Reimbursement Erosion Reshapes Dermatology: Jane Grant-Kels, MD, FAAD

Reimbursement erosion and unpredictability are reshaping where, and how, dermatology practitioners choose to practice, said Jane M. Grant-Kels, MD, FAAD, professor and vice chair of the Department of Dermatology at UConn Health. Compounding the problem, insurers are steering patients toward cheaper drugs first, delaying access to the treatment their doctor originally intended to prescribe.

Dermatology Struggling Due to Reimbursement Erosion

Congress passed a one-year 2.5% Medicare payment increase for 2026,¹ but the relief doesn't go far enough, according to Grant-Kels. "We had a cut last year of 2.83%, so they haven't even made up this year with the 2.5% increase with the cut from just a year ago," she said.

That erosion has left reimbursement net down even with the latest bump, and the steady decline in income is making it harder for practitioners to sustain a practice in rural areas. Roughly 94% to 95% of dermatologists accept Medicare, so most practices can't simply walk away from it. Big-city dermatologists and those in concierge practices are the exception, because they can afford to drop Medicare altogether, which would leave rural communities further underserved.

Impact of Reimbursement Uncertainty

That unpredictability is also pushing practices toward private equity as a way to stay afloat. Meanwhile, high medical school debt, compounded by unstable reimbursement, is steering new dermatologists toward higher-paying subspecialties like surgical and cosmetic dermatology instead of general or pediatric care. It's a career decision that takes years to unwind, leaving rural areas underserved in the meantime.

"It will take generations to reverse this trend, unless Medicare stops these ridiculous cuts and doesn't fix the issue more permanently," Grant-Kels added.

Reimbursement Shaping Clinical Decisions

The effects extend beyond where dermatologists choose to practice. Debt pressure is also pushing practitioners toward stable, higher-volume markets in larger cities, contributing to a shortage of general and pediatric dermatologists in underserved areas. Reversing that trend, Grant-Kels said, will require an end to recurring cuts and a permanent reimbursement fix.

The consequences ultimately land on patients. When reimbursement falls below the cost of delivering care, prior authorization becomes an added burden that is expensive for offices to administer. In addition, prior authorization often results in step therapy, which requires patients to try cheaper medications before accessing what their doctor originally prescribed. In practice, that turns a prescription into more of a suggestion than a clinical necessity.

"It's the patients who pay the burden because they're the ones not getting the medications that they need. And the offices are paying the burden because of the expense of filling out prior auths and dealing with all the rejections," Grant-Kels concluded.

Reference

1. Congress passes one-year increase to Medicare physician payment in budget bill. American Academy of Dermatology Association. July 3, 2025. Accessed July 16, 2026. https://www.aad.org/member/advocacy/update/2025/congress-passes-payment-increase