By NextBestFitPhase 1: Enactment & build · Step 1.7
Set the national fee schedule
Months 3–15; annual updates thereafter · Payment Rates Board; UHADiscuss this step
Pros & cons of this step
Pros
- +Medicaid patients become as valuable as any other patient Today Medicaid pays about 0.72× of Medicare and private insurers pay about 140%.
- +Primary care gets a raise, which helps the primary-care shortage.
- +Physicians stop needing billing staff for dozens of payers.
Cons
- −Specialists whose income depends on commercial rates (orthopedics, cardiology, gastroenterology, dermatology) see fee cuts of 20–30%.
- −Fee-for-service keeps volume incentives.
- Raising primary care while cutting procedures narrows the income gap between specialties, which may shift medical students toward primary care but lowers the payoff from long specialty training.
medium confidence
Provider incomes and hospital finances
Hospitals' revenue is roughly flat in aggregate but redistributes sharply, toward Medicaid-heavy and rural hospitals and away from commercially dominant systems. Primary-care physicians gain and procedural specialists lose.
Today
Commercial revenue subsidizes losses on Medicare and Medicaid; hospital margins depend on payer mix.Under the plan
Hospital spending −$18.4B overall. Billing costs fall (about 8.5% of hospital and 13% of physician revenue today).Who gains
- Rural and safety-net hospitals
- Primary care
- Pediatrics
- Psychiatry (more patients covered at better rates)
Who loses
- Academic medical centers and suburban systems with high commercial shares
- High-earning procedural specialties
Magnitude: Commercial-heavy hospitals may see 15–30% revenue reductions before administrative savings.
- MarylandGlobal budgets kept hospitals financially stable while slowing growth.Sources: CMS Innovation Center / RTI (2023)
- RANDPrices vary widely between hospitals in the same market, showing market power rather than cost.Sources: RAND Corporation (2024)
Mitigations
- Hospital Transition Fund
- 4-year rate convergence
- Rural add-ons
Risk that remains: Some hospitals will close or merge.
medium confidence
Equity across income, race, and geography
One tier for everyone removes payer-based segregation of care, which falls along income and racial lines today.
Today
Who you see and how fast depends on your insurance, which tracks income and race.Under the plan
Same card, same rates. A cash tier for opted-out providers remains for the wealthy.Who gains
- Low-income and minority communities
- Rural residents
Who loses
- People who benefit from today's priority access
Magnitude: Large.
- Canada/UKIncome-related gradients in access are smaller than in the U.S., though they persist for specialist care.
Risk that remains: Geographic shortages persist without capacity investment.
Trade-off behind each cost item
- Providers of this service receive $21.4B less for the same care; patients receive $113.0B more care.
- Other professional services+$209.4BPrices rise $1.1B (to raise access or wages) and patients receive $23.5B more care.
- Billing staff lose jobs; providers' margins improve on average, but the distribution across hospitals and practices is uneven.
Trade-off behind each system change
- Medicare Physician Fee Schedule (RBRVS) & the AMA RUCPrimary care gains, procedural specialists lose.
- Hospital and insurer price transparency rulesTransparency is automatic.
- FQHC and Rural Health Clinic prospective payment (encounter rates)Health centers keep stable funding but lose their unique role as the uninsured safety net, since every provider now accepts everyone.
- Certified Community Behavioral Health ClinicsStable funding for behavioral health; cost-based rates weaken efficiency incentives.
- Site-of-service payment differences (hospital outpatient vs. physician office)Removes the incentive to acquire practices; hospital outpatient revenue falls.
- Office of Primary Care (new)Protects the most under-invested part of the system; shifting money to primary care takes it from specialists and hospitals.