2026 Medicare reimbursement: ‘Inadequate physician payment has real-world consequences,’ AMA says

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The 2026 Medicare Physician Fee Schedule (MPFS) could be an opportunity to bolster private practice for physicians and patients’ access to care, according to the American Medical Association (AMA).

The alternative: major cuts to physician payment across primary care, obstetrics-gynecology (OB/GYN), oncology and other specialties.

This week, AMA submitted its comment on the 2026 payment plan proposed by the U.S. Centers for Medicare & Medicaid Services (CMS). AMA CEO and Executive Vice President John Whyte, MD, MPH, wrote to CMS Administrator Mehmet Oz, MD, MBA, included a letter and 201-page report outlining the organization’s recommendations for handing Medicare reimbursement to doctors.

“Inadequate physician payment has real-world consequences, accelerating the trend in consolidation and worsening seniors’ access to care,” Whyte said in his letter to Oz. “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 2026 MPFS has a one-year, 2.5% update for physician payment and positive conversion factor updates. There have been temporary updates in four of the last five years, Whyte wrote.

But “Medicare physician payment has continued to erode as economic pressures on physician practices, including rising costs of rent, wages, supplies, and administrative burdens, have intensified,” he said.

“Between 2001 and 2025, Medicare physician pay remained virtually flat even though the cost of running a medical practice increased 59 percent,” Whyte’s letter said. “Adjusted for inflation in practice costs, Medicare physician pay declined 33 percent from 2001 to 2025.”

Efficiency, pay and facilities

The 2026 MPFS also has a -2.5% efficiency adjustment that, if too broad, would have unintended consequences for budgeting and staff in physician practices and health systems, Whyte said.

CMS also proposed a 7% reduction in practice expense used in physician payment for services performed in facilities such as hospitals or ambulatory surgical centers, AMA said in a news release about its MPFS comment.

“Because this change does not accurately reflect physician resource costs incurred by practices in the facility setting, it may have the unintended effect of reducing competition and encouraging consolidation, results that CMS itself has been eager to avoid,” according to AMA.

Coupling efficiency adjustments with proposed cuts to practice expenses “will result in widespread impacts on physicians and patients,” he said. Among the problems:

• 37% of oncologist could face cuts up to 20%.
• More than 56% of internists and 80% of infectious disease physicians would face cuts of at least 5%.
• 49% of ophthalmologists and 37% of OB/GYN physicians would face cuts.

What about primary care?

Whyte specifically mentioned the CMS dedication to increasing primary care payment.

It appeared the federal calculations in 2021 and 2023 redistributed more than $6 billion of Medicare reimbursement from other services to evaluation and management codes. In 2024, CMS implemented the new add-on code G2211 to support primary care office visits.

However, the previous administration significantly overestimated 2024 utilization of the code, “dramatically impacting the Medicare conversion factor via a negative budget neutrality adjustment.”

“The resulting conversion factor reduction hurt payments to primary care physicians more than reporting of G2211 helped them,” Whyte wrote. CMS should increase the 2026 conversion factor to prevent the overestimation from reducing Medicare payment rates year after year.

Is site-neutral payment coming?

CMS acknowledges that private practice physicians need more money to keep the doors open and compete with hospitals and health systems. AMA appreciates that recognition, Whyte said.

The pay difference between services performed at hospital outpatient departments or in physician offices puts doctors at a competitive disadvantage. Meanwhile, the hospital payment rates are adjusted for inflation, but physician payment is not, Whyte wrote.

The 2026 MPFS has proposed cuts to practice expenses. Those cuts do not address the pay differential or reflect actual costs of office expenses, Whyte said. The cuts could have “significant impacts to many individual physicians and other health care professionals, and could drive consolidation,” he wrote.

Instead, CMS could base practice expenses on the 2025 AMA Physician Practice Information Survey.

“The AMA strongly urges CMS to reconsider this proposal and work with physicians on an alternative based on the 2024 PPI Survey data that will support private practice physicians,” Whyte wrote.

Is hospital data accurate?

AMA’s supporting document expanded on the need to ensure accurate payment to reflect costs of care across physician offices, hospitals and ambulatory surgical centers.

“The AMA agrees that the site of service payment differential between the non-facility and facility settings is an issue that creates inherent unfairness to office-based physicians trying to compete with higher-paid sites of services, such as the hospital outpatient setting,” the AMA letter said. “However, the main driver of this differential has been the lack of inflationary updates to physician payment, unlike facility payment schedules.

“We also know that cost reporting by hospitals is inconsistent and unreliable,” according to AMA. “For instance, for packaged services, hospitals often do not report supplies on their cost reports. In other instances, they use flawed methodology like square feet allocation over actual costs.”