Sometimes, Washington delivers a moment of unity that breaks the gridlock. When the House Ways and Means Committee advanced the Provider Reimbursement Stability Act (H.R. 8163) last month on a 44–0 vote, both parties sent a clear message: The system behind Medicare physician payment is broken—and the now is the time to fix it
This move comes not a moment too soon. Since 2001, inflation-adjusted payment rates under Medicare have dropped by about one-third. Unlike hospitals, skilled nursing facilities and other entities that are paid to provide services to patients with Medicare and have their rates updated annually to cover inflation, physicians receive no annual inflation adjustment from Medicare—even as practice costs such as wages, rent and supplies continue to soar. Every year, practices hang on while unpredictable cuts, outdated budget formulas, and runaway administrative complexity grind them down.
Unsurprisingly, this financial instability makes it harder for doctors to keep their doors open, especially in rural and vulnerable communities. Each closure isn’t just a loss for the profession; it is a matter of health and dignity for every patient who may now have to travel farther, wait longer, find a new physician or abandon needed care.
Bringing budget neutrality to modern era
The Provider Reimbursement Stability Act is a workable solution. It updates the decades-old $20 million budget neutrality threshold—untouched since 1992—to $57.64 million and ties it to the Medicare Economic Index going forward.
This legislation requires that the Centers for Medicare & Medicaid Services (CMS) adjust utilization estimates once actual claims data becomes available. Doing so could potentially prevent billions in future payment reductions when these misestimates are compounded annually, preventing physicians from receiving money rightfully due them for services they provided. For example, when transitional care management services were added in 2013, this new category of care resulted in CMS overestimating utilization to the tune of $5.7 billion over a decade. That money was extracted from Medicare physician reimbursement and never added back.
The bill also establishes a mechanism to keep practice-expense updates aligned with updated costs, and caps annual Medicare payment swings at 2.5% starting in 2028, providing practices with long-sought predictability and stability in their Medicare reimbursement. Instead of more guessing games with dire consequences, this measure can deliver what we need: a system that helps physician practices plan operations, hire staff and better serve their patients.
Meanwhile, another critical piece of AMA-supported legislation (PDF) introduced last year called the Strengthening Medicare for Patients and Providers Act (H.R. 6160) would permanently link Medicare payments to the real costs of running a physician practice by tying them to the Medicare Economic Index.
Overhauling MIPS
But there’s another side to this crisis: overwhelming, ineffective federal reporting requirements. The Medicare Incentive-based Payment System (MIPS), originally designed to usher in a new era of value in healthcare, has instead become a costly burden that disproportionately penalizes small and solo practices.
Data shows those physicians overwhelmingly bear the highest penalty rates, which fund bonuses for large, better-resourced practices. MIPS compliance costs each physician nearly $13,000 and more than 53 hours per year on measures that are as effective as random chance at measuring the quality of patient care.
New bipartisan legislation—the Medicare Physician Data-Driven Performance Payment System Act of 2026 (PDF; H.R. 8622)—seeks to overhaul MIPS. It would freeze the MIPS performance threshold for three years, provide timely feedback to doctors, and replace the “win-lose” game of steep penalties with payment updates tied more rationally to performance. This is welcome relief for independent practices and the patients who rely on them.
Other urgent steps include strengthening pathways to alternative payment models by extending existing incentive payments, and lowering the participation hurdles for specialty and rural practices too often left out.
Help bring forth change
At every turn, these reforms focus on protecting patient access to care. They are about repairing the cracks in our health system before they threaten the entire structure. Without stabilization, more physician practices will close—and the most vulnerable, including seniors and rural families, will suffer most.
These changes will not solve every longstanding challenge in Medicare physician payment. But they will bring much-needed predictability, fairness, and stability. They honor the reality faced by every physician and patient: that healthcare works only when the foundation is strong enough for all.
Just as importantly, they show that Medicare physician payment reform is no longer a theoretical discussion. Congress is beginning to act, and continued bipartisan momentum will be essential to building a more rational and sustainable payment system.
The historic, bipartisan committee vote on the Provider Reimbursement Stability Act shows precisely what is possible when lawmakers listen. But there is still work ahead. It’s time for the House and Senate to finish the job through continued support for physician-led payment reforms. I invite you to add your voice to our Fix Medicare Now grassroots campaign, which outlines specific reforms to create a rational Medicare payment system that safeguards patient access to high-quality care.
Let’s build that future. Together, let’s fix what’s broken, preserve what matters, and create a healthcare system worthy of everyone who depends on it.
