Summary
Health Policy to Watch. Congress is officially in recess, with the House returning on August 31 and the Senate returning September 14. During this August period, Impact Health Policy Partners will provide a series of brief policy outlooks examining key priority areas likely to shape the health policy landscape this fall. This week, we are examining Medicare.
Medicare Physician Payment Reform
Momentum is building on Capitol Hill for structural changes to the Medicare Physician Fee Schedule (PFS), driven by a growing gap between statutory payment updates and the cost of delivering care. Congress provided a temporary 2.5% conversion factor (CF) increase for CY 2026, but it expires at the end of the year, meaning physicians face a scheduled payment cut in 2027 absent further legislative action.
Patients First Act. A key legislative effort is the bipartisan Patients First Act (H.R. 9693), introduced July 15 by Reps. John Joyce (R-PA), Greg Murphy (R-NC), and Kim Schrier (D-WA) — co-chairs of the GOP and Democratic Doctors Caucuses (IHPP summary). The bill would replace the annual CF update with an inflation-indexed formula (MEI minus 1 point, with guardrails), create a five-year hybrid primary care demonstration, and raise the Medicare budget-neutrality threshold from $20 million to $57.64 million, among other changes. It builds on a bipartisan discussion draft the two caucuses released earlier this year, incorporates the Radiology Outpatient Ordering Transmission (ROOT) Act (S. 1692/H.R. 5737) into its imaging appropriate use criteria provisions, and echoes several reforms included in the standalone Provider Reimbursement Stability Act (S. 5180/H.R. 8163) which cleared Ways & Means unanimously; committee staff cited an estimated direct spending impact of just under $5 billion during the May 21 markup. Most recently, sponsors issued a Request for Information (RFI) seeking stakeholder input on potential refinements and offsets, with responses due Aug. 21.
CY 2027 Physician Fee Schedule. On the regulatory side, CMS released the CY 2027 PFS proposed rule on July 14, proposing CFs of $33.17 for qualifying APM participants (a 1.19% decrease from CY 2026) and $32.84 for non-qualifying providers (a 1.68% decrease), reflecting the loss of the temporary 2.5% statutory bump (IHPP summary). The rule also includes major practice expense reforms and several RFIs signaling potential future reforms to primary care payment, diagnostic interoperability, and the CPT coding/valuation process, along with proposed changes to the Medicare Shared Savings Program and the mandatory Ambulatory Specialty Model launching Jan. 1, 2027. Comments are due Sept. 14.
What to Watch. Expiration of the temporary 2.5% physician payment update at the end of CY 2026 is expected to renew pressure on Congress to address Medicare physician payment before Jan. 1. Congress is currently working towards passing a short-term continuing resolution that would fund the government through early Dec. (House and Senate versions still need to be reconciled), and lawmakers will separately need to address a package of expiring Medicare extenders by Dec. 31. This would tee up a must-pass vehicle towards the end of the year.
The Doctors Caucuses appear to be angling to attach the Patients First Act to that year-end package. Because the legislation is likely to carry a substantial price tag, identifying acceptable offsets is the central obstacle. The CY 2027 PFS Final Rule (expected by November 1) could also play a role. Stakeholders unhappy with specific decisions on RPM/RTM payment, practice expense methodology, or specialty-level reimbursement shifts in the final rule may look to a year-end omnibus as a vehicle to legislatively correct those policies before they take effect.
If a comprehensive deal on Medicare physician payment reform does not come together in the lame-duck session, the first six months of next year (before election-year politics harden positions) could offer a second window for bipartisan policymaking.