BREAKING NEWS! Impact of One Big Beautiful Bill on Physician Payment Reform
The budget reconciliation package passed on Thursday, May 22, and included several provisions that would significantly impact physician payments and healthcare overall. Unfortunately, there is no unequivocally good news; rather, we are faced with a mix of potentially good, bad, and ugly developments.
Maybe Good News
Medicare Physician Fee Schedule Updates:
1. Initial Increase: The bill proposes a 2.25% Medicare pay update for physicians in 2026, based on 75% of the Medicare Economic Index (MEI), at a projected cost of $8.9 billion for that year.
Bad News
1. Future payment updates would be tied to the MEI, which tracks inflation and physician practice costs.
However, while linking payment updates to the MEI is a step in the right direction, concerns persist that the proposed MEI updates—capped at 10% annually—will not keep pace with actual inflation and rising practice expenses. This could result in effective increases of less than 0.5%.
2. The physician payment conversion factor is based on three components, including:
• An inflationary index, which is currently projected as 0% for 2025.
• A budget neutrality adjustment would apply solely to physician payments.
• Payments would continue to be influenced by the Merit-Based Incentive Payment System (MIPS). Consequently, CMS retains the authority to convert even minimal positive inflation adjustments into negative adjustments.
3. The continuation of 2% sequestration cuts, initially implemented after the Affordable Care Act, is set to extend through 2032.
4. Broader healthcare provisions will also affect physicians. These include Medicaid cuts, implementation of work requirements, and reductions in multiple assistance programs, which are likely to lead to decreased Medicaid enrollment.
What Is Ugly?
• What is particularly troubling is the ongoing instability of the physician payment system and the continued imposition of 2% sequestration cuts.
• Overall payment reductions could reach as high as 6%, despite the proposed MEI-based increases.
We find ourselves in a critical situation. ASIPP has long been engaged in addressing these challenges through a non-partisan proposal to reform the physician payment system and safeguard telehealth services. The bill is now before the Senate. Please contact your senator individually, through your group, patients, or staff—and urge them to support meaningful reform of the physician payment system. You may also use the convenient link set up by ASIPP: https://www.votervoice.net/ASIPP/Campaigns/127211/Respond
