There are some positive steps forward for physician payments for services provided to Medicare patients in 2026, but the changes need to go further to preserve quality and access to care for the nation’s older-adult patients, the AMA has told the Centers for Medicare & Medicaid Services (CMS) in a comprehensive comment letter (PDF) on the proposed 2026 Medicare Physician Fee Schedule.
Congress’ one-year, 2.5% update to 2026 Medicare physician payment rates led CMS to propose positive 2026 conversion factor updates which are greatly appreciated, says the letter. Permanent conversion-factor updates that take practice-cost increases into account are needed, though.
“Despite temporary updates in four of the last five years, Medicare payment has continued to erode as economic pressures on physician practices, including rising costs of rent, wages, supplies, and administrative burdens, have intensified,” John J. Whyte, MD, MPH, AMA CEO and executive vice president, wrote in the Sept. 11 comments to CMS Administrator Mehmet C. Oz, MD.
Since 2001, Medicare physician pay has remained virtually flat while the cost of running a medical practice catapulted 59% in that time period. When adjusted for inflation, physician pay declined 33% between 2001 and 2025, an AMA analysis shows (PDF).
“Inadequate physician payment has real-world consequences, accelerating the trend in consolidation and worsening seniors’ access to care. To protect Medicare for the next generation, we urge the Trump Administration to support any congressional action to enact inflation-based updates for physician payments, such as the provision tied to the Medicare Economic Index (MEI) that was in the House-passed reconciliation bill,” the letter states.
The comments are in response to the nearly 2,000-page proposed 2026 Medicare physician payment schedule that CMS unveiled earlier this year.
The AMA is leading the charge to reform the Medicare payment system.
Proposed efficiency adjustment concerns
The AMA’s 116-page comment letter—complete with nearly 100 additional pages of charts detailing, by the numbers, how physicians are affected—suggests how CMS can make adjustments.
When it comes to the proposed efficiency adjustment, CMS is suggesting a 2.5% decrease in work relative value units (RVUs) and physician intraservice time for most services. This affects more than 7,000 physician services, with additional cuts proposed every three years.
“The AMA agrees with CMS’ goal of ensuring that the time data used in work RVUs is accurate, that high-volume services are frequently reviewed to account for efficiencies and that primary care pay is adequate, but recommends alternate approaches to achieve this goal based on data and physician input,” the letter states.
For example, a recent study in the Journal of the American College of Surgeons found that the data doesn’t support the proposed efficiency adjustment. After analyzing intra-service times from 1.7 million surgeries across 249 Current Procedural Terminology (CPT®) codes and 11 specialties, the data showed that overall operative times increased 3.1% between 2019 and 2023, with 90% of CPT codes having longer or similar operative times in 2023 compared to 2019.
Among the other concerns the AMA has with the proposal:
- The negative 2.5% efficiency adjustment assumes the same amount of efficiency gains across a large group of services over a fixed period.
- Applying a broad-based adjustment factor to all work RVUs could have unintended consequences to the budgeting, projecting, resource determination and staffing within physician practices and health systems that rely on stable physician work RVUs to use in their productivity and compensation plans.
- The exceptions to the efficiency adjustments are inconsistent. Sufficient data and/or studies aren’t provided to justify why physicians might be able to obtain efficiency in most services yet not others.
Path to strengthen, preserve care
Combined with proposed practice expense cuts to services performed in a facility, the above proposals will have widespread effects on patients and physicians, including:
- More than 56% of internists facing cuts of 5% or more.
- 37% of oncologists facing notable cuts of 10% to 20%.
- 37% of obstetricians and gynecologists facing cuts.
Rather than finalize a negative 2.5% efficiency adjustment to nearly all CPT codes, the AMA in its comments urges CMS to work with physicians to “accomplish its objectives to increase primary care payment and ensure frequent review codes with empirical data.”
And the comment letter urges CMS to provide meaningful support to primary care physicians by making a prospective increase to the 2026 Medicare conversion factor to prevent further impacts from a 2024 overestimate of the office visit add-on code, G2211, that will continue to affect Medicare payment rates year after year until it is corrected, as the AMA outlined in a May letter (PDF).
“The AMA agrees with CMS that the pay differential between hospital outpatient departments and physician offices for the same services puts independent physician practices at a competitive disadvantage,” the letter says.
But the AMA is concerned that the practice-expense cuts that CMS proposes “do not address the root cause of this differential, do not reflect resource costs incurred by practices in the facility setting, create significant impacts to many individual physicians and other health care professionals and could drive consolidation.”
One major source of the problem is that hospitals receive annual, inflation-based updates that physicians don’t receive.
The AMA also is concerned about the CMS proposal to reduce indirect practice expense when a service is performed in a facility setting could have the unintended consequence of further incentivizing consolidation by hurting private practice physicians who provide some services in hospital outpatient departments or ambulatory centers but also maintain private office practices.
The AMA urges CMS to work with the AMA and physicians—which includes considering results from the 2024 AMA Physician Practice Information Survey—to come up with solutions that will support private practice physicians as CMS intends.
