Reintroduction of the Strengthening Medicare for Patients and Providers Act
Representatives Raul Ruiz, MD (D-CA), Gus Bilirakis (R-FL), Jimmy Panetta (D-CA), Kim Shrier, MD (D-WA), and Ami Bera, MD (D-CA), have reintroduced the Strengthening Medicare for Patients and Providers Act. This bipartisan legislation would provide physicians with a permanent inflation update based on the Medicare Economic Index (MEI) starting in 2026. On Dec. 8, the AMA sent a letter (PDF) to the bill sponsors supporting the bill as reintroduced.
Unlike other providers, including hospitals and skilled nursing facilities, physician payment rates have not been consistently updated based on inflation. Costs to run medical practices have increased nearly 59% over the past two decades, while Medicare payments have fallen over 33 percent when adjusted for inflation, creating significant financial strain for practices across the country and heightened risks to patient access. Temporary Medicare updates in four of the last five years have not kept pace with the economic pressures on physician practices.
H.R. 6160 provides a clear, permanent long-term solution by shifting to a single conversion factor in 2026 and applying a permanent annual inflation increase tied to the MEI. Aligning Medicare payment updates with the MEI, a meaningful, health care-centric measure of medical practice cost inflation, brings stability to the program and allows practices to plan, invest, and continue serving their patients without the constant uncertainty that has defined recent years. Both the Medicare Trustees and the Medicare Payment Advisory Commission have warned that the growing gap between what Medicare pays and the cost to provide care could result in patient access to care and have recommended that Congress provide physicians with an annual inflation update that is tied to the MEI.
AMA urges 4-year phase-in of Medicare cuts
The AMA urged leaders in the Senate and House (PDF), as well as the Centers for Medicare & Medicaid Services (CMS) (PDF), to phase in over four years Medicare indirect practice expense (PE) cuts recently finalized in the 2026 Medicare Physician Payment Schedule and scheduled to go into effect on Jan. 1. These payment reductions, which are -7% on average, will affect physician services provided in hospitals, ambulatory surgery centers, skilled nursing facilities, and other facility settings. However, the impact on certain physicians and specialties will be higher. For instance, facility-based ophthalmologists are projected to face a 13% cut, facility-based otolaryngologists face a 12% cut, and facility-based gastroenterologists face a 10% cut. The AMA expressed deep concern that the abrupt, full-scale cuts will significantly threaten the financial viability of many physician practices, particularly smaller and independent groups. In fact, inadequate payment rates and costly resources are two of the drivers of hospital consolidation according to the AMA 2024 Physician Practice Benchmark report (PDF).
The AMA addressed CMS’ concerns that it is double paying for the indirect expense (e.g., administrative staff salaries and overhead costs) when services are performed in the facility setting based on the 2024 AMA Physician Practice Information (PPI) Survey, which found that indirect expenses for hospital-based medicine averaged $57 per hour of direct patient care, and $62 for hospital-based surgery. These expenses reflect necessary functions such as coding, billing, and scheduling, which remain the sole responsibility of the physician practice. Furthermore, the letter pointed out the historical precedent for phasing in substantial changes to the Medicare practice expense methodology, most recently when clinical labor pricing and supply and equipment rates were updated. Congress and CMS must act as soon as possible to provide a transition period for these cuts to ensure patient continuity of care and safeguard private practice.
