Washington, D.C. – A bipartisan Senate bill aims to provide a critical 2% boost in Medicare payments for physicians in 2025, offering a temporary reprieve from persistent cuts that have threatened independent medical practices across the nation. The American Medical Association (AMA) has voiced strong support for this legislation, highlighting its potential to stabilize physician payments amid escalating inflation and rising practice costs.
The Medicare Patient Access and Practice Stabilization Act of 2025 (S. 1640), introduced by Senator Roger Marshall, MD, seeks to reverse a significant 2.83% cut to the Medicare Physician Fee Schedule Conversion Factor (MPFS) implemented in January and grant a positive 2% update for the latter half of 2025. This adjustment roughly equals half of the Medicare Economic Index (MEI) inflation measure for physician practices, a crucial factor for maintaining practice viability.
A Temporary But Vital Reprieve for Physician Practices
The proposed legislation directly addresses the financial strain on physician practices caused by consecutive Medicare payment reductions over recent years. The AMA’s Executive Vice President and CEO, Dr. James L. Madara, emphasized in a letter to Senator Marshall that the bill offers a much-needed pause to help practices manage soaring costs:
“By fully reversing the 2.83% cut and applying a 2% update to the MPFS conversion factor from June through December 2025, S. 1640 offers physician practices a temporary but important reprieve. It allows practices to better weather inflationary cost pressures while Congress works toward the long-term structural reform that Medicare urgently requires.”
This adjustment is particularly crucial given recent data showing a 33% decline in Medicare physician payments after inflation since 2001, even as the costs for essentials like electricity, insurance, and medical supplies have dramatically increased.
Bipartisan Efforts and Legislative Momentum
The Senate bill complements a bipartisan House counterpart, H.R. 879, introduced by Representatives Greg Murphy, MD (R-N.C.) and Jimmy Panetta (D-Calif.). With approximately 170 cosponsors from both parties backing the House version, the AMA is championing these efforts as part of a broader push to reform the Medicare payment system.
- The Senate bill, S. 1640, would temporarily offset the 2.83% Medicare payment cut implemented in January 2025.
- It proposes a 2% positive payment update from June through December 2025.
- This 2% boost represents roughly half of the Medicare Economic Index (MEI), a key cost-inflation metric for physician practices.
- The AMA’s advocacy efforts encourage physicians to urge their senators to cosponsor the bill through resources like the Physicians Grassroots Network.
Why Medicare Payment Reform Is Urgently Needed
Continued Medicare payment cuts risk forcing physician practices — especially independent and rural providers — to close their doors, thereby diminishing patient access to healthcare. Dr. Madara noted a troubling disparity in the recent Medicare update landscape:
“This year, the Centers for Medicare & Medicaid Services projected a 3.5% increase in the MEI. Yet physician practices are facing another payment reduction, while other providers, including hospitals and Medicare Advantage plans, are receiving payment updates that at least account for inflationary pressures.”
The long-term implications are stark. The 2024 Medicare Trustees report warns that without legislative change, access to Medicare-participating physicians will become a significant problem down the road. Further, the Medicare Payment Advisory Commission (MedPAC) has recommended linking Medicare physician payment updates directly to the growth in care costs, underscoring the need for structural reform.
Looking Ahead: Protecting Patient Access and Practice Stability
The AMA has committed to advancing this legislation while continuing collaboration with Congress on more comprehensive Medicare payment reform strategies. As Dr. Madara states,
“The AMA will work to advance this legislation and looks forward to continued collaboration with Congress on long-term structural reform to protect patient access and stabilize the Medicare physician payment system.”
Physicians and stakeholders interested in supporting this initiative can learn more and participate in advocacy efforts by visiting the AMA’s official page and the Physicians Grassroots Network.
Key Facts to Know
- Medicare physician payments have declined by 33% after inflation since 2001.
- Physicians have faced Medicare payment cuts for five consecutive years.
- The Senate bill S. 1640 would apply a 2% payment update from June to December 2025.
- The 2% update covers roughly half the inflation reflected by the Medicare Economic Index (MEI).
- Ongoing cuts threaten access to care, especially in rural and underserved areas.
- The AMA is actively advocating for both short-term relief and long-term reform of Medicare physician payments.
