MedPAC to Congress: Increase Medicare payments

WASHINGTON - The Medicare Payment Advisory Commission (MedPAC) recommended (PDF) today that Congress increase the payment update for physicians caring for Medicare patients in 2027, reinforcing the urgent need to stabilize Medicare physician payment and protect patient access to care.

The American Medical Association (AMA) welcomed the recommendation.

"Because of lagging payments, rising inflation and bureaucratic demands, physicians are struggling to keep their practices open and continue caring for their patients," said AMA President Bobby Mukkamala, MD. "These pressures fall hardest on private practice physicians caring for Medicare patients especially in rural and underserved communities."

MedPAC recommended an additional 0.5 percent payment update on top of the updates specified in current law-0.25 percent and 0.75 percent-and will forward that recommendation to Congress.

In last year's reconciliation bill, Congress provided a temporary 2.5 percent update for 2026; however, that increase expires in 2027. Without meaningful reform, physicians again will face payment cuts, forcing Congress into past-minute efforts to avert disruption in patient care.

In June, MedPAC warned that Medicare's physician payment system required significant reform. The commission called for a long-term, inflation-adjusted approach to better reflect the actual cost of providing care. This lasting policy change is desperately needed, while the latest recommendation is only a Band-Aid.

MedPAC's findings confirm what physicians have experienced for years: Medicare payments have failed to keep pace with rising practice costs, putting patient access to care at risk. When adjusted for inflation in practice expenses, Medicare physician payment declined (PDF) 33 percent from 2001 to 2025.

The AMA has long supported tying physician payment updates to the Medicare Economic Index (MEI), the established measure of practice cost inflation and is disappointed that MedPAC did not reiterate this message for 2027.

"MedPAC should continue urging Congress to link physician payment updates to MEI to provide stability for physician practices and certainty for patients. Other health care providers have payments linked to inflation, which spares them the annual year-end scramble in Congress to fend off payment cuts," Dr. Mukkamala said. "The AMA will carry this message to Congress and hopes it resonates in the marble halls as it does in the exam room."