What’s the news: The influential Medicare Payment Advisory Commission (MedPAC) voted in January to address inadequate payment for Medicare physician services under current law, once again underscoring a longstanding policy failure that is widely recognized but remains unresolved.
MedPAC voted to recommend an additional 0.5% update on top of the updates specified in current law—0.25% and 0.75%—and will forward that recommendation to Congress.
“The AMA appreciates that last year’s reconciliation bill provided a temporary 2.5% update for 2026; however, that increase expires in 2027. Absent meaningful reform, physicians again will face payment cuts, and Congress will once more be forced into last-minute efforts to avert further disruption,” AMA Board Chair David H. Aizuss, MD, said in a statement.
The AMA is leading the charge to reform the Medicare payment system. That includes strongly urging MedPAC to recommend to Congress that they update 2027 physician payment rates so that they keep pace with the Medicare Economic Index (MEI).
Doing so would help “ensure predictability and stability for physician payment, to maintain private practice as a viable business model and to maintain or improve access to care,” AMA CEO and Executive Vice President John Whyte, MD, MPH, wrote in a December letter (PDF) to MedPAC Chair Michael E. Chernew, PhD.
Last June, MedPAC said Medicare’s physician payments system needed to be overhauled. It called for a long-term, inflation-adjusted approach to better reflect the actual cost of providing care.
In his statement, Dr. Aizuss said that “while the AMA agrees with MedPAC’s diagnosis of the problem, it is disappointed that the commission has stepped back from the solution it endorsed just months ago, a point that two commissioners noted.”
He added that “linking Medicare physician payment updates to MEI—as MedPAC itself suggested last June—would provide stability for physician practices and certainty for patients, particularly those in rural and underserved communities, that access to their physician won’t be compromised.”
Why it’s important: The Medicare physician payment system is on an unsustainable trajectory with payments continuing to fall further behind practice cost inflation. When adjusted for inflation, Medicare physician payment declined 33% (PDF) between 2001 and 2025, according to an AMA analysis.
The Medicare Trustees have also expressed their concern that an unchanged physician payment system will lead to issues for beneficiaries being able to access Medicare-participating physicians.
The AMA’s letter details the unintended consequences of policies that don’t pay physicians enough to keep up with the cost of doing business. These include:
- Access-to-care challenges. MedPAC’s 2025 survey results showed that 29% of Medicare patients waited six weeks or more to see a new primary care physician, up from 28% in 2024; 31% waited six weeks or more to see a new specialist, up from 29% in 2024.
- Growing consolidation. Small and independent physician practices are disappearing because of rising financial and operational pressures, including diminishing Medicare payment rates that private payers use as a benchmark for their rates. The AMA 2024 Physician Practice Benchmark Survey shows that inadequate payment, access to costly resources and managing burden are drivers of consolidation.
Despite MedPAC’s focus on growth in Medicare physician payment under the Medicare Physician Fee Schedule (MPFS), inflation has outpaced MPFS spending per enrollee since 2015. Growth in MPFS spending per enrollee has also been substantially slower than growth across the rest of Part B over the past decade.
Between 2015 and 2025, MPFS spending per enrollee rose by 19%, reflecting an annual average growth rate of 1.7%. Over the same period, spending for the rest of Medicare Part B—including hospital, physician-administered drugs, labs and durable medical equipment—jumped by 86%, with an average annual growth rate of 6.4%.
Learn more: In a separate letter (PDF) sent to several members of the U.S. House of Representatives in December, Dr. Whyte voiced the organization’s support for reintroduced bipartisan legislation that would ensure physicians receive a permanent inflation update based on the MEI starting in 2026.
The Strengthening Medicare for Patients and Providers Act, H.R. 6160, “addresses the most significant structural deficiency in the Medicare Physician Fee Schedule ... by establishing a stable, permanent inflation-based update that reflects the true cost of providing care to Medicare beneficiaries,” the AMA said in its letter to Reps. Raul Ruiz, MD (D-Calif.), Gus Bilirakis (R-Fla.), Jimmy Panetta (D-Calif.), Kim Shrier, MD, (D-Wash.), and Ami Bera, MD, (D-Calf.).
While the AMA appreciates the one-year, 2.5% update to 2026 Medicare physician payment, U.S. physicians continue to face inadequate updates while they contend with rising expenses. H.R. 6160 is an important policy change, the letter said, and the AMA is ready to work with Congress to get it passed.
Visit AMA Advocacy in Action to find out what’s at stake in reforming Medicare payment and other advocacy priorities the AMA is actively working on.
