The Next Doc Fix is Coming

Congress has now kicked off this year’s “Doc Fix” process, an increasingly annual occurrence where they provide ad-hoc pay increases to physicians treating Medicare beneficiaries.

The House Ways and Means Committee passed the Provider Reimbursement Stability Act of 2026 last week, while the House Energy and Commerce Subcommittee on Health recently held a hearing that discussed how to improve the Medicare Physician Fee Schedule (PFS). Meanwhile, in collaboration, members of the Republican Doctors Caucus and Democratic Doctors Caucus have floated a bill that would significantly increase federal costs.

Unfortunately, it has become all too common for Congress to enact these physician pay increases – and to do so without reforms or offsets – raising Medicare spending through an inefficient payment system. This year should be different. Instead of rubber stamping another payment bump, lawmakers should enact fiscally responsible improvements to the PFS such as the ideas we recently put forward.

The PFS details payment rates for physicians and other health care professionals for services billed under Medicare Part B or outpatient services. In 2024, the Medicare PFS spent approximately $70 billion, net of premiums, to pay doctors for the services they provided. The PFS is unique in that it contains a budget neutrality feature that disallows total increases over $20 million each year. This allows for a more predictable payment schedule than without it. At a time with high and rising health spending for the federal budget, it is important to maintain this budget neutrality feature in the future.

The PFS has undergone major reforms in the last decade, and this year Congress has been under significant pressure again. Stakeholders say that the Medicare payment rates are inadequate to cover costs and/or the budget neutrality rule means that pay is effectively diminishing as inflation grows faster than pay. The Energy and Commerce Subcommittee on Health hearing highlighted this perspective: witnesses described how the PFS has not kept up with inflation and has created bad incentives such as site-neutral payment differentials and increased health care consolidation.

Adding to the pressure to increase spending, Congress’ independent advisory committee, the Medicare Payment Advisory Commission (MedPAC) in its June 2025 report to Congress, recommended that the PFS be indexed to the rate of the Medicare Economic Index (MEI) minus one percentage point, which we estimate would cost $25 billion through 2035. Because the One Big Beautiful Bill Act (OBBBA) included a one-year 2.5% payment rate increase, MedPAC’s March 2026 report recommended an update of 0.5 percentage points more than current law for 2027.

Members of the House Ways and Means Committee passed a bill that would increase spending without offsets. The Provider Reimbursement Stability Act of 2026 would increase the budget neutrality requirement to $57.6 million per year, further increase budget neutrality by the rate of MEI every 5 years, and limits year-to-year variance of the conversion factor by 2.5%. The Congressional Budget Office has not yet scored this bill, but it would add meaningfully to deficits as there are no offsets included in this bill.

Similarly, there have been reports of a bill being discussed amongst the Republican Doctors Caucus and the Democratic Doctors Caucus – led by Representatives John Joyce (R-PA), Greg Murphy (R-NC), and Kim Schrier (D-WA) – that would index the PFS to MEI-1, amongst other provisions. The bill would also apparently increase pay for primary care physicians, and adopt the provisions mentioned above in The Provider Reimbursement Stability Act of 2026.

Such increases are neither responsible nor necessary. We previously put forward a menu of reform options that would improve the overall function of the PFS and help offset some of the proposed increases. These policies would:

• Eliminate “incident to” billing for Advanced Practice Providers (APPs), such as a Physician Assistant or Nurse Practitioner. Current law allows APPs to bill “incident to” a service at rates that a doctor would receive. However, when they bill independent of the physician, they receive 85% of that reimbursement.
• Expand CMS’s work on misvalued codes. CMS estimates it takes approximately 17 years between each review of one code. Speeding up this process would reduce spending on overvalued codes.
• Adopt an efficiency adjustor. This would more accurately reflect the time and effort it takes to complete a task, which the PFS was not originally set up to do. CMS has, encouragingly, adopted this proposal with a reduction of 2.5% in order to increase spending in other parts of the PFS; due to budget neutrality, it does not result in federal savings.

At a time of high and rising debt, lawmakers should ensure that any changes made to the PFS are fiscally responsible. It is important to make changes to the system over time to improve its functionality for clinicians billing and improve overall accuracy providing reimbursement. We have previously recommended a menu of options to help offset the cost to changes to the system. Policymakers could also offset these costs by increasing revenues. Any changes to the system that increase spending must be offset to avoid worsening our dire fiscal situation.