2025 AADA Legislative Conference: Increase Your Advocacy Influence-Overview of Medicare Physician Payment Policy

Video Transcription

Video Summary

The Medicare Physician Fee Schedule Proposed Rule for 2026 introduces significant changes impacting dermatology and other specialties. For the first time in decades, CMS proposes two conversion factors: a 3.84% increase for physicians participating in advanced alternative payment models (QPs) and a 3.32% increase for others, creating a widening payment gap. Despite a temporary 2.5% boost from the One Big Beautiful Bill Act, overall reimbursement increases remain minimal, with dermatology seeing roughly a 0-2% rise depending on practice setting. CMS also proposes a 2.5% efficiency adjustment reducing work relative value units (RVUs) for many services, excluding time-based codes, potentially leading to ongoing cuts. Additionally, CMS plans to reduce indirect practice expense RVUs for services in facility settings by 13%, heavily affecting about 25% of dermatologists practicing in such environments. Proposed changes to payment for skin substitutes and maintenance of outdated cost data further threaten reimbursement stability.<br /><br />Historically, physician payments have failed to keep pace with rising practice expenses measured by the Medicare Economic Index (MEI), leading to a 33% decline in real physician income since 2001. Despite bipartisan congressional efforts, including proposed legislation (H.R. 879 and Senate S.1640) aiming to mitigate recent 2.83% cuts and provide partial inflationary increases, sustainable reform remains elusive. Dermatology advocates stress the urgent need for payment reform to prevent practice closures, maintain patient access, and uphold Medicare’s promise to seniors. The key legislative ask is immediate mitigation of current cuts and alignment of physician payments with rising costs to sustain care delivery.

Asset Subtitle

Learn how Medicare physician payment is determined, the history of Medicare payment policy, and how physicians can advocate to Congress for reform.

Keywords

Medicare Physician Fee Schedule 2026

dermatology reimbursement changes

CMS conversion factors

advanced alternative payment models

efficiency adjustment RVUs

indirect practice expense cuts

Medicare Economic Index impact

physician payment reform legislation