ASDSA AdvocacyPractice AffairsReimbursement Resources

Reimbursement Resources

Physicians and Patients are Facing a Crisis: The Outdated Medicare Physician Payment System Needs Systemic Reform to Protect Patient Access to Care.  

Lack of Fair Reimbursement and Rising Practice Costs May Force Physicians to Stop Taking Medicare Patients or Possibly Close Their Practices Permanently  

Medicare payments to physicians have been steadily declining relative to inflation, and this trend will persist unless Congress acts to fix the flawed and outdated payment rules:

  • Medicare payments to physicians, including dermatologists, do not receive an annual inflationary update and are subject to budget neutrality constraints.
  • Since 2001, Medicare reimbursement rates have lagged 33% behind the rate of inflation growth, totaling more than two decades of stagnant payment.
  • Medicare’s trustees and the Medicare Payment Advisory Commission (MedPAC) support taking action to update physician payment, as does every lawmaker in Congress with a medical background.

Physicians additionally continually face Medicare cuts due to payment redistributions caused by policy changes implemented by the Centers for Medicare & Medicaid Services (CMS), totaling a more than 10% reduction in the past five years:

  • Recently, the final Medicare Physician Fee Schedule (MPFS) rule for 2026 was released. Dermatology make gains in the Conversion Factor (CF) increase, with a 3.77% increase for advanced alternative payment model (APM) qualifying participants (QPs) and a 3.26% increase for all other physicians, but it is not keeping pace with inflation.
  • However, “efficiency adjustments”, a 2.5% decrease to work RVUs and the intraservice portion of physicians time for non-time-based services, and practice expense adjustments mitigate the CF increase and continue to affect physician's ability to practice.
  • ASDSA is continuing to work with its Coalition partners to support appropriate physician reimbursement.

Amidst Rising Overhead Costs and Record Inflation these Policies Have Been Devasting to Physicians’ Practices and Patients:

  • On top of rising practice costs and lack of fair reimbursement, dermatologic surgeons are struggling to keep their practices open. Without comprehensive Medicare reform, physicians may be forced to turn away Medicare patients, or worse close our practices permanently, leaving patients without the life-saving care they need.

This is a key priority area for ASDSA members and their patients. ASDSA will continue to fight to preserve patient access to care and support further Medicare reform.

Congressional Activity on Medicare Payment Reform Continues

As part of the recent budget reconciliation bill – the "One Big Beautiful Bill Act" – Congress adopted a temporary one-year 2.5% conversion factor update for 2026, replacing the original House bill that called for a 75% MEI inflation update in 2026 followed by annual 10% MEI increase, leaving no permanent, inflation adjusted payment fix. 

To prevent cuts to patients' access to care, address the growing instability of the Medicare Physician Fee Schedule (MPFS) and the urgent need for fair reimbursement, Reps. Ruiz, MD (D-CA) and Bilirakis (R-FL) have introduced the Strengthening Medicare for Patients and Providers Act. This legislation would provide an annual inflationary update for Medicare physician payment tied to the Medicare Economic Index (MEI), reflecting bipartisan acknowledgement that physicians need a stable, predictable payment system to sustain patient access to care.

Additional Legislative Momentum on Budget Neutrality

Rep. Greg Murphy, MD (R-NC) is also preparing legislation addressing Medicare’s long-standing budget neutrality requirements—one of the main drivers of recurring cuts and year-to-year payment instability. House Ways & Means Committee Majority staff have indicated that this measure could advance as early as this year. They also note that the bill may have a stronger pathway to enactment because it carries a lower Congressional Budget Office (CBO) score than the broader MEI adjustment legislation being discussed by the GOP Doctors Caucus.