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Medicare cuts will jeopardize physician practices, groups say

Healthcare providers slammed planned reductions to Medicare physician reimbursement next year, while supporting more structural changes to how the program pays them.

Jacqueline LaPointe
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Published: 16 Sep 2026

Proposed cuts to Medicare's Physician Fee Schedule rates would harm physician practices and ultimately patient access to care, according to leading provider groups.

The groups, including the American Medical Association and the American Hospital Association, have submitted comment letters to federal officials decrying a proposed reduction to the fee schedule's conversion factor next year. The planned factors would reduce reimbursement rates by 1.19% for Part B providers in qualifying alternative payment models and by 1.68% for those not participating.

The CMS also proposed deeper localized cuts across several specialties, including a whopping 50% payment cut when a separately identifiable office/outpatient evaluation and management visit is furnished on the same day as a global procedure.

The agency has been planning cuts to physician payment rates, but Part B providers have been spared by Congressional action over the last six years, including last year's temporary 2.5% rate increase. However, this boost will expire at the end of the year, leaving providers to finally face the music if the CMS moves forward with the policy updates.

However, the AMA said in its comment letter on Monday that physician practices won't be able to weather these reimbursement cuts, which would add to the 33% reduction they have encountered since 2001.

"Yet this rule advances several significant redistributive changes at once, and their combined effect falls hardest on the practices least able to absorb it," the AMA explained. "Small, independent, and rural practices operate on the thinnest margins, and for some, these changes would mean being paid less than it costs to deliver care, which could accelerate the consolidation and loss of access that CMS itself says it wants to prevent."

The cuts also come as provider groups grapple with changes to the Medicaid program, which are expected to significantly increase the uninsured rate and provider uncompensated care costs.

Adding Medicare reimbursement cuts to this already fragile state could bring the healthcare system "closer to snapping," said Dr. Jerry Penso, president and CEO of the American Medical Group Association.

The groups urged the CMS not to move forward with the proposed payment rate cuts, instead calling for more details on why the agency is seeking reductions, especially for certain specialties, and how cuts could affect specific provider types. AMGA also urged federal officials to consider structural reforms, rather than relying on short-term patches to bolster practices.

Provider-backed bill seeks to reform physician payment

Provider groups are now throwing their weight behind a bill introduced by Reps. John Joyce, M.D. (PA-13), Greg Murphy, M.D. (NC-03), and Kim Schrier, M.D. (WA-08) in July. Dubbed the Patients First Act, H.R. 9693 is designed to reform the Medicare physician payment system by establishing a permanent, automatic annual update tied to medical inflation.

The bill would also create a primary care payment pilot program that delivers predictable, per-member-per-month payments to independent practices in addition to regular fee-for-service payments. This would counter the pressure to consolidate, the lawmakers explained.

The AMA said the bipartisan bill would "replace the annual cycle of cuts and temporary patches with a payment system that is stable, predictable, and more reflective of the actual costs of delivering care."

The National Association of ACOs also supports the legislation, saying it would help provide access to high-quality care, especially for those in risk-bearing alternative payment models.

"[R]etaining higher payment updates for physicians in APMs will help ensure that accountable care becomes the prevailing approach in traditional Medicare," stated the group representing accountable care organizations, a type of alternative payment model. "APMs have reduced costs by more than $37 billion over 12 years, saving Medicare $14 billion, while continuing to improve health quality."

However, NAACOS urged lawmakers to keep the advanced APM incentive, which rewards providers in qualifying models with a percentage boost to their payments. This would continue to drive adoption as the industry transitions further to value-based care, the group explained.

Praise for value-based care changes

While provider groups have almost unanimously slammed proposed payment cuts, some have praised the CMS for the value-based care updates in the proposed rule.

Specifically, the AHA expressed support for proposals related to the Medicare Shared Savings Program, which comprises over 500 ACOs. The rule seeks to bolster participation in the flagship ACO program by increasing the BASIC track Level E sharing rate and the prior savings adjustment scaling factor, establishing guardrails on the ACO growth rate, and enabling cost-sharing reductions for beneficiaries.

New guardrails on the growth rate, also known as the Accountable Care Prospective Trend, would also mitigate the benchmark ratchet effect, according to the NAACOS. The ratchet effect has been a major challenge for ACOs as it shrinks future financial benchmarks when ACOs save, making success more difficult as time goes on.

The group said the proposals "are a positive step toward" supporting the impact ACOs have had, including reducing federal spending by a projected $5.5 billion through 2036.

Jacqueline LaPointe is an Executive Editor at Xtelligent Healthcare Media, covering revenue cycle management, healthcare payers, health policy and health IT since 2016.

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