In the final hours of the 1989 session, Congress passed the Omnibus Budget Reconciliation Act (OBRA) of 1989, which included the most important change in physician reimbursement policy since the introduction of Medicare. The new payment system will base physician Medicare reimbursement on a fee schedule, establish uniform percentage limits on balance billing, and set targets for total Part B physician expenditures. Medicare payments to family physicians will increase substantially under the new system. This will enhance the status and attractiveness of the specialty. The new system will decrease physician autonomy in some respects, and it is not clear that it will successfully control spending. However, on balance it offers significant advantages for family physicians.