Inside the Fight to Fix Medicare Physician Payments Today

As the fifth consecutive year of Medicare physician payment cuts takes effect, physician groups are warning of cascading access issues, especially in rural and underserved markets. While Congress debates whether to reverse the latest 2.83% reimbursement cut, the broader conversation has shifted: Can the Medicare Physician Fee Schedule be fixed before it irreparably breaks independent practice?

The American Medical Association (AMA), Medical Group Management Association (MGMA), and more than 150 physician organizations have backed legislation to restore payment rates and tie them to inflation moving forward. Their message to Washington is clear: The current system is driving consolidation, burnout, and practice closures—and the data supports it.

The Case for Urgency

According to the AMA, practice costs have risen 59% since 2001, yet Medicare payments have only increased 7% in that time. Adjusted for inflation, physician reimbursement has dropped 33% over the past 25 years.

“With nearly 80% of all physicians now employed by hospitals or health systems, the era of independent medicine is on life support,” said AMA President Bruce Scott, M.D., during a January 2025 policy forum. “If Congress doesn’t act now, Medicare beneficiaries in community-based practices will be the ones who suffer.”

The MGMA has echoed these concerns, citing staffing shortages, rent hikes, and administrative burden as contributing factors to shrinking margins across specialty and primary care practices. In rural regions, some providers are seeing waitlists grow by 40% or more.

What the New Bill Proposes

The current fix, introduced in March by a bipartisan group of lawmakers, includes:

A 6.62% increase in physician pay from April through December 2025
Proration adjustments to offset Q1 losses
Inflation indexing for future updates based on the Medicare Economic Index

The bill’s authors say the approach is fiscally balanced, aiming to preserve access without ballooning federal health expenditures. But cost-conscious lawmakers, including members of the House Freedom Caucus, have raised objections, arguing that broader entitlement reforms should take priority.

Health IT Implications: Billing Systems and Automation

Behind the scenes, healthcare IT vendors are preparing for significant updates to their reimbursement engines and provider contracting modules. Companies like ECG Management Consultants and R1 RCM have issued guidance to clients advising them to prepare for backdated fee schedule adjustments and shifting payer rules, particularly for Medicare Advantage plans.

“This creates a retroactive recalibration challenge,” said Janice Liu, VP of payment policy at Availity. “Many systems aren’t built to automatically reconcile new rates against claims already submitted.”

Smaller practices may be most affected. With limited billing staff and older practice management systems, backdating fee schedules, reprocessing claims, and updating EHR templates can consume hundreds of hours of work per provider.

Administrative Burden and Prior Authorization Reform

Payment isn’t the only issue. Physician groups are also lobbying hard for reductions in administrative friction—especially around prior authorization. The Improving Seniors’ Timely Access to Care Act, which enjoys cross-sector support, would establish standards for prior authorization timelines, automate workflows, and require public reporting of denial rates.

“More than 90% of physicians say prior authorization harms patient outcomes,” said Susan Turney, M.D., CEO of the Marshfield Clinic Health System. “Every hour spent chasing paperwork is an hour not spent with a patient.”

CMS finalized new prior auth rules last year—requiring response windows of 72 hours for urgent cases and 7 days for routine requests, starting in 2026—but physician groups argue more aggressive reform is needed now to stem burnout and delays in care.

Workforce and Access: The Broader Cost

The consequences of underfunded, overburdened physician practices are becoming increasingly visible. Primary care access is deteriorating in rural states like Mississippi and West Virginia, where net losses of independent practices have outpaced population growth. Nationally, over 45% of providers now report delaying retirement solely due to financial insecurity.

“If we can’t restore some financial predictability, we’ll lose an entire generation of community physicians,” said Anders Gilberg, SVP of government affairs at MGMA.

The Political Outlook

As of April 2025, the payment reform bill has been referred to the House Ways and Means Committee and is expected to surface in summer budget talks. However, with rising deficit concerns and Trump administration pressure to target federal health spending, passage remains uncertain.

Still, provider advocacy groups are ramping up grassroots campaigns, urging constituents to call legislators and share how payment volatility affects their practices. Many are also preparing public awareness efforts tied to National Doctors’ Day on May 1.

For IT leaders, the message is clear: prepare now for multiple reimbursement scenarios, increased demand for revenue reconciliation tools, and heightened provider frustration. Financial fragility is fast becoming a digital operations issue—and one that the health tech community must help solve, not just watch unfold.

Sources:

Reversing the Decline: Inside the Fight to Fix Medicare Physician Pay