MedPAC: Increase physician pay by 0.5% for 2027

Physicians should get a 0.5% increase in Medicare payment for 2027, though next year’s net payment rates still could come in lower than 2026, based on payment formulas.

That’s potentially good news, but the U.S. Centers for Medicare & Medicaid Services need a permanent solution for annual raises for physicians, or doctors will see another scramble by clinicians and lawmakers attempting “past-minute efforts to avert disruption in patient care,” according to the American Medical Association (AMA).

Meanwhile, a physician in Congress hopes a new bill will adjust upward the physician reimbursement by updating some rules that have been in place since the Medicare Physician Fee Schedule was established in 1992.

The Medicare Payment Advisory Commission (MedPAC) and AMA offer different analyses about what physician reimbursement means for patient access to health care. Medicare Advantage (MA) continues its growth and program leaders announced changes coming to make things easier for beneficiaries in 2027; MedPAC generally supports MA but said reforms are needed.

The developments were part of the continuing deliberations about the best ways to handle Medicare, the nation’s single largest health insurance program.

MedPAC meeting on money

MedPAC, which advises Congress on Medicare fiscal policy, is scheduled to meet April 8 and 9 to continue its review of Medicare payments for health care services that patients receive from physicians, hospitals, and other health care providers.

That meeting will follow the commission’s March 2026 report to Congress with a recommended reimbursement increase for doctors. In 2027, the recommended 0.5% bump would push the total payment increase to 1.25% for physicians in advanced alternative payment models (A-APMs), such as accountable care organizations that involve some financial risk. All other physicians would see an uptick of 0.75%.

But there’s another change coming because a temporary 2.5% payment increase expires at the end of 2026. That means net payments for 2027 would fall 1.2% for A-APM participants and 1.7% for other clinicians. Adding the recommended increase, “these net reductions would be smaller than what would otherwise occur under current law,” the MedPAC report said.

Unlike the 2026 boost, MedPAC says its recommended increase should be permanent, continuing after 2027 and built into the baseline for future payment calculations, rather than set to expire after one year.

“The Commission maintains that this recommendation balances the need to provide adequate payments to clinicians with the need to limit growth in beneficiaries’ cost share and premiums and maintain financial pressure on clinicians to constrain their costs,” the report said.

New legislation about Medicare physician pay

Along with the MedPAC analysis, Congress could rework the formula to determine physician reimbursement under the Provider Reimbursement Stability Act, introduced this week by Rep. Greg Murphy, MD (R-N.C.)

In a statement, Murphy, a urologist and surgeon, said updates to the MPFS would protect private practice physicians and patient access to affordable care.

"With expenses for providing care continuing to rise, declining payments are forcing many doctors into retirement, to stop seeing Medicare patients, or to sell out to consolidated hospital systems, private equity, or even insurance companies just to keep practicing,” Murphy said in a news release. “As a result, access to care in rural and underserved communities is drying up. In an era of a shortage of physicians, we cannot lose good doctors to these ever-increasing pressures.”

Changing the reimbursement calculation

Adjusting for inflation, physician reimbursement has dropped 33% from 2001 to 2026, according to AMA. Murphy’s new bill uses MEI for one of its provisions for adjusting physician payment.

AMA summarized: Under current law, changes in Medicare fee schedule payments must be implemented in a budget-neutral manner. Murphy’s bill would increase the budget neutrality threshold from $20 million to $54.3 million, then index the threshold to the cumulative percentage in the MEI every five years.

Additional provisions in the bill:

• Budget neutrality corrections would be related to the estimated utilization of codes.
• Provide updates to direct costs used to calculate practice expense relative value units (RVUs) not less often than every 5 years.
• Limit year-to-year variance in the conversion factor by 2.5%.

Doctors in Congress support change

At least three other congressional physicians agreed and signed on as bill co-sponsors.

Doctors face “unpredictable and unsustainable payment cuts,” so stabilizing reimbursement is essential to preserve care, particularly in rural areas, said Rep. John Joyce, MD (R-Pennsylvania), a dermatologist also certified in internal medicine.

