Medicare anchors the payment structure for most payers. Commercial and Medicaid rates often mirror or benchmark against Medicare’s fee schedule, so every Medicare cut triggers an across- the-board reduction in physician payment.
Key structural flaws continue to erode physician reimbursement:
• Budget Neutrality : CMS must offset any payment increase with a cut elsewhere, creating instability and pitting specialties against one another. Specialty societies have urged Congress to end budget neutrality , but progress remains limited , especially amid disruptions such as the 2025 government shutdown. • No Inflation Indexing : Unlike hospital payments, physician rates are not tied to inflation . The Medicare Economic Index (MEI) tracks rising costs but is not fully applied . • Medicaid Shortfalls : Medicaid often reimburses below the cost of care , far less than Medicare or commercial payers, forcing many physicians to limit the number of Medicaid patients they can serve. Impact: Eroding reimbursement has created financial instability, driven independent practice closures, and reduced access to care, especially for Medicare and Medicaid patients and those in rural or low-income communities. Administrative Overload Administrative demands remain one of the greatest barriers to patient-centered care. Physicians spend over seven hours each week on paperwork, documentation, and compliance. For every hour with patients, nearly two are lost to clerical tasks.
Key contributors include:
Prior Authorization : A major source of frustration and delay that diverts time and resources from patient care. ➢
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CMS plans to pilot the WISeR Model in 2026 in six states, using AI to automate parts of this process. While promising, it could also add new complexity .
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• EHR and Compliance Requirements : Documentation, reporting, and certification mandates often exceed their purpose, forcing physicians to focus on screens and checkboxes instead of patients .
Impact: Each new administrative mandate pulls physicians further from patient care, replaces care with paperwork, and erodes morale across the system.
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