Physicians finally got a Medicare raise. Keeping it is the hard part.

After five straight years of Medicare pay cuts, physicians secured a modest raise for 2026. The harder question, now working its way through Congress, is whether they get to keep it.

On May 21, the House Ways and Means Committee voted 44-0 to advance the Provider Reimbursement Stability Act of 2026, H.R. 8163, a bipartisan measure that takes aim at the budget-neutrality math responsible for years of conversion factor reductions. A separate bill to replace the Merit-based Incentive Payment System, or MIPS, was introduced weeks earlier. Together they represent the most concrete movement in years on a problem physician groups have raised at the close of nearly every calendar year: a payment system that, unlike the rest of Medicare, carries no built-in adjustment for inflation.

The 2.5% increase physicians received for 2026 was a one-year patch passed in last summer's One Big Beautiful Bill Act, and it expires at the end of 2026. Without a longer-term fix, rates revert in 2027 to current law's far smaller statutory updates, 0.75% for clinicians in advanced payment models and 0.25% for everyone else.

By the American Medical Association's (AMA’s) accounting, physician pay has fallen roughly 33% since 2001 when adjusted for inflation, even as practice costs have climbed, a slide physician groups warn is driving doctors in rural and underserved areas toward early retirement, private equity sales or hospital acquisition.

The budget-neutrality problem

The recurring cut cycle traces back to a rule that requires the physician fee schedule to stay budget neutral. When Medicare raises payment for some services, it has to find the money by trimming the conversion factor, the dollar multiplier that sets the rate for everything else. The result has been a near-annual scramble.

"At the end of the year, there's going to be a cut," said Anders Gilberg, senior vice president of government affairs at the Medical Group Management Association (MGMA), speaking on Off the Chart: A Business of Medicine Podcast, in April. "And there'll likely be one next year, if we don't do something about it."

H.R. 8163, introduced by Rep. Greg Murphy, M.D., (R-North Carolina) — who has led the bipartisan push with Rep. Tom Suozzi, (D-New York) — tries to defuse that dynamic rather than patch it annually.

The bill would raise the spending threshold that triggers a budget-neutrality adjustment from $20 million to $54.3 million beginning in 2027 and index it to medical inflation every five years. It would also require the U.S. Centers for Medicare & Medicaid Services (CMS) to revisit its cost estimates for newly unbundled billing codes after two years and correct them if they missed, refresh the underlying data on staff wages, supplies and equipment at least every five years, and cap year-to-year swings in the conversion factor at 2.5%.

The AMA, nearly 50 national specialty societies and all 50 state medical associations signed on in support.

For Gilberg, the durable fix is worth fighting for. "One of our priorities, and the priorities of some of the major physician organizations, is to deal with this once and for all and get us back on a good trajectory that aligns payment with inflation," he said.

A rare raise, already eroding

Even this year's increase comes with an asterisk. The 2026 conversion factor landed at $33.5675 for clinicians in qualifying alternative payment models and $33.4009 for everyone else, according to CMS — increases of 3.77% and 3.26% over 2025. But the agency simultaneously applied a 2.5% efficiency adjustment that lowered the work relative value units for many procedural and diagnostic services, offsetting much of the gain for the specialties that perform them.

That split means the raise is landing unevenly. Tynan Kugler, M.P.H., MBA, CVA, a principal at the consulting firm PYA who specializes in physician compensation, told Medical Economics that primary care comes out ahead precisely because it is less exposed to the adjustment.

Related content: The four forces reshaping physician compensation in 2026

The 2.5% increase "is actually somewhat of a nice win, depending obviously on the mix of patients you see," Kugler said, while surgeons, proceduralists and imaging-heavy practices feel the offset more sharply. She counts reimbursement among the forces compressing practice margins, shaping not just what a group can pay its physicians but whether it can afford to recruit the next one.

The relief on the table for 2027 is thinner still. The Medicare Payment Advisory Commission (MedPAC) has recommended a permanent 0.5% update for next year, which would not cover the ground lost when the 2.5% expires. The bonus payments for clinicians in advanced alternative payment models, worth 1.88% this year, are also scheduled to be fully retired in 2027.

Untangling MIPS

The second bill goes after a program physicians have spent a decade trying to leave behind. The Medicare Physician Data-Driven Performance Payment System Act of 2026, H.R. 8622, introduced April 30 by Reps. Mariannette Miller-Meeks, M.D., (R-Iowa) and Herb Conaway Jr., M.D., (D-New Jersey) would scrap MIPS and replace it on Jan. 1, 2027, with a framework its sponsors call the Data-Driven Performance Payment System, or DPPS.

Related content: Bipartisan bill targets MIPS overhaul, draws MGMA and AMA support

As a first step, it would freeze the performance threshold at 75 out of 100 for three years, order a Government Accountability Office study of a better scoring method, and require CMS to give physicians their performance feedback during the year rather than long after.

Its central change targets what Gilberg and many others refer to as "the tournament model," the structure that, in his words, "requires certain [physicians] to get cut in order to pay quality bonuses to other physicians, so it's all budget neutral." The bill would replace those win-or-lose penalties by tying performance to a portion of the annual payment update instead.

The burden has fallen hardest on the practices least able to absorb it. One widely cited study in JAMA Health Forum put MIPS compliance at roughly $12,800 per physician in 2019, with physicians themselves spending more than 53 hours on related tasks, and solo, small and rural practices are penalized at the highest rates while the bonuses flow to larger groups. And the value-based escape hatch MIPS was meant to open never fully materialized.

"Almost two-thirds of practices remain in the merit-based incentive payment program," Gilberg said, a holding pattern for groups that "don't have clinically relevant APMs to get into. They're stuck in MIPS."

What comes next?

Both bills remain early in the process. H.R. 8163 cleared the Ways and Means Committee but still needs approval from the House Energy and Commerce Committee before it can reach the floor, and H.R. 8622, referred to both committees after its April introduction, has not yet been marked up.

Medicare payment reform stayed near the top of the AMA's agenda at its annual House of Delegates meeting this week in Chicago, and the association is pressing Congress to permanently tie physician rates to the Medicare Economic Index (MEI) and to extend the alternative payment model bonuses now in their final year. It made the same case at a May 20 House Energy and Commerce subcommittee hearing on the fee schedule.

Bobby Mukkamala, M.D., the association's president when the committee voted in May — and now immediate-past president — called it "an encouraging sign that meaningful budget neutrality reform is possible."

Whether that turns into law before the 2026 raise runs out is the question practices will be watching into next year.