From the Desk of the President
Declining Physician Reimbursement and the Impact of Intersociety Conflict
Scott Kreiner, MD
President, North American Spine Society Barrow Neurological Institute Phoenix, AZ
The health care industry in the United States is facing a growing crisis as physician reimbursement rates continue to decline. This financial strain is driven by various legislative, economic, and administrative factors that make it increasingly difficult for physicians to maintain their practices while providing high-quality patient care. Key issues include legislative constraints, inflationary pressures, and complex billing and coding requirements. Addressing these challenges is essential to ensure not only that health care providers remain adequately compensated for their services, but also remain able to keep their doors open. To the great consternation of many physicians, the CMS final 2025 payment rule included a 2.83% decrease from last year's payment conversion factor. (The conversion factor is the dollar amount assigned to each relative value unit [RVU].)
Legislative Issues Impacting Physician Reimbursement
Legislation plays a significant role in determining how much physicians are paid for their services. Medicare and Medicaid reimbursement rates are largely set by the federal government, and these rates have not kept pace with the rising costs of providing care. Historically, between 1997 and 2015 CMS used the Sustainable Growth Rate (SGR) formula which was calculated on the basis of projected changes in 4 factors:
1) Fees for physicians' services
2) The number of Medicare beneficiaries
3) US gross domestic product
4) Service expenditures based on changing law or regulations.1
Simply stated, the SGR formula tied growth in physician spending to the economic performance of the United States, theoretically preventing growth in Medicare physician spending from exceeding the annual growth in gross domestic product.1 However, this formula, almost every year, began calling for negative payment updates. Congress, fearing these cuts would have a negative impact on access to patient care, would routinely enact “doc fixes” to stave off the scheduled reductions.
After years of short-term “doc fix” patches to avoid steep Medicare physician payment cuts under the SGR formula, Congress passed the Medicare Access and CHIP Reauthorization Act (MACRA) with overwhelming support. This legislation permanently repealed the SGR, ending the cycle of annual payment crises and ushering in a new era of value-based care.
MACRA created the Quality Payment Program (QPP), a framework designed to reward clinicians for quality and cost-effective care. It established two primary participation tracks:
- Merit-based Incentive Payment System (MIPS): MIPS consolidated several legacy Medicare quality programs, tying clinician reimbursement to performance in areas such as quality, cost, EHR use, and improvement activities.
- Alternative Payment Models (APMs): These models promote participation in risk-bearing arrangements like Accountable Care Organizations (ACOs), where providers share responsibility for cost and outcomes. Qualifying participants can receive bonus payments but also face downside risk if spending targets are exceeded.
MACRA marked a clear shift away from traditional fee-for-service models toward outcome-based reimbursement. However, it also introduced significant complexity. Clinicians now operate in a highly data-driven environment, navigating evolving performance metrics, reporting requirements, and participation thresholds.
While MACRA technically has eliminated the SGR as it relates to physician payments, physician reimbursement is still influenced by budgetary restrictions. As we all know, our medical practices have increased administrative burden and complexity to meet QPP requirements, yet in 2025 the Centers for Medicare & Medicaid Services (CMS) still cut the Medicare Physician Fee Schedule by 2.83%. Without some sort of reform, physicians will struggle to provide care to patients.
Financial Pressures: Inflation and Rising Costs
One of the most pressing financial issues affecting physician reimbursement is inflation. As the cost of medical supplies, rent, utilities, malpractice insurance, and employee wages continues to rise, the purchasing power of physician reimbursements declines. Between 2001 and 2024, inflation-adjusted physician payments saw a 29% decline, and 2025 is not looking better.
Private insurers often follow Medicare’s lead in setting reimbursement rates, which means that even physicians who primarily see commercially insured patients experience financial strain. Unlike other industries that can adjust prices to match inflation, physicians must accept predetermined payment rates that do not necessarily reflect the rising cost of delivering care. This situation has led to increased financial stress, forcing many physicians to consolidate practices, sell to private equity, or join larger health care systems to remain financially viable.
The graph below compares physician reimbursement with inflation (consumer prices), practice cost inflation, and reimbursement rates for hospitals and skilled nursing facilities, which are not tied to the federal budget or the SGR formula. Since 2001, physician reimbursement has risen a total of less than 10%, while inflation and consumer prices have increased by 80%.
Additionally, the cost to maintain a medical practice has increased by nearly 60% over that time. With a good understanding of these numbers, it becomes clear why we have fewer effective, qualified staff members to help maintain high quality care. Additionally, the burden of providing and getting paid for care, as discussed below, has increased in complexity, increasing the demand on clinical and administrative staff.
Billing, Coding, Authorization, and Coverage Challenges
Administrative burdens also contribute to declining physician reimbursement. Complex billing and coding systems require providers to spend significant time and resources ensuring compliance with ever-changing regulations. The implementation of the International Classification of Diseases, 10th Edition (ICD-10), along with evolving Current Procedural Terminology (CPT) codes, has made accurate billing more challenging than ever.
Additionally, prior authorization requirements from insurance companies create delays in care while increasing administrative overhead for physicians. Insurance companies frequently deny claims or demand extensive documentation, leading to payment delays and increased workload for health care providers. These barriers ultimately reduce the efficiency of care delivery and contribute to physician burnout.
Moreover, coverage determinations often vary between insurers, making it difficult for physicians to predict coverage for specific services. Many providers experience payment reductions due to claim denials or downcoding by insurers, further diminishing the financial stability of independent practices.
The Impact of Conflict Between Medical Societies on Physician Payments
In addition to legislative and health policy burdens, conflicts between medical societies can have far-reaching consequences, one of the most significant being the negative impact on physician payments. While medical societies exist to represent the interests of their respective specialties and advance the quality of care, disagreements among these organizations can lead to fragmentation in advocacy efforts, weakened bargaining power, and inconsistent messaging to policymakers and payers.
When societies representing different specialties—or even competing factions within the same specialty—fail to align on key issues such as reimbursement policies, scope of practice, or coding guidelines, it creates confusion and dilutes their influence. For instance, if two societies propose different valuations for the same medical procedure, payers like Medicare may question the legitimacy of both, ultimately adopting a lower reimbursement rate or delaying payment reform altogether. This internal discord can erode trust and make it difficult to present a unified front when negotiating with government bodies or private insurers.
Moreover, these conflicts may result in lobbying against each other’s interests, which can lead to policies that favor one group at the expense of another, creating inequities in payment structures. This dynamic not only fosters resentment but also contributes to a zero-sum environment where overall physician compensation suffers due to lack of cooperation.
The Need for Change
To address these issues, policymakers and health care stakeholders must work together to implement reforms that ensure fair and adequate reimbursement for physicians. Potential solutions include:
- Legislative adjustments: Updating Medicare and Medicaid reimbursement formulas to account for inflation and actual costs.
- Reducing administrative burdens: Simplifying billing and coding requirements to decrease time spent on paperwork and increase time available for patient care.
- Revising insurance practices: Streamlining prior authorization processes and improving transparency in reimbursement policies.
- Society Collaboration: As physicians, and as medical societies, we need to stop competing against one another and collaborate on bigger picture reimbursement issues.
Conclusion
Declining physician reimbursement poses a significant threat to the sustainability of health care delivery in the United States. Legislative constraints, financial pressures, and administrative complexities make it increasingly difficult for physicians to operate their practices profitably. Without meaningful reforms, patient access to high-quality care may suffer, particularly in underserved areas. Addressing these challenges through policy changes, financial adjustments, and society collaboration is critical to maintaining a robust and effective health care system.