Q&A: AMA president discusses fifth straight year of Medicare physician payment cuts

Key takeaways:

• The recently passed short-term funding bill locked in another year of cuts to Medicare physician reimbursement.
• Healio spoke with the president of the AMA to learn about how these cuts will affect physicians.

Physicians treating Medicare patients are staring down the barrel of five consecutive years of cuts to their reimbursement rates.

In January, CMS proposed the 2026 reimbursement rates for Medicare Advantage (MA) insurers. From 2025 to 2026, MA plans will likely receive a 4.33% average payment increase — higher than the expected health care inflation rate — but physicians treating Medicare patients will have their pay cut by 2.8%. According to the Medicare Economic Index, practice costs have risen by 3.5%.

Over the last 20 years, Medicare physician pay has dropped 33%, according to the AMA. These unsustainable declines threaten health care access, the organization stated.

In a March 9 statement — just after a federal spending bill was initially unveiled — AMA President Bruce A. Scott, MD, said that physicians from around the country were “outraged that Congress’s proposed spending package locks in a devastating fifth consecutive year of Medicare cuts, threatening access to care for 66 million Medicare patients.”

“Despite repeated warnings, lawmakers are once again ignoring the dire consequences of these cuts and their impact both on patients and the private practices struggling to keep their doors open,” Scott wrote.

“Congress has failed physicians, and Medicare patients will pay the price. The window to reverse this reckless decision is rapidly closing,” he added.

On March 13, the Medicare Payment Advisory Commission (MedPAC) recommended that “Congress link next year’s physician payment update to the growth in the cost of providing care,” according to the AMA. Scott said in a press release that, “with exquisite timing,” the recommendation highlights a path for Congress to strengthen Medicare policy.

Healio spoke with Scott to learn more about the proposed cuts and the effect they will have on physicians across the country.

Healio: What are the most important details in the proposed 2026 reimbursement rates?

Scott: CMS announced in January that MA plans will receive a 4.33% average payment increase in 2026, while physicians are in their fifth consecutive year of payment cuts. The stark contrast between highly profitable insurance companies that are receiving annual payment increases above inflation and physicians, whose inflation-adjusted payments have fallen by 33% since the turn of the century, ought to raise eyebrows of policymakers and taxpayers — as it has for physicians.

Healio: How would this affect primary care practices?

Scott: The MA increase is unlikely to have a direct impact on physician practices; the continued cuts in physician payments affect all physicians, including primary care.

Healio: Physicians treating Medicare patients are seeing their fifth straight year of payment cuts despite rising practice costs. Is this sustainable?

Scott: No. This is the fifth consecutive year of cuts, and they came on the heels of woefully inadequate payment updates that have fallen 33% below the rate of inflation since 2001. These years include periods of extraordinarily high inflation, a multiyear pandemic, rising staff costs, and the rapid incorporation of electronic health records and other technology into physician practices. Medicare payments have lagged far behind these increasing costs of practice, and it’s clearly not sustainable.

Healio: What are some solutions? What might payment reform look like?

Scott: Medicine is united in supporting a four-pronged approach. First, an annual update that reflects the rising costs of maintaining a physician practice is needed; we support updates that reflect the full Medicare Economic Index. Second, the budget neutrality adjustment process needs to be reformed, particularly to allow revisions when actuarial projections about utilization for new or revised services are overstated, resulting in inappropriate payment reductions. Third, the Merit-based Incentive Payment System, or MIPS, needs to be made less burdensome and more clinically relevant. Finally, we seek further extension of the advanced [alternative payment model (APM)] bonus and participation criteria along with a more robust pipeline for the adoption of new payment models.

Healio: How can PCPs be a part of the solution?

Scott: All physicians need to express their concerns to Congress, sharing personal stories about how Medicare’s situation is affecting their practices and their patients. For PCPs, the foundational nature of the services they provide is appreciated by most policymakers who should be receptive to stories about threats to patient access.

Healio: What is the take-home message for PCPs?

Scott: Congress is rarely in the mood to spend more money for health care, and this year the outlook is particularly bad, with rumors circulating of potentially major cuts to Medicaid and other health programs. No one can, or will, effectively tell the story about Medicare physician payment cuts the way that physicians can. PCPs need to sound the alarm loudly and often, educating these decision makers about the impacts they already are seeing.

Healio: Is there anything else you would like to add?

Scott: Yes, I want to be clear that the impact of Medicare payment cuts to physician practices is amplified because most private payers and Medicaid in most states base their payment on Medicare rates. Ultimately, it’s our patients who suffer as access to care becomes increasingly difficult.

References:

AMA. Congress abandons Medicare patients and their physicians. Available at: https://www.ama-assn.org/press-center/press-releases/congress-abandons-medicare-patients-and-their-physicians. Published March 9, 2025. Accessed March 20, 2025.
AMA. Medicare Advantage programs receive boost while physicians wait. Available at: https://www.ama-assn.org/press-center/press-releases/medicare-advantage-programs-receive-boost-while-physicians-wait. Published Jan. 13, 2025. Accessed March 20, 2025.
AMA. MedPAC gives Congress a roadmap to Medicare reform. Available at: https://www.ama-assn.org/press-center/press-releases/medpac-gives-congress-roadmap-medicare-reform. Published March 13, 2025. Accessed March 20, 2025.