Rep. Mariannette Miller-Meeks, MD, (R-Iowa), an ophthalmologist, called herself proud to co-lead the legislation for physicians. “This is about protecting patient access, supporting our doctors, and ensuring our health care system works for the people it serves," she said.

Rep. Bob Onder, M.D. (R-Missouri), an allergy and immunology specialist, and Rep. Kim Schrier, MD (D-Washington), also have signed on as co-sponsors. The bill offers commonsense reforms, Schrier said, and guardrails against physician pay cuts are “long-overdue,” Onder said.

AMA reaction

AMA President Bobby Mukkamala, MD, issued statements endorsing Murphy’s legislation and MedPAC’s recommended increase.

“Because of lagging payments, rising inflation and bureaucratic demands, physicians are struggling to keep their practices open and continue caring for their patients,” he said. “These pressures fall hardest on private practice physicians caring for Medicare patients especially in rural and underserved communities.”

The 2026 increase will expire and Congress has not been willing to create a physician funding formula based on the Medicare Economic Index (MEI). For years, AMA has advocated for that calculation, Mukkamala said, and he noted other sources of health care get payments linked to inflation.

Are physicians opting out of Medicare?

Physicians argue the general trend of declining Medicare payment will hurt patient access to care if more doctors stop taking on Medicare patients. MedPAC’s analysis of physician payment and patient access is somewhat less drastic.

The Commission notes a growing but changing clinician workforce who ensure Medicare beneficiaries have better access to care than younger adults. At least some surveys indicate “the share of clinicians accepting Medicare is comparable with the share accepting private insurance, despite private health insurers’ higher payment rates,” the MedPAC report said. “Very few” physicians and other clinicians opt out of Medicare entirely. Medical school application rates continue to grow, as do the numbers of advanced practice registered nurses and physician assistants, the report said.

MedPAC also does not get exact annual cost reports from physicians, so that panel cannot calculate physician profit margins from services to Medicare beneficiaries or a full panel of patients, the report said. But physician pay increased 6% to $369,000 for 2023-2024, twice as fast as inflation and suggesting that providing clinician services is profitable. MedPAC noted that is an indirect measure. Data come from health care workforce analyst SullivanCotter.

What about Medicare Advantage?

On April 2, CMS Administrator Mehmet Oz, MD, MBA, and Medicare Director Chris Klomp announced new quality improvements to make it easier for patients to understand and compare MA and prescription drug plans for 2027.

“Medicare should be easy to navigate and focused on results,” Oz said in a news release. “These changes simplify the system, reward real improvements in health outcomes, protect patients when their providers leave their network, and reduce burdens that drive up costs.”

Medicare also issued its 2027 final rule for MA and Medicare Part D, with a link to the full document in the Congressional Register.

MedPAC’s March report includes a chapter listing endorsements and warnings about Medicare Advantage.

“The MA program is quote robust, with growth in enrollment, considerable plan offerings, and a record-high level of supplemental benefits,” the report said. As of 2025, 55% of eligible Medicare beneficiaries, or 34.9 million people, enrolled in MA, up from 54% in 2025 and 37% in 2018. There were 5,492 plan options offered by 164 organizations.

In 2025, Medicare paid $537 billion to MA plans; that is projected to hit $615 billion this year, an estimated 14% more, or $76 billion, than if MA enrollees opted for Traditional Medicare, according to MedPAC.

Having private health insurance plans in Medicare offers beneficiaries greater choice in coverage options, the report said.

“But the rapid growth of MA enrollment and spending elevates the urgent need for reform,” the report said. “As MA enrollment continues to grow, higher payments to plans relative to (fee-for-service) will worsen Medicare’s fiscal sustainability.”

One solution: reduce Medicare payments to MA plans. “If payments to MA plans were lowered, plans might reduce the supplemental benefits they offer, but research has found that plans have responded to past payment reductions by modifying other aspects of their bids in order to continue offering benefits to attract enrollees,” the report said.