The American Medical Group Association is renewing its call for comprehensive reform of the Medicare physician fee schedule, warning that temporary congressional actions to mitigate payment reductions are unsustainable and mask deeper structural flaws in the system.
While recent legislation will temporarily avert a cut to the Medicare conversion factor in 2026, AMGA emphasized that such stopgap measures highlight the ongoing instability of the physician payment model. Without intervention, the conversion factor was once again set to decline — continuing a trend that health systems say threatens the financial sustainability of group practices and hampers the progress being made from volume to value-based care.
“Health systems and medical groups continue to bear the brunt of an outdated and underfunded reimbursement model,” AMGA President and CEO Jerry Penso, MD, said in a July 14 news release. “Without systematic reform, Medicare’s current fee-for-service framework will remain misaligned with the shift toward high-value care.”
Under CMS’ proposed 2026 physician fee schedule, two separate conversion factors will apply for the first time, as required by statute:
- $33.59 for qualifying alternative payment model participants — a 3.83% increase from the current rate.
- $33.42 for non-qualifying participants — a 3.62% increase.
These figures include a one-time 2.5% statutory boost and technical adjustments for relative value units, yet AMGA argues they still fall short of reversing the long-term erosion in Medicare reimbursement. Since 2001, physician payment updates have failed to keep pace with inflation and rising practice costs, according to the trade group.
AMGA has urged Congress and CMS to move beyond short-term fixes and partner with stakeholders to build a more sustainable and predictable payment system. The group’s recommendations include:
- Annual conversion factor updates that reflect inflation and real-world practice expenses.
- Stronger incentives for participation in high-value care models.
- Reduced regulatory burden on providers.
- Alignment of Medicare policy with modern, team-based care delivery models.
“CMS and Congress must take this opportunity to modernize the PFS and build a payment foundation that supports innovation, sustainability and improved outcomes,” Dr. Penso said.
AMGA said it is closely reviewing CMS’ proposed rule and plans to submit formal comments.
AMGA is a trade group that represents more than 400 health systems and medical groups. More than 175,000 physicians practice in its member organizations, according to its website.
