Providers call for deeper reform despite CMS proposing payment hikes in 2026

Editor's Note

CMS is boosting 2026 Medicare outpatient payments by 2.4%, but provider groups warn the increase barely scratches the surface of mounting financial strain. Alongside the payment bump, the agency is proposing a two-track physician reimbursement model that ties rates to value-based care participation. While some see these moves as steps in the right direction, the prevailing sentiment is that they fall short of the structural reform needed to stabilize long-term provider viability.

According to MedCity News July 21, CMS’ newly proposed rule outlines a 2.4% Medicare payment increase for both hospital outpatient departments and ambulatory surgery centers next year. This figure reflects a 3.2% market basket update, partially offset by a 0.8% productivity cut. At the same time, the agency plans to implement dual conversion factors for physician payment, marking a significant departure from the uniform structure previously used.

As detailed in the article, the two conversion factors would separate physicians based on their participation in alternative payment models. For 2026, physicians in value-based arrangements would receive a conversion factor of $33.59, representing a 3.8% increase, while those outside such models would see a 3.6% increase to $33.42. This shift traces back to the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which aims to transition Medicare away from fee-for-service toward outcomes-driven care.

Despite these short-term gains, major provider groups expressed reservations. The American Academy of Family Physicians welcomed the immediate increase but pointed out that much of the 2026 boost stems from temporary adjustments authorized by H.R. 1, set to expire at year’s end. The group warned that without ongoing support, practices will face renewed cuts and inflation-driven challenges by 2027.

Similarly, the American Medical Group Association (AMGA) voiced concern the proposed payment increases do not keep pace with operational costs. AMGA is urging CMS to pursue a broader overhaul of the Medicare physician fee schedule. CEO Jerry Penso stressed that stopgap measures cannot resolve what he described as a “misaligned” and outdated reimbursement system, warning that without structural reform, financial instability will continue to threaten healthcare access and provider sustainability.