Why is CalDerm focusing on Medicare physician payment?

CMS has proposed Medicare payment changes that could reduce reimbursement for dermatology by approximately 9% beginning in 2027. These changes threaten the ability of independent practices to invest in staff, expand access, and continue caring for Medicare patients.

How could this affect my practice?

Reduced reimbursement means fewer resources to hire staff, invest in technology, expand appointment availability, and maintain access for Medicare beneficiaries. Over time, these pressures threaten the sustainability of independent community practices.

What is CalDerm doing?

CalDerm is working closely with the AADA and other physician organizations to educate policymakers, mobilize members, and advocate for Medicare policies that protect patient access and independent physician practices.

Why does a 10% cut reduce resources by 50%, not just 10%?

Physician salaries and practice overhead are largely fixed costs — they don't shrink just because reimbursement does. When revenue drops, the entire reduction comes out of what's left over: the resources practices use to hire staff, invest in technology, and expand patient access. Because that remaining category is a much smaller slice of revenue to begin with, even a modest cut on paper translates into a disproportionately large cut to a practice's actual capacity to grow and serve patients.

What is included in the proposed rule?

The CY 2027 Medicare Physician Fee Schedule Proposed Rule includes several policy changes that together are expected to reduce Medicare reimbursement for dermatology by approximately 9% if finalized. According to the AADA, the primary drivers are:

• A 1.68% reduction in the Medicare physician conversion factor for physicians who are not qualifying participants in an Advanced Alternative Payment Model (APM).
• A proposed payment reduction for Evaluation & Management (E/M) services billed with Modifier 25 when performed on the same day as procedures with 0- or 10-day global periods, based on CMS's belief that there is overlapping physician work and practice expense.
• Changes to the practice expense methodology, which disproportionately affect procedural specialties such as dermatology.

Together, these changes would significantly reduce the resources available to independent dermatology practices to care for Medicare patients, invest in staff and technology, and maintain timely access to care.

How could this affect patients?

Patients may experience more return visits for procedures, longer wait times for appointments, and delays in diagnosis and treatment. Over time, these policies could reduce access to independent community dermatology practices and make it more difficult for Medicare patients to receive timely care.

How can I help?

You can make a difference by donating to the AADA Skinpac and CalDerm PAC, contacting your Members of Congress, educating your patients, and using the advocacy resources available in this toolkit.