The massive reconciliation bill that passed the House of Representatives in a 215-214 vote May 22 includes provisions to increase Medicare physician payments by 2.25% in 2026 and implement ongoing annual inflation-based payments thereafter.
Five things to know:
- The bill ties Medicare physician payments in 2026 to 75% of the Medicare Economic Index, resulting in an estimated 2.25% increase. Beginning in 2027, payments would be adjusted annually by 10% of the MEI, creating a permanent inflation-based update mechanism.
- If the changes are enacted, annual Medicare physician payments would increase to 4.3% by 2035. Under the current law, payments would only rise to 0.25% in 2026 and 2.5% by 2035.
- The American Medical Association said it “strongly supports” the updates, which represent an estimated $9 billion in new investments in the Medicare Physician Fee Schedule over a 10-year budget window.
- When adjusted for inflation, Medicare physician pay has fallen 33% since 2001. The bill’s provisions also come after five consecutive years of Medicare physician payment cuts. For years, the AMA advocated for physician payment updates that are more closely tied to inflation and the actual costs of providing care and maintaining a practice, calling the proposed changes an important step toward a more predictable and sustainable payment system.
“Ensuring regular, adequate payment updates is vital to maintaining practice stability, advancing value-based care models and safeguarding access to care for Medicare beneficiaries, particularly in rural and underserved communities,” the AMA said in a May 20 letter to House leadership, ahead of the floor vote on the legislative package.
“Continued cuts threaten access to care for America’s seniors, and the inclusion of an update for 2026 that partially accounts for inflation is an important step. This must, however, represent only the first step to ensuring that Medicare payments keep up with inflation over the long term, as they do for other Medicare providers.” - The Medicare payment updates stand out as one of the few healthcare provisions welcomed by industry stakeholders in a bill otherwise marked by steep cuts — including reductions to Medicaid and Medicare, and limits on federal student loan support for medical students. The bill now heads to the Senate, though a date for when a vote will be held has not been announced. Read more about the bill’s healthcare proposals and industry reactions to the House’s passage here.
