MedPAC Reviews 2027 Medicare Physician Payment Update and Site-Neutral Policies

The Medicare Payment Advisory Commission (MedPAC) recently reviewed a draft recommendation to increase Medicare reimbursement rates for physicians in 2027 by 0.5 percentage points above current law. While the proposal generally gained support from commissioners, one member highlighted that this still amounts to a net physician fee schedule decrease of 2.2%, effectively a pay cut amid challenges such as rising corporate employment and potential quality of care concerns. Despite differing opinions on the scale of the update, some commissioners emphasized that maintaining access to physician services while balancing beneficiary costs is crucial. MedPAC’s 2025 beneficiary survey, conducted by Gallup, indicates high satisfaction with access to Medicare providers, with 97% of beneficiaries satisfied with provider availability and shorter wait times compared to privately insured individuals aged 50 to 64. Additionally, data from the American Medical Association’s 2024 Physician Practice Benchmark Survey shows that approximately 95% of providers are accepting new Medicare patients, highlighting continued provider engagement in the Medicare program. The commission also discussed site-neutral payment policies, which aim to standardize Medicare payments for services regardless of care settings — particularly to discourage higher payments for hospital-based outpatient services compared to other settings. Since 2017, Medicare has applied site-neutral payments to many off-campus hospital-owned practices and is set to extend this to drug administration services in 2026. Expansion efforts toward on-campus outpatient departments are under consideration to promote efficiency and limit provider consolidation. Commission members acknowledged the complexities around site-neutral payments, with some expressing cautious interest in expanding these policies to off-campus sites but voicing concerns about blanket applications that might disrupt hospital-based care delivery. The nuanced debate reflects the balance between fostering cost efficiency and maintaining hospital services essential to community health needs. Overall, MedPAC’s recommendations and discussions highlight ongoing efforts to navigate Medicare payment updates, provider payment equity, and service access amid evolving healthcare delivery landscapes and regulatory frameworks.