Texas Society of Eye Physicians and Surgeons

2026 Medicare PFS: Independent Physicians Hit Harder Than Employed Docs—Fueling Consolidation As we wrap up PFS week, here’s the through-line from what we’ve covered so far. Monday: The 3.26% conversion factor bump is temporary. There’s still no MEI-linked inflation fix, a new –2.5% “efficiency” cut to work RVUs, and practice-expense/site-of-service changes that widen payment gaps. Tuesday: The efficiency adjustment is deeply flawed. It ignores rising patient complexity, double-counts prior “efficiency” trims, and disproportionately targets procedural work RVUs (for example, many spine codes down 2–3%). Wednesday: CMS reallocated indirect practice expense in facility settings to 50%, further undervaluing office-based care. The same epidural pays roughly $250 in an independent office versus $750+ in a hospital outpatient department, rewarding hospital ownership and site shifts. Today: The uneven toll. Independent practices absorb the full impact of these changes, while employed physicians feel only part of it. Here’s how that plays out in the real world. Employed Physicians Most employed physicians are paid primarily on work RVUs. For them, the main hit is the –2.5% efficiency adjustment on procedures and surgeries. They generally do not experience practice-expense or site-of-service effects, because hospitals bill facility fees separately under OPPS. Recall that those payments receive annual MEI updates unlike physician fees. The result for many employed physicians is relative stability, often buffered by hospital subsidies or compensation adjustments. Independent Physicians Independent practices are hit from every direction: • work RVU cuts • practice-expense reductions • site-of-service differentials For facility-based work common in spine and orthopedics, many codes see 2%–11% per-code reductions, translating to an overall payment decline of roughly 4%. Independent physicians can’t subsidize losses the way large health systems can. They have to survive on undervalued office rates while competing against hospital-owned practices paid at far higher total levels. Examples (facility settings, non-QP CF): • CPT 63047 (lumbar laminectomy): –2.69% • CPT 63048 (additional segment): –8.49% • CPT 27130 (total hip arthroplasty): –7.75% Independent procedural specialists are hit hardest because higher facility volume means larger practice-expense losses. That pressure pushes more independents to sell or close. The outcome is predictable. Independent practices disappear. Hospital employment expands (now 70%+ of physicians, per AMA data). Competition declines. Insurers negotiate with a few dominant systems. Costs rise. Access erodes. Patients wait longer for specialized care. If policy continues to favor employment over independence, the question becomes simple: how do we preserve independent practice and patient choice?