AAFP: Big Beautiful Bill could affect physicians through Medicare pay, direct primary care, student loans, business taxes

Medicare payment to physicians would be tied to the Medicare Economic Index (MEI) starting in 2026, according to the One Big Beautiful Bill Act pending in Congress.

Even so, future increases may not keep up with inflation, according to the American Academy of Family Physicians.

AAFP Board Chair Steve Furr, MD, FAAFP, praised that provision in a nine-page critique of the legislation, sent this week to House Speaker Rep. Mike Johnson (R-Louisiana) and Minority Leader Hakeem Jeffries (D-New York).

AAFP and other medical and health care organizations have argued against potential cuts to Medicaid, based on patient needs and maintaining access to health care. Furr touched on Medicaid and outlined other provisions that could help or hurt primary care going forward.

Physician pay

Steven P. Furr, MD, FAAFP
_{© American Academy of Family Physicians}

The bill has language to provide doctors with Medicare payment increases equal to 75% of the Medicare Economic Index starting next year. After that, the annual updates would equal to 10% of the MEI.

“We recognize the significance of including a provision that invests $8.9 billion in the Medicare Physician Fee Schedule in a piece of legislation that has such a high savings floor,” Furr wrote, praising the House Energy & Commerce Committee for keeping that in the bill.

After 2026, AAFP is concerned that increasing the Medicare conversion factor by only 10% of MEI “will provide little relief from the inflationary pressures that practices continue to face,” Furr wrote.

The bill also would provide a 0.75% increase to the conversion factor for qualifying advanced alternative payment model (APM) participant beginning in 2026. “The AAFP has been a steadfast champion of accelerating the transition to value-based payment,” Furr wrote, but that provision could eliminate one of the few remaining incentives for practices to shift to value-based payment.

“Therefore, we will continue to advocate for long-term, comprehensive payment reform for physicians,” Furr wrote. “Short-term patches limit meaningful investment in primary care and reduce the appetite for federal policymakers to advance true change that will sustain and grow our primary care workforce. More permanent reforms, including an adequate annual inflationary update to Medicare physician payment based upon the MEI, remain necessary.”

Medicaid cuts

Potential cuts to the Medicaid health insurance program have received wide public attention. AAFP is concerned about the dynamics of a physician pay increase in legislation largely financed by Medicaid reforms that will lead to coverage losses, reduced eligibility, and lower physician payment overall, Furr wrote.

“As family physicians, we see the important and often life-saving role that Medicaid and the Children’s Health Insurance Program play for more than 80 million individuals across the country,” Furr wrote. “The AAFP has long opposed changes to the Medicaid program that seek to further restrict eligibility or impede access to coverage.”

Work requirements

AAFP leaders are “deeply concerned about the mandatory work reporting requirements” for Medicaid beneficiaries, in the bill, Furr wrote.

“Empirical evidence has consistently shown that work reporting requirements do not achieve their stated goal of increasing employment,” Furr said. “Instead, they merely achieve “savings” by increasing onerous paperwork requirements that lead to eligible, compliant individuals being kicked off the rolls and fewer people having health insurance. The Congressional Budget Office has concurred with this in their own estimations.”

Meanwhile, data from 2023 showed 92% of Medicaid-covered adults were working full- or part-time. The remaining 8% were retired, unable to find work, or were not working for another reason, Furr said.

Medicaid reforms

AAFP supports Medicaid reforms that will shore up the program for coming generations, Furr said. But the regulations and changes of One Big Beautiful Bill Act do not accomplish that, he said.

A better solution: advancing policies that increase access to direct primary care for Medicaid enrollees, Furr said. There is a pending bipartisan bill, the Primary Care Improvement Act, that would require the U.S. Centers for Medicare & Medicaid Services (CMS) to offer clarification that state Medicaid programs can pay for direct primary care for Medicaid patients if they choose to, he wrote.

“Medicaid is a foundational leg of the stool that is our health care system, and decreased investment in the program risks the stability of the entire structure,” Furr wrote. Whatever the final vote in Congress, “the health care needs of disenrolled Medicaid beneficiaries won’t just disappear.” 

Direct primary care

The bill includes an allowance for people enrolled in high-deductible health plans to health savings accounts to pay for direct primary care arrangements. AAFP supports that, Furr wrote.

“As more primary care physicians choose to participate in DPC arrangements with their patients, removing the barriers to that prevent that choice will only further foster patient-physician relationships,” Furr said. “We have long supported this legislation and believe that DPC is a model of care that provides a pathway to continuous, comprehensive and coordinated primary care for patients.”

The House Committee on Ways and Means included that in the bill.

Small business tax credits

Small business tax credits and deductions in the bill could help physicians operating as independent family medicine practices, Furr wrote.

However, those practices operating as small businesses could be hurt financially if Congress eliminates the Pass-through Entity Tax state and local tax deduction for specified service trades or businesses, including independent physician practices. Furr said.

“Undermining an independent practice’s ability to utilize small business tax deductions and credits will likely only further weaken the desire to practice in independent business models and in communities of greatest need,” he wrote. Congress also should extend the advanced premium tax credits created through the Affordable Care Act and expiring at the end of 2026, but not in the One Big Beautiful Bill Act.

“These tax credits ensure that millions of low- and middle-income families continue to have access to affordable health coverage, which has been shown to have a positive influence on a nation’s economic growth and alleviate economic burdens,” Furr wrote.

Med school student loans

The bill would allow medical students to defer interest on federal student loans, something AAFP supports. But the Academy is concerned with proposals to cap student loan borrowing and restrict participation in public service loan forgiveness (PSLF), Furr wrote.

Educational debt directly influences medical student choices about specialty and location of practice. Based on salary, family physicians proportionally have greater debt burdens than other doctors, and family physicians use PSLF at high rates. For some family doctors, PSLF allowed them to return to medical practice in their rural hometowns, Furr wrote.

“Preserving and strengthening avenues for loan repayment such as PSLF could give family physicians who want to practice in rural areas greater financial freedom to start businesses, employ others, and provide invaluable health care and economic activity in their communities,” Furr wrote.

The House Committee on Education and the Workforce considered those rules.

Good food needed

Family doctors counsel their patients on food, diet and nutrition, and are uniquely positioned to identify those in need of the Supplemental Nutrition Assistance Program (SNAP). The One Big Beautiful Bill Act would prevent future revaluations from increasing the cost of the Thrifty Food Plan that the U.S. Department of Agriculture uses to determine the cost of groceries. AAFP is concerned about that so low-income children and families can afford healthy and nutritious foods, Furr wrote.

The House Committee on Agriculture considered that rule.