Public Health & Policy
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Medicare
— Draft recommendation is for a 0.5% increase above current law in 2027
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December 5, 2025 • 4 min read
Members of the Medicare Payment Advisory Commission (MedPAC) generally responded favorably Thursday to a draft recommendation to increase reimbursement in 2027 for physicians who treat Medicare patients — with one exception.
The MedPAC chairman’s draft recommendation was to “increase payment rates for physician and other health professional services by 0.5 percentage points more than current law.” However, commission member Brian Miller, MD, MPH, of Johns Hopkins University in Baltimore, pointed out that last year, “[MedPAC’s recommended] physician fee schedule update … was a net update of 3%.”
“Our update this year is a net update of -2.2%, so while we are recommending something above the current law, we are still formally recommending a net physician fee schedule decrease — or a pay cut — for physicians in the setting of rising corporate employment, threats to private practice … and declining quality of care,” said Miller. “And so I don’t think that this recommendation, which is a net pay cut of 2.2%, is a good recommendation … I don’t think we should be recommending cutting physician pay, which is on aggregate what we’re doing.”
Others responded more favorably. “I do support the recommendation,” said commissioner R. Tamara Konetzka, PhD, of the University of Chicago. “To me, it really balances rising beneficiary costs with preserving access to physician services.”
Commission member Joshua Liao, MD, MSc, of the University of Texas Southwestern Medical Center in Dallas, agreed. “I support the kind of updates that anchor to current law, rather than kind of incorporating patches that might be year-over-year,” he said. “I think that introduces uncertainty, and it feels unlikely to provide a durable basis for policy recommendations going forward. Second, I think starting from current law, I’m supportive of an upward adjustment.”
Commissioner Cheryl Damberg, PhD, of the RAND Corporation in Santa Monica, California, was supportive but hesitant. “I do share some of the concerns about the system,” she said. “I think it is really struggling, and I think physicians are sort of front and center, especially primary care physicians — they are struggling to meet the demand … [but] I think the chair’s recommendation is directionally correct.”
Medicare’s current pay rates, which have been panned in some quarters, don’t seem to have negatively affected Medicare enrollees’ access to care, according to data presented at the meeting. The commission’s 2025 survey found that 97% of beneficiaries reported that they were “very” or “somewhat” satisfied with their ability to find providers who accepted their insurance, compared with 93% of those ages 50 to 64 who had private insurance. Among those who looked for a new primary care provider, 38% of Medicare enrollees were able to get an appointment with that provider in 0 to 2 weeks, as compared with 28% of those 50 to 64 who were privately insured. As for specialty care, 34% got an appointment with a specialist in 0 to 2 weeks, compared with 28% of those 50 to 64 years old.
The survey, which was conducted by Gallup for MedPAC, included 5,000 Medicare beneficiaries and 5,000 patients ages 50 to 64 with private insurance. It was conducted from July 18 through Sept. 8 and included responses related to the previous 12 months. Survey data were weighed to be nationally representative.
MedPAC also looked at new patient acceptance among providers using data from the American Medical Association’s 2024 Physician Practice Benchmark Survey. About 95% of providers were accepting new Medicare patients, with 85% accepting “all” Medicare enrollees and 10% accepting “some,” the survey found. Specialists and hospital-owned practices had higher acceptance rates compared to other types of practices.
In addition to physician pay, commissioners also discussed the idea of site-neutral payment, in which Medicare would pay the same amount for a service no matter where it was performed. Although Medicare often pays more for services performed in hospital settings, beginning in 2017 most services — with some exceptions — performed in off-campus hospital-owned provider practices were subject to site-neutral payments, and starting in 2026, drug administration services will also be included, Alexandra Harris, PhD, MPH, a MedPAC policy analyst, said during a staff presentation. Clinic visits in on-campus hospital outpatient departments provide another opportunity to institute site-neutral payments, she said. Such payments improve incentives by focusing on efficiency of care rather than setting, and they also reduce incentives for providers to consolidate, Harris added.
Commissioner Stacie Dusetzina, PhD, of Vanderbilt University School of Medicine in Nashville, Tennessee, said she found the idea of expanding site-neutral payments “really intriguing. I like the idea of some version of expansion, especially for off-campus sites, but I’m more conflicted about what to do for on-campus sites of care.”
Commission member Gregory Poulsen, MBA, of Intermountain Health in Salt Lake City, Utah, said he appreciated the nuanced way that MedPAC staff members were looking at the issue. “I think we could do harm by putting a blanket overall look on all site-neutral [payments], which I think would be a mistake,” he said. “Our communities depend upon hospitals for services that aren’t available elsewhere in an appropriate time, or in an appropriate way, or for the appropriate patient types, so the hospitals end up becoming [the focus] for a whole series of things, and to be paid in the same way that others who are skimming the cream get paid, I think would be a mistake.”
