney Blum (R-IA).