Medicare's 2027 fee schedule won't settle the physician pay debate, with four health policy experts

If the proposed 2027 Medicare physician fee schedule is finalized, real Medicare payment rates will be 35% below 2016 levels, according to Jonathan Ketcham, Ph.D., Earl and Gladys Davis Distinguished Research Professor in Business and professor of economics at Arizona State University. He says commercial rates have largely tracked along, pushing physicians away from independent practice and toward consolidation.

Ahead of the final rule, guest interviewer Cameron J. Sabet, M.S., MBA, M.A., a medical student at Georgetown University, sat down separately with Ketcham and three other health policy experts.

Medical Economics Senior Editor Richard Payerchin connects the interviews.

Michael Chernew, Ph.D., Leonard D. Schaeffer Professor of Health Care Policy at Harvard Medical School and former chair of the Medicare Payment Advisory Commission (MedPAC), explains why he doesn't call the 2027 conversion factor drop a cut and why MedPAC still recommended paying above current law.

Miranda Yaver, Ph.D., assistant professor at the University of Pittsburgh and author of “Coverage Denied: How Health Insurers Drive Inequality in the United States,” says a proposed pay cut for evaluation and management visits on the same day as a procedure could mean more trips, copays and parking fees for older patients.

David O. Meltzer, M.D., Ph.D., Fanny L. Pritzker Professor of Medicine and chief of the Section of Hospital Medicine at the University of Chicago, makes the case for hybrid payment models. The experts also cover prior authorization, whether the fee schedule favors larger practices and why Ketcham would sunset the fee schedule altogether.

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Editor's note: Episode timestamps and transcript produced using AI tools.

0:00 – 0:57 | Cold open. Ketcham, Chernew, Yaver and Meltzer on payment rates, fairness, rationing and hybrid payment models.

0:57 – 2:22 | Introduction. Austin Littrell introduces the episode and the experts and previews the Physicians Practice Practice Academy on Oct. 29.

2:22 – 3:26 | Is it really a cut? Chernew says the 2027 conversion factor drop is the same as it would have been under current law once a temporary increase expired.

3:26 – 5:18 | 35% below 2016. Ketcham says real Medicare rates have fallen sharply since 2016, commercial rates have tracked along and the result has pushed physicians toward consolidation.

5:18 – 7:36 | When pay cuts become an access problem. Yaver notes 98% of non-pediatric physicians accept traditional Medicare, and Chernew explains why MedPAC found access adequate but still recommended paying more.

7:36 – 9:00 | The same-day visit cut. Yaver says a proposed cut to visits billed on the same day as a procedure could spread care across more appointments for older patients.

9:00 – 12:06 | Is Medicare paying for the wrong things? Meltzer on risk selection, the limits of pay for performance and how advanced primary care management fees helped his program's primary care break even.

12:06 – 12:58 | P2 Management Minute. Keith Reynolds shares practice management tips and invites listeners to submit their own workflow ideas.

12:58 – 14:39 | Fairness vs. economics. Chernew argues physician pay comes down to what it costs to get the services we want, not what feels fair.

14:39 – 15:57 | Does the fee schedule favor bigger practices? Ketcham says administrative and legal barriers, not medicine itself, push practices to grow, and the 2027 changes continue that momentum.

15:57 – 17:31 | Paying for prior authorization work. Yaver on the Wasteful and Inappropriate Service Reduction (WISeR) Model pilot, nearly 53 million Medicare Advantage prior authorization requests in 2024 and one practice's five-person prior authorization staff.

17:31 – 18:23 | Sunset the fee schedule. Ketcham, back in academia after working in the White House, says he would get the government out of setting physician prices.

18:23 – 19:42 | Do alternative payment models work? Chernew says they only have to be better than fee-for-service and urges small practices to look at conveners.

19:42 – 20:56 | A fixed payment per patient? Meltzer warns flat per-patient payments invite avoiding sicker patients and says hybrid models matter.

20:56 – 22:37 | The most important change. Yaver warns that well-intentioned policies, like prior authorization, can backfire and make care costlier.

22:37 – End | Outro. Littrell thanks the experts and wraps the episode.