The Medicare Payment System Has Cut Physician Pay 33 Percent Since 2001. DPC Physicians Left. Now Their Colleagues in Congress Are Trying to Fix What Remains.

Legislation by DPC Insider
#medicare#physician-payment#patients-first-act#independent-practice#macra-reform#primary-care
Sources: Calendar Year (CY) 2027 Medicare Physician Fee Schedule Proposed Rule — CMS Fact Sheet, July 14, 2026 · Drs. Schrier, Joyce, and Murphy Introduce Bipartisan Patients First Act — Rep. Kim Schrier Press Release, July 15, 2026 · (July 15, 2026) MGMA Statement on the Introduction of the Patients First Act · Patients First Act Signals Commitment to Modernizing Primary Care Payment — AAFP Press Release · Medicare Physician Pay Has Plummeted Since 2001 — American Medical Association · 2027 CMS Proposed Physician Fee Schedule Rule Illustrates Need for Systemic Reforms — AMGA, July 2026 · Bipartisan Patients First Act Seeks Major Reform of Medicare Physician Payments — OncoDaily

Since 2001, Medicare has cut physician pay by a third — in inflation-adjusted terms — while the cost of running a medical practice increased 59 percent. Three physician-lawmakers from opposite parties introduced a bill last week to permanently end that pattern. The CMS proposed rule that prompted them came out the day before.

On July 14, 2026, the Centers for Medicare & Medicaid Services released the proposed Calendar Year 2027 Medicare Physician Fee Schedule. For most physicians who accept Medicare — those not participating in qualifying alternative payment models — the proposed conversion factor drops from $33.40 to $32.84, a reduction of 1.68 percent. For physicians in qualifying APMs, the proposed cut is 1.19 percent.

On July 15, 2026, the chairs of the House Democratic Doctors Caucus and the Republican Doctors Caucus introduced a bill to replace the cycle that produced it.

How the proposed 2027 cut works

The structural cause of this year’s proposed cut is the expiration of a temporary payment increase. The One Big Beautiful Bill Act, enacted in 2025, provided physicians with a 2.5 percent increase in the Medicare conversion factor for calendar year 2026. That increase expires on December 31, 2026.

Current law includes small statutory updates built into the fee schedule — 0.75 percent for qualifying APM participants, 0.25 percent for everyone else. CMS also proposed adjustments to work relative value units that add approximately 0.53 percent. But when the 2.5 percent temporary increase expires, those additions cannot offset the loss. The net result is a cut.

This pattern is not new. The American Medical Association documents that Medicare physician pay, adjusted for inflation, has fallen 33 percent since 2001. Over the same period, the cost of running a medical practice increased approximately 59 percent. When Congress passed MACRA in 2015, it did not index the conversion factor to inflation. The gap between what Medicare pays and what it costs to see Medicare patients has widened continuously since then, interrupted only by temporary increases that expire and leave the underlying system unchanged.

What the Patients First Act would do

H.R. 9693, the Patients First Act, was introduced on July 15 by Reps. Kim Schrier, M.D. (D-WA), John Joyce, M.D. (R-PA), and Greg Murphy, M.D. (R-NC). All three are physicians. Schrier is a pediatrician, Joyce a dermatologist, Murphy a urologist. They are the chairs of the Democratic and Republican Doctors Caucuses, respectively. The bill had 28 bipartisan cosponsors at introduction.

The legislation addresses four distinct problems in the current physician payment system.

Inflation-linked updates. The bill would permanently tie Medicare physician payment to the Medicare Economic Index, minus one percentage point. The Medicare Economic Index already exists — CMS uses it to track the actual cost of physician practice inputs, including staff wages, supplies, rent, and equipment. Applying MEI minus one percentage point would not fully cover practice cost inflation, but it would close most of the gap that has been widening since 2001. Physicians in qualifying APMs would receive MEI with no subtraction.

A primary care payment pilot. The bill would create a five-year pilot for independent physician practices providing primary care. Under the pilot, qualifying practices could receive predictable, per-member-per-month payments rather than fee-for-service payment for covered primary care services. The program is explicitly designed to reduce consolidation pressure on independent practices by creating a payment model where visit volume does not drive revenue.

Quality metrics reform. The bill would restructure how quality measures under MACRA are developed, creating a physician-led process to produce measures that are more specialty-specific and more clinically relevant than the current administrative-reporting requirements.

Budget neutrality changes. Under current law, when CMS increases payment for some services, it must decrease payment for others. That requirement has created instability across specialties and contributed to unpredictable year-to-year payment swings unrelated to clinical decisions. The bill would raise the threshold at which budget-neutrality adjustments trigger.

The AAFP endorsed the legislation shortly after introduction. The MGMA also released a statement of support. The American Medical Group Association noted the same week that the proposed rule illustrates the need for exactly the kind of systemic reform the bill proposes.

The physician-lawmakers behind it

The three sponsors are not translating a briefing memo into legislation. They practiced medicine before entering Congress. Schrier ran a pediatric practice. Joyce spent years in dermatology. Murphy was a practicing urologist. Their press release described what the bill is trying to prevent: a primary care crisis concentrated in rural and underserved areas, accelerating consolidation of independent practices into large health systems, and physicians exiting Medicare because the payment math no longer works.

That is not a policy description of a hypothetical future problem. It is a description of what has been happening continuously since 2001. Independent physician practices have been consolidating into health systems at a rate that has reduced their share of total physician employment year over year. The consolidation is driven partly by physician preference and partly by financial pressure from a payment system that does not cover practice costs.

What DPC physicians already have

DPC practices do not bill Medicare for clinical services. The 2027 proposed rule does not affect their revenue. The annual conversion factor cycle — release in July, final rule in November, new rate in January — is not part of how a DPC practice operates.

DPC physicians set their own rates. Their patients pay a flat monthly membership fee. There is no conversion factor, no budget-neutrality adjustment, no temporary congressional fix that expires at year-end. The practice-cost increases that have eroded Medicare payment over 25 years affect a DPC practice in the same way they affect any small business — but the physician decides how to respond, not CMS.

The primary care PMPM pilot in the Patients First Act describes a payment structure that DPC practices have operated with for more than a decade. Independent practices would receive a predictable monthly amount per patient without volume pressure or code selection driving revenue. Congress is proposing to experiment with this structure inside Medicare. DPC practices have been running it outside Medicare since the model emerged.

What This Means

The 2027 proposed Medicare physician fee schedule cut will follow the standard trajectory. CMS will accept comments through September 14, 2026. Congress may intervene before January, as it has in previous years. The final rule issues in November. The payment rate changes in January.

The Patients First Act is bipartisan, physician-sponsored, and has the endorsement of organized medicine’s largest practice management associations. That does not guarantee it moves through committee, reaches the floor, or clears the Senate. MACRA reform has a long history of stalling, and the structural changes in the Patients First Act represent a significant departure from the current fee schedule framework.

But the timing of the bill’s introduction — literally the day after CMS released the proposed cut — reflects something the sponsors stated explicitly: the system keeps requiring temporary fixes because its underlying design produces declining physician pay. The Patients First Act is a structural response to a structural problem.

For physicians who chose DPC, the proposed 2027 cut is not a threat. The system behind it is one they already left. What the Patients First Act represents is Congress arriving at the same conclusion they reached years earlier: that predictable, inflation-adjusted payment produces different outcomes than a conversion factor that declines in real value every year without a congressional rescue. The bill would give Medicare physicians a version of that predictability. DPC gave its physicians a version of it outside Medicare entirely.