The latest dispute opened with the Centers for Medicare & Medicaid Services’ proposed 2027 Medicare Physician Fee Schedule rule, released in July 2026. Despite positive statutory updates for 2027, the proposed conversion factors would decline from their 2026 levels, renewing a familiar debate over what Congress should do about physician payment. The sequence is now predictable: CMS publishes a proposed rule, clinicians and advocacy groups raise concerns, Congress is pressed to intervene, and lawmakers frequently produce another short-term adjustment. Since 2021, Congress has provided temporary physician-payment relief in five of the six calendar years from 2021 through 2026. Henry’s central claim is that this apparent inaction is less an absence of work than a recurring failure to reach agreement over financing, timing, procedural strategy and policy design.

Medicare’s scale makes every adjustment consequential. The program covers more than 67 million people, roughly one in five Americans, and nearly half of Medicare spending flows through Part B. Physician services alone account for approximately one-quarter of all national spending on physician and clinical services. Medicare pays for more than 10,000 services through the Physician Fee Schedule. Payment for each service is based on three components—physician work, practice expense and professional liability insurance—combined into a relative value unit. Those units are geographically adjusted and converted into dollars using a conversion factor. Statutory updates under the Medicare Access and CHIP Reauthorization Act of 2015, known as MACRA, then modify payments, while strict budget-neutrality requirements limit the program’s ability to finance higher spending.

The budget-neutrality rule has a particularly sharp consequence. If changes to payment policy increase Medicare spending by more than $20 million, CMS must offset the added cost. In practice, this often means reducing the conversion factor for all physicians, producing a downward adjustment even when an individual service is not the target. Because specialties share a constrained pool of dollars, gains for one group can become reductions for another. The 2025 conversion factor decreased by 2.83%, corresponding to an estimated 2.93% average payment cut for physicians and other clinicians. The threshold is exceptionally small compared with the scale of the program: annual Medicare Physician Fee Schedule spending exceeds $90 billion. Even raising the threshold from $20 million to $50 million, for example, would remain modest relative to total spending, although any higher threshold would need to be paired with a decision about offsets or additional federal spending.

Congress can intervene by temporarily raising the conversion factor, but such legislation does not alter the structure that produces the shortfall. When an extension expires, the same cycle begins again. Temporary legislation can provide meaningful short-term relief to clinicians facing rising practice costs, inflation, workforce shortages and growing administrative demands, yet it also postpones the harder choices. Henry points to the failed end-of-year negotiations in 2024, when Congress did not pass a package containing physician-payment relief, and to the March 2025 attempt to advance the Bipartisan Health Care Act through unanimous consent. That effort was blocked on March 14 and the bill did not advance. Behind the public account of a bill that failed were congressional staff members testing legislative language, assessing possible vehicles, negotiating policy details and determining whether a proposal could attract enough support. Henry’s experience illustrates that a sound policy idea is only the beginning of lawmaking; relationships, procedural strategy, persistence and timing are also required.

Regulatory work continues even when congressional deliberations stall. Through annual rulemaking, CMS can reconsider how services are valued, test new payment arrangements and strengthen incentives for primary and accountable care, but it cannot independently rewrite the statutory framework governing annual physician-payment updates. Congress included a temporary 2.5% increase in physician payment for 2026 in H.R. 1, enacted in July 2025. CMS subsequently finalized the calendar-year 2026 Physician Fee Schedule with two conversion factors: one for qualifying participants in Advanced Alternative Payment Models and another for other clinicians. Compared with 2025, the final conversion factors increased by 3.77% for qualifying alternative-payment-model participants and by 3.26% for other clinicians. The final rule also sought to rebalance payment toward primary care through an efficiency adjustment affecting many procedural services while exempting evaluation and management codes.

For 2027, CMS is seeking input on redesigning primary-care payment, including how primary care should be valued, how payment should account for emerging technologies and whether prospective primary-care payment could be used within the Medicare Shared Savings Program. The proposal would replace G2211 with a modifier that increases associated evaluation and management payment by 16%, as well as a separate modifier providing a 32% increase for eligible clinicians participating in the Shared Savings Program or Long-term Enhanced ACO Design model. Henry describes these changes as a positive step toward strengthening primary care, but they also reveal the limits of regulatory action. CMS can adjust service valuations, experiment with payment models and strengthen incentives for coordinated care; Congress sets the statutory updates and budget rules that determine whether temporary relief becomes permanent.

