For decades, primary care providers have complained that their work is undervalued, noting that insurance companies pay far less for office visits than for procedures and imaging tests. 

In fact, research shows that Medicare — whose rates heavily influence other insurance plans — reimburses physicians 3-5 times more for procedures than for evaluation and management of patients during office visits.

The payment gap has contributed to the national shortage of primary care professionals, as young doctors burdened by medical school debt gravitate to higher-paying specialties.

Through a proposed rule on physician fees for 2026, the Centers for Medicare and Medicaid Services has signaled its intent to shift resources toward primary care and away from procedures and tests.

In the first step toward transforming how physicians are paid, Medicare has proposed reducing payments for procedures, surgery, and medical tests by 2.5%, contending that physicians have become more efficient at providing these services and no longer need as much time to perform them.

The pay cut would not affect doctors such as family physicians and internists, whose care tends to involve in-depth conversations and examinations of patients, making a diagnosis, and suggesting treatment.

Radiologists and pathologists would see their pay fall by an average of 1%, for example, while thoracic surgeons would see their pay decrease by an average of 4% and neurosurgeons by 5%.

In contrast, the proposed rule would raise average payments for geriatricians, neurologists, nurse practitioners, and physician assistants by 1%; for optometrists and pediatricians by 2%; for clinical psychologists, endocrinologists, family physicians, and general practitioners by 3%; for clinical social workers and rheumatologists by 4%; and for allergists/immunologists by 7%.

Temporary Pay Boost for All

Cuts to physician fees would be tempered by a 2.5% across-the-board payment increase in 2026. Congress included the one-time pay boost in the tax and spending bill it passed earlier this year, although advocates for physicians say they would like Congress to craft a long-term plan for adjusting doctor fees to account for inflation.

Over the long haul, Medicare plans to change the way it calculates physician pay.

The federal program has until now relied almost exclusively on recommendations from a powerful committee of the American Medical Association (AMA) and specialty societies, which estimates the time and effort involved to provide about 9000 medical services.

Physicians on the committee — most of whom are specialists — could have an incentive to inflate the amount of time and resources it takes to provide treatment, said Corinne Lewis, assistant vice president for care delivery at the Commonwealth Fund, a private foundation that focuses on high-quality, affordable care in New York City.

“There has been long-standing concern that there’s a bias towards specialty care over primary care, just in terms of the representation of the group itself,” Lewis said. Committee “members sign nondisclosure agreements and vote via secret ballot, so there’s a lack of transparency in the actual process.”

The committee’s recommendations tend to favor procedures over office visits and are based on small, subjective surveys with low response rates that underrepresent physicians in primary care, said Paul B. Ginsburg, PhD, former vice chair of the Medicare Payment Advisory Commission (MedPAC).

MedPAC and other government watchdogs have urged Medicare to gather its own information from objective, independent sources.

Powerful AMA Committee Scrutinized

“There’s a real need to reform this process,” said Ginsburg, professor of the practice of health policy at the University of Southern California’s Sol Price School of Public Policy in Los Angeles. “Medicare pays out hundreds of billions of dollars for physician services but spends very little to ensure that relative payments accurately reflect the resources involved in providing them.”

In an effort to make payments more fair and accurate, Medicare has proposed considering independent sources of information, such as “auditable, routinely updated hospital data,” to calculate costs and relative payment rates.

“This approach promotes price transparency across settings, offers more predictable rate-setting outcomes, and limits the influence of limited survey data,” according to a Medicare fact sheet about the proposed rule.

The biggest challenge with collecting this sort of data is the expense, Lewis said. While data from the AMA may be biased, it’s provided for free. Medicare would have to pay employees to find and review the new sources of data.

That could be tough, given that the Trump administration cut 300 Medicare employees as part of a massive reorganization that trimmed the workforce at federal health agencies by 25%. Additional staff have been furloughed due to the federal government shutdown.

Physician Pay Not Keeping Up With Inflation

AMA officials declined to comment on the record for this story.

But in a written critique of the proposed rule on its website, the AMA said, “It is imperative that practicing physicians and other healthcare professionals, those who provide services to Medicare patients, continue to advise Medicare payment policy based on their experience. Their valuable expertise makes them an indispensable source of survey information that ensures fair, accurate, and consistent payment and supports innovation and high-quality care.”

In its critique, the AMA denied that doctors need less time to perform procedures today.

The association cited a study in the Journal of the American College of Surgeons that found that most surgical times “stayed the same or increased” from 2019 to 2023. Study authors noted that surgeries also became more complex during that time.

And in a public comment on the proposed rule, AMA officials wrote that inflation-adjusted pay for physicians has declined over the past two decades. Physicians are facing rising costs for rent, wages for their staff, medical supplies, and administration. The letter noted, “Between 2001 and 2025, Medicare physician pay remained virtually flat even though the cost of running a medical practice increased 59%. Adjusted for inflation in practice costs, Medicare physician pay declined 33% from 2001 to 2025.”

The proposed rule would make no changes to billing codes created and trademarked by the AMA, known as current procedural terminology codes, which determine how much physicians are paid for procedures and services.

‘A Very Small Step’

Medicare’s proposed changes won’t save primary care overnight, said Troyen Brennan, MD, an adjunct professor of health policy and management at the Harvard T. H. Chan School of Public Health, Boston.

The US would have to make much larger changes to attract more doctors to primary care and improve Americans’ health, he said. The US spent less than 5% of its healthcare budget on primary care in 2021 compared with 10%-15% in other high-income countries, where the primary care system is much stronger and whose populations have lower rates of chronic disease, Brennan said.

“It’s a step in the right direction, but it’s a very small step in the right direction,” said Brennan, author of Wonderful and Broken: The Complex Reality of Primary Care in the United States.

In spite of the proposed pay raises, primary care doctors will likely lose money due to the steep cuts to Medicaid — about $1 trillion by 2034 — included in the tax and spending law passed by Congress in July. Those cuts are projected to cause 12 million Americans to lose insurance. Enhanced premium tax credits provided by the Affordable Care Act (ACA) are expected to end by the end of 2025, unless Congress acts to save them. Without those credits, health insurance premiums are projected to more than double for people on ACA plans, which could drive some people to drop insurance altogether.

The loss of insured patients “hurts the most vulnerable of the primary care practices — those with lots of people who are on the exchanges and lots of people who have Medicaid,” Brennan said.

“I think that there’s going be those in primary care who cheer these [Medicare payment] changes,” Brennan said. “But when you put them into perspective, they’re not going to have a big impact. If you look at the other things that the administration is doing, it’s going to be a net negative.”