Patient care is getting squeezed. For years now, the Medicare Physician Fee Schedule has failed to give doctors the resources they need to keep up with rising costs and deliver high-quality care. The result is real strain on practices, especially smaller and independent ones, and growing risks for patients who rely on Medicare.
When you adjust for inflation, Medicare payment rates to physicians have dropped by about 33 percent since 2001. Practice costs, tracked by the Medicare Economic Index, have climbed steadily with expenses for staff, supplies, rent, insurance, and technology. Yet payments have not kept pace. This gap has widened over two decades, and temporary fixes from Congress have not solved the underlying problem.
The financial pressure shows up in daily operations. Doctors and their teams spend more time on paperwork, prior authorizations, and other administrative tasks that add overhead without helping patients. Combined with stagnant or declining reimbursements, this contributes heavily to physician burnout. Many practices have closed or been absorbed by larger hospital systems. Independent offices, which often serve rural and underserved communities, feel the pinch hardest. Physician practices continue to face excessive administrative burdens, from prior authorization requirements, quality reporting, and other regulations that divert time from patient care and contribute to burnout. Congress should advance targeted relief in these areas as part of payment reform. In accordance with this, the Centers for Medicare and Medicaid Services (CMS) has announced early adopter programs with health systems, electronic health record (EHR) vendors, and providers to accelerate electronic prior authorization (ePA) implementation ahead of deadlines. Some additional transparency or health equity requirements for Medicare Advantage utilization management committees have been suspended or not fully enforced under the current administration.
Market consolidation is one clear outcome. When smaller practices cannot stay afloat, they join bigger entities. That can drive up overall health care costs and reduce choices for patients. In rural areas, the loss of local physicians threatens timely access to care. Seniors may face longer waits, travel farther for appointments, or see limits on who accepts new Medicare patients. Physicians continue to struggle to keep up with rising inflation that is layered on top of other long-standing financial pressures. Since 2001, the cost of running a medical practice has increased 39 percent, but CMS has only increased reimbursement for physicians by 11 percent. In fact, when adjusted for inflation, physician pay actually declined by 26 percent from 2001 to 2023.
A key structural flaw is the lack of automatic updates tied to actual practice costs. Unlike hospitals and some other providers, physicians do not get reliable annual inflation adjustments. On top of that sits the budget neutrality requirement. If Medicare wants to increase payment for one type of service, it often must cut elsewhere, frequently through an across-the-board reduction in the conversion factor. This creates unnecessary conflict between specialties and makes the whole system unpredictable.
Congress has stepped in repeatedly with short-term patches, such as modest boosts or the avoidance of cuts for 2026. These help in the moment, but they do not fix the foundation. The system remains on an unsustainable path.
What reform could look like
Physician organizations across the spectrum, including the American Medical Association and the American College of Physicians (ACP), are pushing for lasting change. A strong proposal is tying annual updates to the Medicare Economic Index (MEI), so payments better reflect real cost increases. MedPAC, the independent Medicare advisory commission, recommends replacing the current flawed Physician Fee Schedule (PFS) updates with a single, predictable annual adjustment based on MEI growth minus 1 percentage point. The MEI tracks inflation in physician practice costs such as staff wages, rent, supplies, equipment, and malpractice insurance. This formula would deliver automatic increases. For instance, a 2.3 percent MEI growth would yield a 1.3 percent payment update, providing far more stability than today’s tiny statutory updates and temporary patches. It balances access to care, fiscal responsibility, and productivity expectations while serving as a practical middle ground between full MEI updates favored by physicians and the existing unsustainable system.
Bipartisan legislation such as the Strengthening Medicare for Patients and Providers Act aims to provide that inflation-based stability. Versions of this bill have been introduced in recent Congresses, and the idea continues to draw support from doctors in both parties.
The goal is not to enrich physicians. It is to create a stable foundation so they can focus on patients, invest in their practices, hire and retain staff, and remain independent when that best serves the community. Without reform, the trends of burnout, consolidation, and reduced access will likely accelerate.
This is a solvable policy issue. ACP urges Congress to deliver a positive annual update to the PFS tied to the MEI, ensuring payments keep pace with rising practice costs. Congress must also reform the budget neutrality rules that trigger unnecessary cuts, especially since CMS routinely overestimates utilization of new services. Finally, to improve access for patients with complex needs, lawmakers should allow physicians to waive cost-sharing services like Advanced Primary Care Management and Chronic Care Management, with appropriate documentation.
On patient access, eliminating or allowing waivers for beneficiary cost-sharing on care management services would remove financial barriers, particularly for those with multiple chronic conditions and social needs, thereby increasing uptake of valuable coordination services. Legislation, such as the Chronic Care Management Improvement Act, directly supports waiving coinsurance for these services while maintaining physician documentation requirements.
Medicare beneficiaries, who are often our parents and grandparents, deserve reliable access to care. Physicians need a payment system that keeps up with economic reality rather than falling further behind each year. Congress has the tools to make the fix. What is needed now is the will to move from temporary band-aids to structural reform. When practices close or consolidate, Medicare beneficiaries, especially seniors, lose continuity of care. Costs can shift elsewhere in the system. A stable, predictable payment structure that reflects actual expenses would let physicians focus on patients, invest in their practices, and reduce burnout. Temporary patches aren’t enough; structural reform is needed.
This topic matters to all of us who will eventually need good medical care. Stable physician payments are one practical way to protect that access for the long term.
Kayvan Haddadan is a physiatrist and pain management physician, and president and medical director of Advanced Pain Diagnostic & Solutions, a multidisciplinary pain management practice in California that he founded in 2012. A physician and surgeon licensed by the Medical Board of California, he is double board-certified in pain medicine and physical medicine and rehabilitation. He is also certified in controlled substance registration through the DEA and serves as a qualified medical examiner through California’s Department of Industrial Relations Division of Workers’ Compensation.
Dr. Haddadan earned his Bachelor of Science degree from the College of Alborz in Tehran, Iran, and his medical degree from Shahid Beheshti University of Medical Sciences. He later received his Educational Commission for Foreign Medical Graduates certification in Philadelphia, completed an internship in medical surgery at Loyola University Medical Center’s Stritch School of Medicine in Illinois, and finished his residency in physical medicine and rehabilitation at the same institution. He completed his fellowship in pain medicine at California Pacific Medical Center’s Pacific Pain Treatment Center and also trained in medical acupuncture for physicians at the University of California, Los Angeles David Geffen School of Medicine.
Dr. Haddadan has contributed to 29 research publications across multiple specialties, including pain management, cardiology, pulmonology, endocrinology, gastroenterology, and infectious disease. His work has examined topics such as hyperlipidemia in high cardiovascular risk patients, hyperuricemia and gout management, type 2 diabetes and hypertension, chronic obstructive pulmonary disease and asthma therapies, influenza treatment, irritable bowel syndrome, and opioid related complications in chronic pain care. His research has also included clinical outcome studies in spinal cord stimulation and award-winning presentations on neuropathic pain management and neuromuscular disorders.