Unstable payments are not merely an inconvenience for physicians. Henry notes that inadequate and unpredictable updates can affect access to care, contribute to burnout and accelerate attrition from medical practice, particularly in primary care, although payment policy alone does not explain those outcomes. A nationwide longitudinal analysis of 712,395 physicians caring for Medicare beneficiaries found that attrition from clinical practice increased from 3.5% in 2013 to 4.9% in 2019. A more recent study of more than 37,000 physicians across 160 U.S. organizations found that in 2024, more than one in five physicians intended to leave their organization. Physicians identified improved workflow efficiency, more consistent staffing and enhanced compensation as factors that could influence their reconsideration. Another study found that physicians who perceived their compensation to be fair reported greater work satisfaction and decreased intentions to leave their practices. These findings do not establish that Medicare fee changes caused the reported workforce trends, but they show why payment uncertainty belongs in discussions about workforce stability.

Potential reforms expose the trade-offs that have slowed legislative action. Permanently tying annual payment updates to the Medicare Economic Index, which reflects changes in medical practice costs, would improve predictability but could increase federal spending, forcing Congress to identify a funding source or spending cut or accept a larger budget. Raising the $20 million budget-neutrality threshold could reduce recurring across-the-board cuts. Allocating more resources toward primary care could better support longitudinal and coordinated care, but doing so under budget neutrality could intensify competition or opposition from affected specialties. These choices help explain why agreement on the need for reform has not produced consensus on how to finance it or distribute payments. The design challenge is a system that is patient-centered, adequately compensates clinicians and restrains growth in annual spending. The Senate Finance Committee’s 2024 white paper on strengthening chronic care through physician payment reflected bipartisan agreement that greater predictability and stability are needed, but agreement on a problem does not settle the solution.

After CMS released the 2027 proposed rule in July 2026, bipartisan lawmakers introduced the Patients First Act of 2026, H.R. 9693. The proposal would establish a permanent inflation-based payment update tied to the Medicare Economic Index, modernize budget-neutrality requirements, replace the Merit-Based Incentive Payment System with a streamlined clinician-driven quality program and preserve incentives for alternative payment models. More than a decade has passed since Congress enacted comprehensive physician-payment reform with MACRA in 2015. The new proposal represents another attempt to move beyond temporary fixes, but its introduction does not establish that the measure will become law. Henry’s perspective ultimately argues for a system aligned with the economic realities of medical practice, the value of primary care and chronic-disease management, and the clinical needs of patients. The lesson is that public inaction and policymaking activity can occupy the same landscape: quiet legislative periods may conceal intense negotiations, regulatory rules may reshape payment while legislation stalls, and temporary increases can provide short-term relief without resolving the structural choices needed for long-term stability.

Subject of Research: A policy perspective on the legislative, fiscal and regulatory barriers to Medicare physician payment reform.

Article Title: The Illusion of Inaction: Lessons from Medicare Physician Payment Reform

Article References: Henry, T. L. (2026). The Illusion of Inaction: Lessons from Medicare Physician Payment Reform. Journal of General Internal Medicine. https://doi.org/10.1007/s11606-026-10933-2

Image Credits: AI Generated

DOI: 10.1007/s11606-026-10933-2

Keywords: Medicare, physician payment, health policy, Medicare Physician Fee Schedule, CMS, budget neutrality, primary care, MACRA, alternative payment models, physician workforce, Illusion, Inaction

The Collaborative Care Model is a specific form of behavioral health integration in which primary care teams are joined by two additional roles: care managers, who coordinate and track treatment for patients with common psychiatric conditions, and psychiatric consultants, who advise on the harder cases without requiring every patient to secure an appointment with a psychiatrist. A registry tracks each patient’s symptoms over time, allowing the team to adjust treatment systematically rather than waiting for patients to return on their own. The approach emerged from randomized trials, most famously in the treatment of late-life depression, and has accumulated an unusually robust evidence base spanning clinical outcomes, implementation science, and health economics.

The numbers cited in the perspective are striking. Studies of the model report a return on investment of roughly six to one, driven largely by reductions in overall medical spending, not just psychiatric costs. Patients with poorly controlled behavioral health conditions, particularly those with chronic comorbidities, tend to generate higher total medical expenditures and worse outcomes, so treating depression and anxiety effectively in primary care ripples through the rest of the health system. Perhaps more remarkable is the workforce mathematics: by concentrating psychiatric expertise at the level of consultation rather than one-on-one visits, the model multiplies the impact of each psychiatrist’s effort by as much as seven times. In an era when the behavioral health workforce is limited and geographically concentrated, that leverage is not a luxury but a necessity.

So why has real-world adoption lagged so far behind the evidence? The authors point squarely at fee-for-service reimbursement, the dominant payment architecture in American medicine. In 2017, the Centers for Medicare and Medicaid Services created billing codes specifically designed to reimburse collaborative care and related behavioral health integration activities, a genuine step forward. But not all state Medicaid agencies or commercial payers have adopted those codes, reimbursement rates vary widely, and billing stipulations are inconsistent across payer types and practice settings. The codes themselves are administratively demanding, requiring clinicians to track the minutes spent delivering collaborative care each month and then determine which codes to bill at month’s end. That complexity alone deters many practices from starting.

