ACOI Advocacy Alert: Proposed Medicare and Medicaid Policy Changes

As ACOI strives to keep its members apprised in a timely manner of critical policy activities, we want to alert you of developments this week on proposed Medicare and Medicaid policy changes that would impact you and your patients.

This week the House Energy and Commerce Committee approved a budget reconciliation bill that covers a broad range of policy topics, including Medicare physician payment and changes to Medicaid policies, among other things.  

Medicare Physician Payment

The bill provides physicians, under the Medicare fee schedule, an inflationary update in 2026 that is 75% of the Medicare Economic Index (MEI)—a measure of practice cost inflation.  

Without a change in policy, the 2026 Medicare physician fee schedule conversion factor update will be a 0.75% increase for Qualified Advanced Alternative Payment Model (APM) participants and a 0.25% increase for all other clinicians. ACOI has been calling on Congress to link the physician payment update to MEI, and this is a step in the right direction.  

Under the proposal, beginning in 2027 and onward, the payment update would be 10% of MEI. Bridging the gap between the cost of practice and Medicare payment will require comprehensive physician payment reform, but, under rules of reconciliation, would need to happen under separate legislation.  

Disappointingly, the bill does not address the current 2.8% payment cut that took effect on January 1, 2025.  

Medicaid Policy

The package passed by the Energy and Commerce Committee includes policy changes that are of significant concern to ACOI, including language that freezes state provider taxes at their current rate. Consequently, no federal matching funds would be allowed for state provider taxes imposed or increased after the bill's date of enactment. With these changes, states could be forced to make major modifications to their Medicaid programs which could include cuts to benefits, eligibility, and/or payment rates for health care providers. Prior to the Committee’s consideration of the bill, the ACOI joined 41 other medical societies on a letter to lawmakers expressing concern with proposals that would alter the federal financing structure of Medicaid and potentially cut off access to care for millions of Americans.

The bill passed by the Energy and Commerce Committee will eventually be combined with bills under consideration by other House committees and voted on by the full House of Representatives.  

ACOI is closely following developments and will provide updates as needed. ACOI members are encouraged to follow all ACOI advocacy and policy news and activities through the ACOI Action Center.