By Dr. Paul Berggreen
Medicare has slashed physician reimbursement again. Unless Congress takes swift and meaningful action, we could see the unraveling of independent medical practices across the country.
This isn’t theoretical. It’s already happening. If this trend continues, many communities will lose access to convenient, cost-efficient care.
Doctors in independent practice have now endured five straight years of Medicare payment cuts. The expenses required to keep a practice running are climbing – they’re projected to rise 3.5% this year alone.
After adjusting for inflation, Medicare’s payments to physicians have dropped by roughly 33% since 2001.
Faced with shrinking revenue and rising costs, independent physicians are left with few choices. Negotiating better rates from private insurers is next to impossible due to the insurers’ overwhelming market power. That leaves doctors with painful decisions: cut back services, shut down their practices or sell to large hospital systems.
Many have taken that last route. Over the past five years, nearly 75,000 physicians have shifted from private practice to employment within hospitals and large health systems. In 2022 and 2023 alone, hospitals absorbed 2,800 more practices.
Hospitals are more than willing to take on these practices. More employed doctors means more internal referrals for lucrative services. And here’s the kicker. Medicare pays hospitals significantly more than independent doctors for identical treatments – from imaging scans to chemotherapy.
When local practices disappear, patients often find themselves paying more for the same care. Hospitals’ higher reimbursement rates translate into bigger out-of-pocket bills. Plus, patients might have to travel farther for services they once received close to home.
And as competition shrinks, massive health systems gain more leverage to raise prices – without necessarily delivering better outcomes. A National Bureau of Economic Research report found that medical services from these large health systems can cost up to 26% more than those provided by independent physicians.
Medicare is feeling the financial strain. According to a 2024 study of five specialties conducted by health care consulting firm Avalere, total Medicare expenditures per beneficiary per year increased an average of more than $1,300 in the 12 months after the physician caring for the beneficiary moved from an unaffiliated private practice to a hospital affiliation. That directly translates to higher out-of-pocket costs for patients, with no improvement in quality or access. Not a winning formula.
Congress can reverse these trends – and protect the viability of independent physician practice – by raising Medicare reimbursement. The Medicare Patient Access and Practice Stabilization Act of 2025, introduced by Rep. Greg Murphy, R-N.C., would reverse this year’s pay cut and make doctors whole for the losses they’ve already endured. It has attracted bipartisan support from over 120 members of Congress.
But Congress must not stop there. It needs to implement structural reform. That means tying Medicare reimbursement for physicians to inflation, as the program long has for hospitals.
For years, lawmakers have applied all sorts of temporary fixes to mitigate the impact of Medicare reimbursement cuts for physicians. That approach makes no sense. It creates uncertainty for physicians about whether they’ll be able to absorb the rising costs of running a practice, recruit and retain skilled staff and invest in new technology and equipment.
Independent physicians aren’t asking for special treatment. They’re asking for a level playing field – one that reflects economic reality and supports the kind of patient-centered care our system needs.
Congress has a chance to protect access, strengthen competition and ensure health care remains personal and affordable. The time to act is now.
Dr. Paul Berggreen is a gastroenterologist and president of the American Independent Medical Practice Association (aimpa.us).