Sign in Subscribe
Physicians

Medicare Payment Reform Divides Physicians Over Budget Bill's Impact on Alternative Payment Models

Strategic Insights

— 2 min read

Physicians and medical associations are debating the implications of a Republican budget bill that would consolidate Medicare payment updates into a single inflation-based conversion factor. While the American Medical Association (AMA) supports the provision, others warn that it would maintain a fee-for-service system and disincentivize value-based care. The bill's impact on alternative payment models, which tie payments to patient outcomes, is a critical concern.

Key Takeaways:

  • The Republican budget bill would consolidate Medicare payment updates into a single inflation-based conversion factor, starting in 2026.
  • Primary care physicians and providers embracing value-based care worry that removing an incentive for participating in performance-based payment models will set back efforts to move Medicare toward a more holistic payment system.
  • The American Academy of Family Physicians (AAFP) and the American College of Physicians (ACP) have expressed concerns that the policy will disincentivize doctors' participation in value-based care.
  • The AMA disagrees that the provision would discourage participation in alternative payment models, citing positive payment updates overall for providers in these models.
  • Reductions to the conversion factor over the past half-decade have made private practice financially impossible for many doctors, according to the AMA.
  • Over 95% of physicians and physician trade organizations agree that stable Medicare payment updates with some link to inflation is necessary to ensure continuous access for Medicare patients.

Statistics:

  • 2.83% cut to physicians' Medicare payment that took effect in January.
  • 2026-2028: Performance-based payment model physicians will get higher payments than currently prescribed.
  • 2029-2035: Performance-based payment model physicians will get lower payments than outlined in current law.
  • 95%: Percentage of physicians and physician trade organizations that agree on the need for stable Medicare payment updates with some link to inflation.

Sources:

  • [https://www.acponline.org/sites/default/files/acp-policy-library/letters/acps_letter_to_leadership_regarding_the_big_beautiful_bill_act_2025.pdf](https://www.acponline.org/sites/default/files/acp-policy-library/letters/acps_letter_to_leadership_regarding_the_big_beautiful_bill_act_2025.pdf)
  • [https://www.axios.com/2024/07/11/doctors-medicare-payment-cut-2025](https://www.axios.com/2024/07/11/doctors-medicare-payment-cut-2025)
  • [https://searchusan.ama-assn.org/letter/documentDownload?uri=%2Funstructured%2Fbinary%2Fletter%2FLETTERS%2Flf.zip%2Flf%2F2025-5-20-Letter-to-Johnson-and-Jeffries-re-House-Rules-on-Reconciliation-Text-v3.pdf](https://searchusan.ama-assn.org/letter/documentDownload?uri=%2Funstructured%2Fbinary%2Fletter%2FLETTERS%2Flf.zip%2Flf%2F2025-5-20-Letter-to-Johnson-and-Jeffries-re-House-Rules-on-Reconciliation-Text-v3.pdf)
  • [https://www.axios.com/2025/05/14/medicare-innovation-memo-patient-choice-preventive-care](https://www.axios.com/2025/05/14/medicare-innovation-memo-patient-choice-preventive-care)

Read more