Impact of MedPAC Recommendations on Physician Payment Rates

The Texas Medical Association (TMA) is monitoring federal activities following the Medicare Payment Advisory Commission's (MedPAC) recommendations, with a comprehensive report expected in June. According to MedPAC's March 2026 findings, the physician fee schedule (PFS) payment rates are set to decrease by 1.7% for those in advanced alternative payment models (A-APMs) and by 2.2% for other physicians starting in 2027, compared to 2026 rates.

These reductions stem from the expiration of a 2.5% increase permitted by the One Big Beautiful Bill Act in 2026, alongside mandated raises of 0.75% for A-APMs and 0.25% for others under the Medicare and CHIP Reauthorization Act of 2015 (MACRA). To counteract the reductions, MedPAC suggests a 0.5% rate increase in 2027, yielding net cutbacks of 1.2% for A-APM physicians and 1.7% for others, relative to the prior year.

Dr. Tina Philip, vice chair of TMA’s Council on Socioeconomics, highlighted the financial challenges these cuts pose to independent practices compared to larger healthcare systems. While MedPAC has proposed a permanent update to ensure equitable physician compensation and manage patient cost-sharing, no formal recommendation was concluded in the recent report. TMA has advocated for Medicare rates to align with the Medicare Economic Index (MEI), which accounts for inflation in practice costs. Despite acknowledgment from MedPAC, a concrete recommendation was not submitted this year. Furthermore, legislative movements like the Provider Reimbursement Stability Act aim to address Medicare reimbursement reform, potentially modifying budget neutrality rules to stabilize physician payments. Industry professionals should stay informed as these significant healthcare policy discussions evolve.