Lawmakers are mulling reform of how Medicare pays physicians, concerned that insufficient reimbursement in the federal insurance program is incentivizing consolidation and increasing healthcare costs.
Physician pay has declined over the past two decades when accounting for inflation, spurring independent providers to be acquired by hospital systems rather than go it alone, provider witnesses told representatives during a House Energy and Commerce subcommittee hearing Wednesday. And representatives agreed that’s a concern.
“Making sure that independent physician practices stay open [...] is one of the most critical ways we can ensure competition and drive down costs,” said Rep. Kim Schrier, D-Wash.
The hearing is the latest in a series on the Hill about healthcare affordability, a major concern for voters ahead of the midterm elections. Insurance executives and representatives from the pharmaceutical and provider sectors have already been called up to testify for their role in rising healthcare spending.
Wednesday’s inquest wasn’t contentious like previous hearings, including one held with insurance CEOs in January during which lawmakers lambasted the executives for putting profits over patients. But declining competition among providers has been the subject of past congressional hearings, and bipartisan lawmakers have shown interest in tackling the challenge.
Primary care was also in the spotlight. Pay is lower for primary care doctors, incentivizing new graduates to join more lucrative specialities — even though comprehensive primary care could decrease costs by better managing expensive chronic conditions, witnesses said.
“I think this is really something this subcommittee can work on in a bipartisan way,” said Rep. Diana DeGette, D-Colo., the ranking member of the health subcommittee. “Because I think it’s recognized by everybody, and it is a growing national crisis.”
Independent physicians on the decline
Fewer doctors are operating independently than in years past, research shows. In 2024, 47% of physicians worked for or were affiliated with hospital systems, compared with 30% in 2012, according to a survey by the American Medical Association.
One driver is insufficient Medicare reimbursement, which providers say hasn’t kept pace with rising costs of running a medical practice. When adjusted for inflation, Medicare physician pay has declined 33% from 2001 to 2025, according to the AMA.
One solution could be tying annual physician pay hikes to inflation, witnesses said, a reform long-sought by doctors that has occasionally been supported by the Medicare Payment Advisory Commission, which advises Congress on Medicare.
Lawmakers could also get rid of the requirement that the government keep physician pay updates budget neutral, they said. The requirement means that increasing pay for one service forces another to lose reimbursement.
“The fee schedule’s budget neutrality requirement has placed additional pressures on reimbursement for certain procedures and often pits specialties against one another,” said Rep. Morgan Griffith, R-Va., the chairman of the House health subcommittee.
If costs continue to rise for independent practices, joining a health system is appealing. But consolidation comes at a cost to taxpayers, providers said.
Research shows consolidation in the healthcare sector often hikes prices without a corresponding increase in quality. For example, Dr. Rick Snyder, president of Texas-based cardiology practice HeartPlace, told lawmakers that Medicare spending on two common cardiovascular tests would increase by more than $25 million each year if his practice was purchased by a health system.
“We’ve got to make sure that this consolidation — which I would submit to you is causing a lot of the problems in our healthcare system — doesn’t get out of control,” said Rep. Buddy Carter, R-Ga.
Not enough primary care doctors
Another challenge for healthcare affordability is a shortage of primary care providers, lawmakers and witnesses said. Primary care can improve outcomes by catching health concerns early and managing chronic conditions to keep patients out of the hospital.
But primary care physicians typically earn less than specialists, pushing many new doctors to choose a specialty instead, said Dr. William Fox, the chair emeritus of the American College of Physicians’ Board of Regents.
One challenge is the physician fee schedule is largely designed to pay for discrete episodes of care based on complexity, rather than care that supports patients’ needs over time.
The CMS has attempted to normalize reimbursement between specialty and primary care, and created new codes to bill for advanced primary care management services.
The new codes have been helpful, but they’re still subject to budget neutrality requirements, according to Fox’s testimony. Plus, they’re not considered preventative serivces, so patients could still be on the hook for cost sharing that could limit access to care.
“You’ll talk to medical school students, and you’ll ask them, ‘What kind of doctor do you want to be?’ And they quickly learn that primary care physicians are reimbursed at a far lower rate than other specialties,” said Rep. Marc Veasey, D-Texas. “Over the course of their career, that can mean millions of dollars in lost earnings.”
