Congress is again trying to solve a Medicare physician-payment problem that has persisted for more than two decades: annual updates that have failed to adjust for inflation and strict budget neutrality rules that have led to more payment cuts, forcing lawmakers to rely on temporary “patches” to prevent or soften cuts. That is the backdrop for H.R. 9693, the Patients First Act of 2026, introduced by Reps. John Joyce, M.D. (R-PA), Greg Murphy, M.D. (R-NC) and Kim Schrier, M.D. (D-WA), all members of the GOP Doctor’s Caucus. The bill would replace temporary adjustments with a more predictable, inflation-based update to Medicare physician payments.The sponsors have now issued a Request for Information (RFI) asking how to pay for that permanent reform. One question is especially significant: are there areas where Medicare “systematically overpay[s]” for services that could be furnished in a less expensive setting without harming access? Although the RFI doesn’t explicitly mention site-neutral payments, that is the policy debate it most directly invokes.Why does Medicare have this problem?Medicare physician services are paid under the Physician Fee Schedule (PFS), using a conversion factor that translates relative values for physician work and practice costs into payment. For years, Congress used the Sustainable Growth Rate (SGR) to control physician spending. When spending exceeded targets, the formula called for cuts. Those reductions became so large that Congress repeatedly passed temporary “doc fixes.”Even though Congress repealed the SGR in 2015 through the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), the law didn’t create a permanent update that fully tracks the rising costs of clinician services. Instead, Congress had to use temporary increases to somewhat close the gap. For 2026, lawmakers added a one-year 2.5% increase. When it expires at the end of this year, physicians face another effective payment reduction in January 2027.Budget neutrality adds more volatility: when CMS increases payment for some services by more than $20 million, it must offset that spending elsewhere in the fee schedule. That means that if CMS wants to increase payments, as an example, for primary care or mental health services, they have to reduce payments across the Physician Fee Schedule to pay for that change. This limits CMS’ flexibility and hurts many clinicians. The $20 million threshold was established in 1992 and has never been adjusted for the growth in Medicare spending.How will the Patients First Act change payments?Beginning in 2027, the bill would create a permanent annual update tied to the Medicare Economic Index (MEI), which measures changes in physician-practice costs. Most physicians would generally receive MEI minus one percentage point, subject to a floor and ceiling. Qualifying advanced Alternative Payment Model (APM) participants would receive an additional 0.5 percentage point.The key change is permanence. Instead of passing one-year patches that disappear, Congress would establish a predictable formula. The bill also includes primary-care and quality-payment reforms and changes intended to reduce budget-neutrality volatility. Specifically, the bill increases the budget neutrality threshold from its current $20 million level to $54.3 million, giving CMS more flexibility to make payment changes. What’s the likelihood of the bill passing?It depends on whether Congress can find a way to pay for the change. Physician payment reform is a top priority of the GOP Doctor’s Caucus, so we expect a continued push to pass legislation. AHPA is actively supporting this bill.
