MedPAC recommended a 0.5% increase to Medicare physician fee schedule rates for 2027, on top of the 0.25% or 0.75% the statute already sets. Even so, net rates still fall 1.2% for clinicians in advanced alternative payment models (A-APMs) and 1.7% for everyone else, because a temporary 2.5% increase expires at the end of 2026.
The recommendation comes from the Medicare Payment Advisory Commission's March 2026 report to Congress, as covered by Medical Economics on April 3, 2026. The same coverage of MedPAC's December 4, 2025 staff presentation supplies the volume, access and cost figures below. Treat the December figures as staff draft numbers, since the chair's recommendation was presented as preliminary.
What 2027 rates look like under each scenario
Current law sets a 2027 update of 0.75% for clinicians in A-APMs and 0.25% for all others. MedPAC's 0.5% recommendation would lift those to 1.25% and 0.75%. Medical Economics reports that the recommended increase would be permanent, built into the base rates.
The 2.5% temporary increase is the larger number. When it ends, Medical Economics says net 2027 payments fall 1.2% for A-APM participants and 1.7% for other clinicians, and those cuts are smaller than current law alone would produce.
| Group | Statutory 2027 update | With MedPAC's 0.5% added | Net change after 2.5% add-on ends |
|---|---|---|---|
| Advanced APM clinicians | 0.75% | 1.25% | -1.2% |
| All other clinicians | 0.25% | 0.75% | -1.7% |
Source: Medical Economics, April 3, 2026 and December 4, 2025, reporting MedPAC's March 2026 report and December 2025 staff presentation.
Volume is growing faster than rates
MedPAC staff reported that allowed charges for all fee schedule services per fee-for-service beneficiary grew 4.1% from 2023 to 2024. Office visit units did most of the work. Evaluation and management (E/M) service units rose 10.9% in 2024, and E/M allowed charges rose 5.1%.
Units outran dollars by 5.8 percentage points. E/M allowed dollars per unit fell in 2024, so each added visit brought in less than the average visit already on the books.
Add-on code G2211 explains part of the unit growth. MedPAC staff said the code was billed roughly 25 million times, with about $400 million in allowed charges. It accounted for about half of the E/M unit increase and about one-fifth of the increase in E/M allowed charges.
The number of clinicians billing under the fee schedule grew about 2.2% per year from 2019 to 2024. A practice that adds 2.2% more clinicians a year while visit units grow 10.9% in one year is seeing demand rise faster than headcount.
Access and participation measures
MedPAC's access check relies on a Gallup survey run from mid-July to early September. It reached about 5,000 Medicare beneficiaries aged 65 and older and a comparable number of privately insured adults aged 50 to 64. The Medical Economics coverage reports no percentages from that survey, so this post does not quote any.
On participation, the AMA's 2024 Physician Practice Benchmark Survey, cited in the same coverage, found that 95.0% of physicians accepting new patients accepted new Medicare patients. Within that, 85.0% accepted all new Medicare patients and 10.0% accepted some. Only 3.0% accepted new patients with private insurance alone.
MedPAC's report says the share of clinicians accepting Medicare is comparable with the share accepting private insurance, despite higher private payment rates. It also says very few physicians and other clinicians opt out of Medicare entirely.
For a practice administrator, the 95.0% figure sets the baseline for peers in the same market. A practice that stops taking new Medicare patients departs from what 19 in 20 physicians with open panels still do.
Costs and pay since 2000
MedPAC measures input costs with the Medicare Economic Index (MEI). The index peaked at 4.3% in 2022 and slowed to roughly 3.0% in 2024. MedPAC staff expect it to slow to 2.1% in 2027.
From 2000 to 2024, cumulative fee schedule updates were roughly 14.0%, while cumulative MEI growth was about 56.0%. That is a gap of about 42 percentage points between what Medicare added to rates and what the cost index added to expenses. A practice with $1,000,000 in Medicare revenue in 2000 would need about $560,000 more in 2024 to cover the cost index, and the updates supplied about $140,000.
Physician pay has moved up regardless. Median physician compensation rose 6.0% to $369,000 in 2024, according to the SullivanCotter data MedPAC cites. Median compensation for nurse practitioners and physician assistants rose 2.0%. Across groups, median compensation grew roughly 3.5% per year since 2019. Medical Economics notes this is an indirect measure, because MedPAC does not collect cost reports from physicians.
What the numbers mean for a practice budget
A practice with $2,000,000 in Medicare fee schedule revenue loses about $24,000 at a 1.2% net cut and about $34,000 at a 1.7% net cut, before any change in visit volume. Those figures are arithmetic on the rates above, not a MedPAC projection.
The same practice would gain about $10,000 from the 0.5% recommendation alone. Volume growth of 4.1% per beneficiary, the 2024 rate MedPAC reported, would add roughly $82,000 on the same base if the practice kept pace with it.
MedPAC's recommendation is advice to Congress. The 2027 rates take effect through CMS's final fee schedule rule and any change Congress makes to the statute.
Sources
- Medical Economics, MedPAC: Increase physician pay by 0.5% for 2027, April 3, 2026
- Medical Economics, MedPAC signals modest 2027 physician payment bump as staff report strong access, rising revenues, December 4, 2025
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