Momentum is building for a big change to how doctors get paid

STAT News – Thursday, September 24, 2026
By John Wilkerson

WASHINGTON — Congress is considering the first major overhaul of how Medicare pays doctors in more than a decade, and both Democrats and Republicans appear to agree on the outlines of an approach.

The main policy under consideration would link Medicare’s doctor pay rates to a medical inflation measure, giving doctors guaranteed pay boosts, as hospitals and other parts of the health care system have long received.

In doing so, Congress would be retreating from the notion that Medicare can control how many services physicians provide on a national basis, an idea that has undergirded Medicare’s doctor payments for decades. And it would reduce the government’s push to get clinicians to engage in value-based care, where they get paid more to keep patients healthy.

Paul Ginsburg, a health economist at the University of Southern California who has been involved in physician payment reforms since the Reagan administration, said the changes under discussion would be significant.

“I would call this major,” Ginsburg said.

The measure under consideration is called the Patients First Act, and would establish a permanent, annual payment hike linked to the Medicare Economic Index (MEI), minus 1%.

During a recent House committee hearing, Republicans and Democrats praised the Patients First Act. No one in either party spoke against it. Congressional Medicare advisers also recommended the MEI minus 1% formula.

Following the hearing, Energy and Commerce health subcommittee Chair Morgan Griffith (R-Va.) predicted that Congress would pass some of the doctor pay measures, but he cautioned about the need for “tweaks” due to their cost.

“Some of them may need a few tweaks, but I don’t think we would’ve done this today if we weren’t at least going to try to get some of them across the finish line during lame duck,” Griffith said.

The research firm Capstone said Congress is more likely to give doctors a temporary pay hike this year, rather than pass wholesale Medicare physician payment reform. However, renewed bipartisan support for a more permanent solution increases the chances of Congress tying physician rates to the MEI in the future.

It might not seem like a big change. The MEI minus 1% formula would’ve amounted to a 1.1% pay hike this year.

The American Medical Association, American Academy of Family Physicians, American College of Physicians, American Osteopathic Association, and dozens of specialty societies support the framework of the Patients First Act.

Congress has been grappling with physician payment for decades. In 1989, lawmakers created a Medicare fee schedule, which controlled prices by basing the fees on the cost of providing services. The next change, in 1997, attempted to control volume. Congress did that by creating the Sustainable Growth Rate, or SGR, which called for across-the-board pay cuts for services when total spending exceeded an annual target.

But lawmakers repeatedly postponed SGR cuts when service volume grew faster than the annual spending target. Each time Congress postponed a pay cut, the gap between the spending target and actual outlays grew wider. After pay cuts had been overridden 17 times, they had snowballed into a potential pay cut of more than 20%. In 2015, at a cost of $145 billion, Congress passed the Medicare Access and CHIP Reauthorization Act, creating the current payment system.

Ginsburg characterized the plan to give automatic annual inflation-based increases to doctors as “giving up on the notion that you could provide incentives for physicians to practice differently on a national basis.”

“In a sense, it is returning to the original pre-SGR situation,” Ginsburg said of the legislative changes now under consideration. “But you’re trying to leave some incentives to help pursue value-based care.”

After iterations of pay systems aimed at controlling prices, then service volume, the goal of MACRA was better quality of care. The law attempted to do that by offering doctors the chance of higher pay by joining models that link earnings to keeping patients healthy, instead of making more money by providing more care. On the flip side, they risk penalties for poor patient outcomes.

But the federal agency that runs Medicare exempted most doctors from one of the performance-rating programs. The Patients First Act would still pay doctors 0.5% more for participating in so-called advanced alternative payment models.

So while the legislation would not do away with the quality-improvement aspect of the system, it wouldn’t do much to change it either. And if doctors get an automatic annual pay increase, there is less reason for them to move away from the fee-for-service system, Ginsburg said.

Robert Berenson, a physician and fellow at the Urban Institute, said the quality measures chosen for the programs under MACRA haven’t worked well and there are too many of them. He doesn’t believe the government should rate physician quality anyway.

Berenson said doctors deserve an automatic annual pay raise. Under the current system, Congress sometimes gives doctors bigger raises than prescribed by law. But that requires lots of lobbying.

“They’re just crying uncle,” he said of lawmakers.

Berenson said it’s unfortunate that physician groups are focused on the annual increase, instead of fixing a system that overpays many specialists, and underpays primary care doctors and others who don’t do many procedures. When Medicare overpays for a service, it incentivizes doctors to provide too much of that service.

The problem, he said, is that for decades lawmakers have mistakenly believed that they could get doctors to collectively restrain services.

“That was never going to happen,” he said. “It did not happen. The doctors take care of themselves.”

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