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Physicians and Patients are Facing a Crisis: The Outdated Medicare Physician Payment System Needs Systemic Reform to Protect Patient Access to Care.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been steadily declining relative to inflation, and this trend will persist unless Congress acts to fix the flawed and outdated payment rules: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 an annual 10% MEI increase, leaving no permanent, inflation-adjusted payment fix. 

Two bills have been introduced in Congress to reform Medicare physician payments.

  • The Provider Reimbursement Stability Act (H.R. 8163), introduced by Reps. Murphy, MD; Suozzi; John Joyce, MD; Onder, MD; Schneider; Panetta; Miller-Meeks, MD; Schrier, MD; and Kelly, would reform Medicare payment calculations by raising the budget neutrality trigger to $57.64 million (indexed to the MEI every five years starting in 2033), require prospective spending estimate revisions based on actual claims data starting in 2029, and mandate regular updates to practice expense inputs. Beginning in 2028, it also caps annual changes to the Medicare Physician Fee Schedule conversion factor at 2.5%. H.R. 8163 was passed unanimously out of the House Ways and Means Committee.
  • The Strengthening Medicare for Patients and Providers Act (H.R. 6160), introduced by Reps Ruiz, MD, and Bilirakis, would provide an annual inflationary update for Medicare physician payment tied to the Medicare Economic Index (MEI).

Together, H.R. 8163 and H.R. 6160 represent targeted, complementary, bipartisan reforms designed to improve stability and predictability within the Medicare Physician Fee Schedule. Failure to address these flawed payment rules jeopardizes continued access to essential dermatologic healthcare for these vulnerable patient populations who depend on Medicare.

Medicare Physician Fee Schedule Database Quarterly Updates

CMS issues quarterly updates to the Medicare Physician Fee Schedule Database that may affect coding, payment, and claims processing.

Review the instructions to your Medicare Administrative Contractor (MAC) to learn about the July quarterly updates to the Medicare Physician Fee Schedule Database, including:

  • New codes
  • Procedure status changes
  • Short descriptor revisions
  • Payment policy indicator changes

Medicare Administrative Contractors will provide 30-days notice before implementing these changes. After implementation, they will adjust affected claims brought to their attention.

For additional information, review the Medicare Claims Processing Manual, Chapter 23, Section 30.1.

Administration Releases Long-Awaited No Surprises Act Final Rule

The Departments of Health and Human Services, Labor, and Treasury recently issued the Independent Dispute Resolution (IDR) Operations final rule, following publication of the proposed rule in November 2023. Broadly, the final rule is expected to streamline the dispute process, reduce administrative costs, and require additional information to be provided to physicians.

Key provisions include:

  • Requiring the use of Claim Adjustment Reason Codes (CARCs) and Remittance Advice Remark Codes (RARCs) to improve payment transparency
  • Requiring additional information to accompany initial payments and notices of denial
  • Formalizing the Open Negotiation process through the federal IDR portal
  • Requiring health plans and issuers to register in the federal IDR portal
  • Expanding batching flexibility by increasing allowable line items from 25 to 50
  • Reducing the administrative fee from $115 to $15
  • Shortening the batching "cooling-off" period from 90 days to 30 days

While the rule includes several physician-friendly improvements, concerns remain regarding certain batching restrictions and other operational aspects of the IDR process. Additional federal guidance is expected before some provisions become fully operational.

Review the IDR Operations Final Rule for additional information.

Review Billing Requirements for E/M Services and Minor Procedures

The Office of Inspector General (OIG) recently reported that approximately 61.5% of Medicare dermatology claims for evaluation and management (E/M) services in 2019 and 2020 included a minor surgical procedure performed on the same day by the same physician. Under Medicare global surgery rules, E/M services are generally included in the cost of the minor surgical procedure and physicians should only be paid separately for the E/M component when a significant, separately identifiable E/M service was performed.

To bill correctly, members should:

  • Use Modifier 25 only for a significant and separately identifiable service unrelated to the decision to perform the minor surgical procedure
  • Maintain medical record documentation supporting the level of service

Review the E/M Services Booklet for additional guidance.