Bipartisan Senate bill would send $10 billion to primary care and rework how Medicare values physician work

The Pay PCPs Act of 2026 would appropriate $10 billion for FY 2027 through FY 2031 to pay primary care physicians a monthly per-patient rate on top of their fee-for-service claims, under legislation Sen. Sheldon Whitehouse (D-Rhode Island) and Sen. Bill Cassidy, M.D. (R-Louisiana) announced Sept. 9.

Hybrid payments under the bill would combine a prospective, per-member-per-month payment with ordinary fee-for-service payments. The monthly payment could represent between 40% and 70% of expected annual total allowed charges under the Medicare physician fee schedule, and the bill states it should exceed the historic actuarially equivalent fee schedule amounts for the services rolled into it.

Care management, behavioral health integration and office-based evaluation and management (E/M) visits for new and established patients, regardless of modality, could all be paid through that monthly rate.

So could work that generates no claim today: emails, phone calls and messages through patient portals with patients and their caregivers.

Screenings, annual wellness visits, vaccinations, initial preventive physical examinations and additional preventive services would stay on fee-for-service. The bill directs the Secretary of Health and Human Services to keep those separately payable and to hold their share of payments at no less than what Medicare pays for them now.

The bill's findings put a figure on the gap it targets. Research has shown that 25% or more of primary care activities go unrecognized for payment under most fee schedules, Medicare's included, largely because those activities are brief and frequent and cost more to bill than the payment is worth.

What the bill requires, and what it merely permits

The bill authorizes the secretary to establish hybrid payments inside the fee schedule. It does not require it. Whether to risk adjust the monthly payment is likewise left to the secretary's assessment, with clinical diagnoses, demographics and social determinants of health named as factors the methodologies may incorporate.

A rule of construction states that nothing in the section requires a primary care physician to receive hybrid payments at all.

Physicians who did take hybrid payments would drop out of the Merit-based Incentive Payment System (MIPS). The bill amends the Social Security Act to add them to the list of clinicians excluded from the program.

Who qualifies is set by statute rather than by specialty. The bill defines a primary care provider as a physician under section 1861(r) of the Social Security Act or a practitioner under section 1842(b)(18)(C), a category that takes in nurse practitioners and physician assistants, so long as they furnish primary care services as the statute defines them.

Beneficiary cost sharing under Part B could be cut by 50% for primary care services reimbursed through hybrid payments. The reduction is conditioned on the beneficiary designating a primary care provider as their usual source of care and informing HHS who that is.

Attribution would run on historical claims data plus the beneficiary's own affirmation. Within 180 days of first implementing the cut, and annually after that, the secretary would report to Congress on whether it changed utilization and whether it opened any door to fraud or abuse.

A new committee on relative values

Section 5 would establish a technical advisory committee inside the Centers for Medicare & Medicaid Services (CMS) to advise on how relative value units are determined.

It would seat 13 members appointed by the secretary, chaired by a CMS official and staffed by CMS personnel, drawn from people with technical expertise in Medicare payment policy and experience that includes billing Medicare, primary care and care delivered under the Departments of Veterans Affairs and Defense.

Its charge runs past advice on individual codes. The committee would design new valuation methodologies for clinician time and resources, recommend changes to the values of existing Healthcare Common Procedure Coding System (HCPCS) codes, evaluate whether codes in the same family should be collapsed into fewer payment codes and identify services to bundle or unbundle.

It would also weigh how any new approach affects administrative burden on physicians, exposure to fraud, beneficiary access, out-of-pocket liabilities and quality.

Transfers from the Federal Supplementary Medical Insurance Trust Fund would be capped at $5 million a year for implementation and $10 million a year for research and development, FY 2027 through FY 2031. The committee would terminate no later than five years after it is established.

Another of the bill's findings holds that the more than 8,000 billing codes in the fee schedule risk inaccurate relative values for closely related procedures and obscure pricing distortions that compound over time.

CMS has its own inquiry running on the same question. The CY 2027 physician fee schedule proposed rule, released July 14, carries a request for information on potential alternatives to the American Medical Association's coding and valuation processes. Comments on the rule are due Sept. 14.

"They want to move away from the AMA processes, the relative value update committee, the CPT editorial panel, but they don't really have the data to back it up," said Anders Gilberg, senior vice president of government affairs at the Medical Group Management Association (MGMA), in a July interview about the proposed rule.

Gilberg noted that specialty societies, not the AMA acting as a single entity, sit at the table on relative values, and said CMS has been "quick to criticize some of the existing processes" without producing alternative data of its own.

The budget neutrality question

The $10 billion would be exempt from the fee schedule's budget neutrality requirement, so the money would not have to be offset by reductions elsewhere in the schedule. Increases to primary care payment inside the fee schedule carry no such exemption.

"You're going to always have to rob Peter to pay Paul, and you may have a very laudable reason to increase, let's say, primary care, but again, at the expense of surgical or other specialties," Gilberg said. "It's not a very effective or sustainable system."

The arithmetic sits on top of a proposed pay cut. CMS has proposed a CY 2027 conversion factor of $33.17 for qualifying alternative payment model participants, down 1.19%, and $32.84 for everyone else, down 1.68%, driven mainly by the expiration of the one-year 2.5% increase Congress provided for 2026.

What physicians who study the problem say

Lawrence Casalino, M.D., spent 20 years in primary care practice and six years as a commissioner on the Medicare Payment Advisory Commission. Asked by Medical Economics which Medicare payment changes would do the most for primary care sustainability, and speaking for himself rather than for the commission, he did not land on one.

"I don't think there's any single answer," said Casalino, a professor of population health sciences at Weill Cornell Medicine. "I think that there are things that could be done to reduce the administrative burden. I think that higher payment rates for primary care physicians would help."

The American Academy of Family Physicians (AAFP), the Primary Care Collaborative, Families USA, the American College of Lifestyle Medicine and the American Association of Nurse Practitioners endorsed the bill.

AAFP President Sarah C. Nosal, M.D., said in a statement that the academy has long pushed for "prospective, sustainable revenue streams" that let practices tailor care to what patients need, and has urged that cost-sharing barriers to primary care be waived.

Not every trade group lined up behind the earlier version. In a July 2024 comment letter on the 2024 bill, the American Hospital Association told the senators the hybrid structure could produce payment decreases practices would struggle to absorb, that the monthly amount might vary by type of provider and that the text left room for the payment not to be risk adjusted, or for what could be included in risk adjustment to be constrained.

The 2026 text keeps the same permissive risk adjustment language. The AHA backed the 50% cost-sharing reduction.

Where it stands

Whitehouse introduced the bill Aug. 5. It was read twice and referred to the Senate Committee on Finance, where Cassidy is also a member. Cassidy, the first physician to chair the Senate Health, Education, Labor and Pensions Committee, is the bill's only cosponsor. The senators announced the reintroduction on Sept. 9.

The earlier version, S. 4338, was introduced May 15, 2024, paired with a request for information the senators used to collect industry feedback. They described it at the time as a marker for future primary care legislation.