MedPAC signals modest 2027 physician payment bump as staff report strong access, rising revenues

The Medicare Payment Advisory Commission (MedPAC) reviewed a chair’s draft recommendation for a modest 2027 increase in payment rates for physician and other health professional services during its December 4 public meeting. The discussion followed MedPAC’s annual assessment of whether current fee schedule rates remain adequate to ensure beneficiary access to care.

Staff presenters — principal policy analysts Rachel Burton, M.P.P., Geoff Gerhardt, M.P.P., Brian O’Donnell, M.P.P., and Ledia Tabor, M.P.H. — reported that the evidence they track indicates stable access for Medicare beneficiaries, rising clinician revenues and compensation, and easing input cost pressures. Under the chair’s draft framework, the Commission would advise Congress to increase the 2027 fee schedule update by 0.5 percentage points more than current law.

Current statute sets 2027 updates at 0.75% for clinicians in advanced alternative payment models (A-APMs) and 0.25% for others. Adding the 0.5-point increase would raise those to 1.25% and 0.75%, respectively.

Medicare access remains strong relative to private insurance

MedPAC’s access survey — administered by Gallup and fielded from mid-July to early September — gathered responses from roughly 5,000 Medicare beneficiaries age 65 and older and a comparable number of privately insured adults age 50 to 64.

Staff reported that Medicare beneficiaries were:

• More satisfied with their ability to find clinicians accepting their coverage,
• More likely to secure new-patient appointments within two weeks, and
• Less likely to report long waits for both routine and urgent care.

Analyses of Centers for Medicare & Medicaid Services (CMS) data also show that once beneficiaries establish care relationships, follow-up appointments tend to be easier to obtain.

Physician participation in Medicare remains high. According to the American Medical Association’s (AMA) 2024 Physician Practice Benchmark Survey, among physicians accepting new patients:

• 95% accepted new Medicare patients,
• 85% accepted all new Medicare patients,
• 10% accepted some, and
• 3% accepted only privately insured patients.

The survey also found higher Medicare acceptance rates among hospital-owned practices and many specialists.

Clinician supply grew, but the mix has changed

From 2019 to 2024, the total number of clinicians billing under the Medicare Physician Fee Schedule increased by about 2.2% per year, according to MedPAC materials. Advanced practice registered nurses (APRNs) and physician assistants (PAs) accounted for a significant portion growth. The number of primary care physicians declined over several years but leveled off in 2024.

Quality signals steady, despite limitations in measurement

MedPAC staff reiterated that fee-for-service claims data lack clinical measures and patient-reported outcomes, which constrains Medicare’s ability to assess quality. MedPAC has previously recommended eliminating CMS’ Merit-based Incentive Payment System (MIPS), citing structural flaws.

Instead, the Commission tracks broad indicators. In 2024:

• Ambulatory care–sensitive hospitalizations remained below pre-pandemic levels.
• Emergency department visits also stayed below pre-2020 baselines.
• Consumer assessment of health providers and systems (CAHPS) patient experience scores were “relatively stable.”

These results, staff said, do not indicate deterioration in access or overall performance.

Revenues and compensation continue to rise

Allowed charges for all fee schedule services per fee-for-service beneficiary grew 4.1% from 2023 to 2024.

Evaluation and management (E&M) services were the largest driver:

• E&M service units increased 10.9%.
• E&M allowed charges rose 5.1% in 2024.

A new office-visit complexity add-on, G2211, contributed meaningfully to that growth. The code was billed roughly 25 million times and generated about $400 million in allowed charges. According to staff materials, G2211 accounted for about half of the E&M unit increase and about one-fifth of the increase in allowed charges.

Additional changes have also affected payment patterns, including:

• Higher rates for many office/outpatient E&M codes.
• Expanded care-management billing pathways.
• New monthly payments for advanced primary care.
• A 2.5% downward adjustment to non-time-based services that redistributed dollars toward time-based E&M.

Compensation trends remained positive. In 2024:

• Median physician compensation increased 6%, reaching $369,000.
• Median compensation for nurse practitioners (NPs) and PAs increased 2%.

Across all groups, median compensation has grown by roughly 3.5% per year since 2019.

MEI pressures

MedPAC staff highlighted that the Medical Economic Index (MEI), which measures clinician input costs, is slowing.

After peaking at 4.3% in 2022, the index slowed to roughly 3% in 2024 and is expected to ease further. MEI growth is expected to slow to 2.1% in 2027.

The Commission also noted the long-running gap between fee schedule updates and inflationary benchmarks. From 2000 to 2024, cumulative fee schedule updates totaled roughly 14%, while cumulative MEI growth was about 56%. Despite that spread, the indicators MedPAC tracks do not suggest worsening beneficiary access.

MedPAC’s draft recommendation

Commissioners raised questions about what drives the E&M volume jump — whether it reflects greater clinical complexity, changes in documentation or coding behavior. They also pressed for additional data on specialty–primary care compensation gaps, behavioral health availability and shifts in clinician mix.

During the discussion, one commissioner described the update assessment process as “a narrow exercise with one level,” emphasizing that broader reforms — including potential targeted investment in primary care or alternative payment structures — would need to be evaluated separately.

The chair’s 2027 payment recommendation was presented to commissioners as preliminary and subject to change, according to language in the slide materials.