Proposed Changes to How Medicare Pays Can Help Primary Care’s Chronic Condition 

The Trump administration released a draft Medicare rule this summer that might have been missed amid HR1’s large funding cuts to Medicaid and the health insurance marketplaces. But the administration’s proposed changes to the 2026 Medicare Physician Fee schedule are an important step toward strengthening primary care — and following through on its commitment to “Make America Healthy Again.” 

That’s because the way that Medicare determines how much it pays for health care services has resulted in a specialist-heavy workforce and procedure-intensive care that are in part responsible for the U.S.’s abysmal health outcomes compared to other wealthy countries. Our nation’s high and rising rates of chronic disease — a priority of HHS Secretary Robert F. Kennedy Jr. — will not be effectively addressed without financial support for a larger, more robust primary care workforce. 

Neglect of Primary Care 

Primary care is the only part of the health care delivery system where evidence shows that more of it leads to improved health outcomes and fewer health disparities. Yet the Health of US Primary Care Scorecard shows that the US has financially neglected primary care, which has contributed to the steady weakening of the country’s primary care capacity. Smaller portions of the country’s rocketing health care spending are going to primary care, with smaller shares of clinicians working in primary care and fewer people reporting that they have a regular source of care.  

As the 2021 National Academy of Science and Engineering and Medicine report on “Implementing High Quality Primary Care” pointed out, we need to pay more and pay differently for primary care. Medicare, the country’s largest payer, is the main reason that we don’t. To determine payment rates, Medicare relies on an American Medical Association (AMA)-controlled committee, known as the Relative Value Scale Update Committee (RUC), that has systematically overvalued technical procedures over health care services involving assessment, planning, and coordination. Health economists and policy experts say Medicare’s valuation process is suffering from its own chronic condition: one of capture and control by self-interested physician specialty groups. 

Commercial insurers have followed the lead of the country’s largest health care payer in setting rates, and the result has been a less-than-virtuous cycle of more specialists and specialty care that led to a health care system ill-prepared for a pandemic and a decline in life expectancy. 

Changing the Mindset 

Most patients with a chronic condition will tell you that diagnosis is relatively easy compared to treatment: Even with the right prescription drug, you probably need to address personal habits that can perpetuate the condition. It’s possible that the current administration’s skepticism of institutional power and focus on chronic illness is the change in mindset that was required to fix Medicare’s service valuation process. 

The proposed changes for 2026 in how Medicare pays physicians offer some evidence of this change in mindset. 

• Value Determination Process: Less reliance on RUC surveys of physicians to estimate the amount of effort involved in delivering a specific service, and therefore the rate, would minimize the financial conflicts of interest. 
• Efficiency Adjustment: An initial 2.5% across the board reduction in the value of services (exempting services involving evaluation and management such as those provided in primary care) and a subsequent adjustment every three years would reflect improvements in technology that allow procedures to be performed more efficiently. 
• Practice Expense Adjustment: Changes to the way certain overhead expenses are allocated when estimating practice costs to deliver care would reduce the financial advantage afforded large health systems over self-employed physicians and physician groups. 
• Telehealth Coverage: Making permanent payment for more than 100 telehealth services that were previously considered “provisional” would support the delivery of primary care and behavioral health services in whatever setting is most acceptable to patients and clinicians. 
• Promotion of a Usual Source of Team-based Care. Primary care–friendly changes include making it easier for primary care clinicians to bill for behavioral health integration and care coordination and requesting feedback on how to redefine preventive services (that are not subject to Medicare co-payments) when delivered by what the beneficiary declares to be their usual source of care.   

The net effects of these proposed changes are relatively small. Medicare estimates that median payments to primary care physicians will be between five and ten percent higher, while payments to orthopedists, for example, will be between two and five percent lower. This is will not close the two-and-half-fold salary gap between these specialties that create incentives for medical students to choose specialty care professions, but the impact will grow over time. 

Still, the changes redistribute funding, The AMA is rattling its sword about a “radical departure from the time-tested CMS decision making process.” Disaffected specialty groups are already lining up to express their concern and the specter of limited access to their services. 

Redistribution is not for the faint hearted. I learned this during my own experience as the country’s first health insurance commissioner when we used insurance rate review to limit the growth in commercial insurer’s payments to hospitals and redirected the savings to primary care and employers. Howls of protest and a lawsuit ensued, but the Rhode Island’s health system has benefitted.  

A willingness and commitment to redistribute resources is exactly what is needed here. Addressing a chronic condition – whether it be related to physical or policy health – requires resolution, followed by action and consistency. To improve the health of Americans, the administration has resolved to start to address Medicare’s undervaluing of primary care, and now it has shown it will act. Their willingness to hold the course and finalize these proposed changes will be a test of their commitment. 

Read an updated version of Christopher Koller’s letter to CMS providing feedback on the 2026 Medicare Physician Fee Schedule (PFS) Proposed Rule.