The Medicare Payment Advisory Commission (MedPAC) has voted to acknowledge what many physician groups have warned for years: Medicare physician payments are no longer keeping pace with the cost of running a medical practice.
In its January vote, MedPAC backed an additional 0.5% payment update on top of the modest increases already written into law and will forward that recommendation to Congress. While incremental, the move reinforces growing concern that the current payment framework is structurally broken.
Why this matters
- When adjusted for inflation, Medicare physician payment has fallen roughly 33% since 2001, according to American Medical Association (AMA) analysis.
- Practice expenses—staffing, rent, technology, compliance—continue to rise faster than Medicare updates.
- Access pressures are emerging: MedPAC data show longer wait times for both primary care and specialist visits, particularly affecting rural and underserved communities.
The unresolved debate
Last year, MedPAC itself called for a more durable fix: linking physician payment updates to the Medicare Economic Index (MEI), which tracks practice-cost inflation. While the commission again diagnosed the problem, it stopped short of fully endorsing that solution this time—drawing criticism from the AMA.