The American Medical Association expressed disappointment after the Medicare Payment Advisory Commission voted Jan. 15 to recommend only a modest update to Medicare physician payments for 2027, backing away from more robust reforms it had previously supported.
MedPAC voted to recommend a 0.5% payment increase for physicians in 2027, on top of the 0.25% and 0.75% updates already included in current law. While the recommendation aims to address growing concerns about reimbursement adequacy, the AMA said it falls short of what is needed to support physicians and preserve access to care.
“The AMA appreciates that last year’s reconciliation bill provided a temporary 2.5 percent update for 2026; however, that increase expires in 2027,” David Aizuss, MD, chair of the AMA Board of Trustees,” said in a news release shared with Becker’s. “Absent meaningful reform, physicians again will face payment cuts, and Congress will once more be forced into last-minute efforts to avert further disruption.”
In June, MedPAC acknowledged the shortcomings of Medicare’s physician payment system and called for an inflation-adjusted model to better reflect the rising cost of providing care. The AMA continues to urge Congress to tie physician payment updates to the Medicare Economic Index — the government’s measure of practice cost inflation. When adjusted for inflation, Medicare physician pay has declined 33% from 2001 to 2025, according to the association.
“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 today,” Dr. Aizuss said. “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.”
MedPAC is also weighing draft recommendations to increase Medicare support for safety-net hospitals. The commission is considering a $4 billion boost to disproportionate share hospital and uncompensated care payments, using a Medicare Safety-Net Index formula to distribute the funds.
In a Jan. 15 comment letter, America’s Essential Hospitals urged MedPAC to consider alternative mechanisms to the MSNI. The association recommended instead using designation criteria from the Reinforcing Essential Health Systems for Communities Act — introduced in February 2025 — as a more equitable approach.
While the MSNI seeks to direct funding to hospitals that serve large numbers of low-income Medicare beneficiaries, MedPAC’s own analysis found the formula would shift funding away from large, urban and teaching hospitals and toward smaller, more rural facilities.
“While thanking the commission for their interest in increasing federal funding for and recognizing ‘the inadequacy of current Medicare payments to safety net hospitals,’ the association noted the MSNI’s failure to account for ‘all types of low-income patients,’ and urges policymakers to ‘supplement rather than redistribute’ existing DSH and uncompensated care payments,” Evan Schweikert, policy analyst at America’s Essential Hospitals, said in a Jan. 15 statement.
MedPAC is expected to vote on the safety-net hospital recommendation by Jan. 16.
At the Becker's 11th Annual IT + Revenue Cycle Conference: The Future of AI & Digital Health, taking place September 14–17 in Chicago, healthcare executives and digital leaders from across the country will come together to explore how AI, interoperability, cybersecurity, and revenue cycle innovation are transforming care delivery, strengthening financial performance, and driving the next era of digital health. Apply for complimentary registration now.