Medical practice financial viability ‘in peril’ as physician pay decreases

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The 2026 Medicare Physician Fee Schedule (MPFS) could be troublesome for doctors as reimbursement continues to decline, according to the Medical Group Management Association (MGMA).

Meanwhile, Medicare spending should have incentives for physicians participating in accountable care models, while disincentivizing fee-for-service (FFS) in most cases, according to the advocacy group Accountable for Health (A4H).

The organizations published their responses to the proposed 2026 MPFS. Their letters to the U.S. Centers for Medicare & Medicaid Services (CMS) touched on a number of issues around Medicare reimbursement and policy, with physician pay at the top of the list.

Differential in pay

As required by the 2015 Medicare Access and CHIP Reauthorization Act, CMS proposes two conversion factors for 2026. Qualifying alternative payment model (APM) participants (QPs) would have a conversion factor of $33.59, or 3.83%, while non-QPs would have a conversion factor of $33.42, or 3.32%.

A4H supported that differential.

“A4H strongly believes that Medicare payment structures should incentivize participation in accountable care models while disincentivizing fee-for-service payment in most instances,” A4H CEO Mara McDermott wrote. “For that reason, we support the differential conversion factor as an incentive and benefit to QPs in Advanced APMs. We encourage CMS to consider how the increased conversion factor for QPs will interact with accountable care programs and models and may need to be addressed through a carve out or other adjustment.”

‘… Does not remedy previous cuts …’

“MGMA remains deeply concerned about the trajectory of Medicare physician payment,” wrote Anders Gilberg, MGMA senior vice president for government affairs. MGMA is willing to work with Congress on a positive update to the Medicare conversion factor for 2026 and future years, and address outdated budget neutrality policies, he said.

The increase to the conversion factor includes a 0.55% positive adjustment to account for changes in misvalued codes and a new efficiency adjustment, along with the 2.5% increase for 2026 for the One Big Beautiful Bill Act spending plan.

That proposal “does not remedy previous cuts that physician groups have … had to absorb due to flawed policy, nor does it address potential future cuts due to budget neutrality,” Gilberg wrote.

The 2025 MPFS had a 2.83% cut to the conversion factor that “continues to put medical groups’ ability to stay financially viable in peril,” Gilberg said. Meanwhile, CMS inaccurately predicted use of the relatively new G2211 complexity add-on code. That in turn triggered Medicare payment cuts due to budget neutrality constraints — an example that shows the flaws of “the antiquated budget neutrality process,” the MGMA letter said.

“Amplifying this dire financial reality are continued inflationary and other financial pressures, such as staffing shortages, increased administrative burden, and more,” Gilberg wrote. “Simply put, comprehensive payment reform is long overdue.”

MGMA noted various medical groups, the 2025 Medicare Board of Trustees’s annual report, and the Medicare Payment Advisory Commission all have issued warnings about decreasing physician reimbursement and its effects: smaller practices going out of business or consolidating with larger hospitals and health systems. Instead, MGMA supports using the Medicare Economic Index to determine Medicare physician pay, Gilberg wrote.

RVUs and setting pay

MGMA and A4H split over two other financial issues:

• A 2.5% reduction to work relative value units (RVUs) and the intraservice portion of physician time of non-time-based services
• A reduction in indirect practice expenses for services performed in a facility setting

“A4H supports both technical proposals, which we believe will increase access to care and make Medicare payments for ambulatory primary care providers more accurate and reflective of the “true” work and practice expense inputs,” McDermott wrote.

MGMA said the 2.5% reduction was an “arbitrary cut” that would affect thousands of code without considering underlying factors and complexity of the codes. Cutting indirect practice expenses does not reflect the current practice landscape and could spur consolidation by undermining private practices that offer services in facilities, Gilberg said.

Coding change

The add-on code G2211 started in 2024 for office/outpatient evaluation and management (E/M) visits. The 2026 MPFS would extend it to home or residence E/M visits, and A4H strongly supports that change, McDermott wrote.

“This policy change will support better access to home-based care for more Medicare beneficiaries in need,” the A4H letter said. “We thank CMS for its proposal and encourage you to finalize it without changes.”