Key Takeaways from House Hearing on Reforming Physician Payment
While there is broad consensus that change is necessary, the path forward remains unclear.
On May 20, the House Energy and Commerce Subcommittee on Health held a hearing on the Medicare Physician Fee Schedule and the Medicare Access and CHIP Reauthorization Act (MACRA). Witnesses included representatives from the American Academy of Family Physicians (AAFP), the American College of Physicians (ACP), the American College of Radiology (ACR), Heartplace (a physician-owned cardiology group), and Aledade (a physician-owned company that helps primary care practices transition to value-based care). Notably absent was a representative from the American Medical Association (AMA).
Congress passed MACRA in 2015. Over a decade later, there is broad consensus that Medicare physician payments need to be stabilized and that long-term payment reform is needed. Key takeaways from the hearing are outlined below.
Physician fee schedule payments are not keeping pace with costs, and an inflationary update is needed. It is the only Medicare payment system not tied to an annual update. Updates tied to the Medicare Economic Index (MEI) have been discussed as an option for the physician fee schedule.
Increasing the budget neutrality threshold is necessary to support payment stability. Budget neutrality rules require that upward payments be offset by decreases elsewhere. The current threshold is $20 million and has not been updated since 1989.
Payment differences based on the site of service were discussed (the same service performed in an office versus a facility, with different, sometimes significantly different, payment rates). The impact of these differences on the overall Medicare budget and on patient cost sharing was raised.
There was significant discussion of the pay gap between primary care and specialists and its impact on access to care.
The year-to-year instability in payments, along with uncertainty about final rates until the last minute, makes it difficult to run a medical practice and to conduct meaningful business planning. This environment has contributed to the decline in the number of independent medical practices.
The current methods used to set rates, which are highly reliant on surveying physicians, have not been meaningfully updated in years and do not produce the best and most reliable data. There was a discussion about whether new methodologies should be explored that use EHRs or other types of electronic data sources.
The Medicare physician quality reporting program, the Merit-based Incentive Payment System (MIPS), was widely viewed as flawed and ill-suited to the diversity of medical specialties participating in Medicare. There was a general consensus that physicians should transition to value-based care. There was also acknowledgment that certain specialties had limited or no options for practicing in a value-based care environment.
Generally, there seemed to be a consensus that the Medicare physician payment system needs to be modernized and that incentives need to be realigned. While there was consensus on tweaking some elements of the payment system (e.g., establishing an inflationary update), what seems to elude lawmakers is the best approach to more fundamental reform.
Physician Payment Reform Bills
Several bills related to physician payment reform have been discussed and introduced in recent weeks.
A few weeks ago, the Republican and Democratic Doc Caucuses released draft legislation to reform key aspects of Medicare physician payment policies. They solicited stakeholder comments and are expected to release the draft legislation. The draft legislation included provisions on the Medicare physician conversion factor, dedicated funding for primary care services, a budget-neutrality threshold, updated practice expense inputs (clinical labor, supplies, and equipment), the replacement of MIPS, and policies on advanced payment models.
On April 30th, Representatives Mariannette Miller-Meeks, MD (R-IA) and Herb Conaway, MD (D-NJ) introduced the Medicare Physician Data-driven Performance Payment System Act of 2026. This bipartisan bill makes key, targeted reforms to MIPS. Notably, it eliminates the MIPS win-lose “tournament-style” payment adjustments (i.e., +/- 9%) to ensure physicians are no longer subjected to steep penalties.
On March 30, a bipartisan group of House members introduced H.R. 8163, the Provider Reimbursement Stability Act. The bill raises the budget neutrality threshold that triggers adjustments to the CF from $20 million to $54.3 million.
Introduced on February 12, 2026, the Efficiency Adjustment Delay Actdelays the implementation of an efficiency adjustment until January 1, 2030, increases the 2026 annual update for the Medicare CF, and sets limits on future efficiency adjustments.
On March 26, 2026, a bill was introduced to establish a permanent full-risk accountable care organization (ACO) program.
While several bills are under consideration and there may be greater political will to implement changes discussed in recent years, Congress will also need to find a way to fund these reforms. The capacity of Congress to pass legislation enacting such significant reform remains uncertain.
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For more information and questions, please contact:
Sheila Madhani
Madhani Healthcare Consulting
Email: smadhani@madhani-health.com
Tel: (202) 679-2977