The deeper problem, however, is structural. Under fee-for-service, the primary care organization must front the investment required to implement the model, hiring care managers, building registries, and reorganizing workflows, while the savings from reduced total cost of care flow to the payer. Behavioral health, meanwhile, competes for investment capital against more lucrative fee-for-service revenue generators, often procedures. In other words, the party that pays the costs is not the party that reaps the returns. The authors argue that simply expanding the billing codes across payers, while worthwhile, is unlikely to be sufficient to drive adoption at the scale the evidence justifies.

The opportunity, they suggest, lies in the ongoing migration of primary care into value-based payment arrangements: risk-bearing provider organizations, value-based primary care companies, capitated programs for beneficiaries dually eligible for Medicare and Medicaid, and demonstration models from the CMS Innovation Center aimed at medically complex patients. To organize their recommendations, the authors use the framework of alternative payment models developed by the Health Care Payment Learning and Action Network, which sorts payment arrangements into four categories of increasing provider accountability. Category 1 is traditional fee-for-service; category 2 adds links to quality and value, such as pay-for-performance; category 3 introduces shared savings and shared risk; and category 4 is full population-based payment.

For each stage, the authors propose a tailored incentive strategy. In pure fee-for-service settings, payers should universally adopt the collaborative care codes, offer more favorable fee schedules with reduced administrative burden, particularly for medically complex populations and youths, and consider upfront infrastructure payments to offset implementation costs. In pay-for-performance arrangements, those measures would be supplemented by incorporating the model as a structural quality measure and adding behavioral health outcome metrics such as benchmarks for treatment response or remission. In shared savings and shared risk arrangements, the recommendation is a hybrid: maintain some fee-for-service reimbursement while allowing providers to share downstream savings, and remove the model’s codes from primary care capitation fee reduction lists, at least during early implementation, because returns may not materialize until the second year or beyond.

At the most advanced stage, full population-based payment, providers theoretically capture the savings themselves, reducing the need for separate fee-for-service reimbursement. But the authors draw a technical distinction here: the return on investment in collaborative care comes substantially through medical cost savings, not merely behavioral health savings, so the inherent incentive is strongest under comprehensive population-based payment rather than condition-specific arrangements. Even in these advanced models, they caution, implementation incentives remain warranted because the financial returns take time to realize. Across all four categories, the authors add cross-cutting policy recommendations: minimizing patient cost-sharing, harmonizing billing stipulations across payers to reduce administrative burden, pushing all state Medicaid agencies to adopt the codes, and providing technical assistance, information technology support, and staffing help, as North Carolina and other states have begun to do.

What makes the argument timely is the convergence of pressures on primary care. Value-based arrangements reward outcomes and efficiency, which is precisely what collaborative care delivers, yet the perspective notes a perverse detail: in many accountable care organizations, the model’s fee-for-service codes appear on lists of primary care capitation fee reductions, cutting that payment by as much as one hundred percent. Despite this, the authors maintain that collaborative care remains the most advantageous behavioral health integration model available, given its demonstrated success across research and real-world settings in treatment access, clinical outcomes, and return on investment. The payment architecture, in their view, is the last remaining bottleneck, and it is one that policymakers can address with tools that already exist.

The stakes extend well beyond billing mechanics. Untreated depression and anxiety impose costs throughout the health system, from worsened chronic disease control to avoidable hospitalizations, and the shortage of psychiatric clinicians means that simply training more providers cannot close the access gap quickly enough. The authors’ segmented approach treats payment reform not as a single lever but as a sequence of calibrated ones, matched to where each provider organization actually sits on the road from fee-for-service to full accountability for population health. If they are right, aligning incentives with the evidence could turn a proven but underused model into the default way American primary care treats the mind, expanding access to effective behavioral health care at a scale the current system has never achieved.

Subject of Research: Payment policy and adoption of the Collaborative Care Model for behavioral health integration in value-based primary care

Article Title: Evidence-Based Behavioral Health in Value-Based Primary Care: Aligning Incentives to Accelerate Adoption of Collaborative Care

Article References: Huang, J. J., Bhalla, I., & Carlo, A. D. (2026). Evidence-Based Behavioral Health in Value-Based Primary Care: Aligning Incentives to Accelerate Adoption of Collaborative Care. Journal of General Internal Medicine. https://doi.org/10.1007/s11606-026-10868-8

Image Credits: AI Generated

DOI: 10.1007/s11606-026-10868-8

Keywords: Collaborative Care Model, behavioral health integration, value-based payment, primary care, fee-for-service, alternative payment models, return on investment, psychiatry workforce, Medicaid, health policy, depression treatment, shared savings