AMGA Calls on Congress to Enact Lasting Reforms
ALEXANDRIA, VA – AMGA today warned that the final Medicare payment rules for 2027 will widen the gap between reimbursement and the rising cost of caring for patients. The Calendar Year (CY) 2027 Physician Fee Schedule (PFS), and Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) final rule cut Part B payments, while at the same time reducing 340B drug reimbursement and accelerating payment offsets for the hospital outpatient departments that many AMGA members operate.
“These cuts are not happening in isolation,” said Jerry Penso, MD, MBA, president and chief executive officer of AMGA. “Our members are absorbing reductions to physician and clinician reimbursement and outpatient drug reimbursement at the same time they face a trillion dollars in pending Medicaid cuts. Each one makes it harder to sustain the staff, technology, and care models patients depend on. Congress must enact lasting reforms now, before access to care suffers.”
Under the final PFS rule, the conversion factor drops to $32.95 for Qualifying Alternative Payment Model (APM) Participants, a 1.83% cut from CY 2026, and to $32.63 for non-qualifying APM participants, a 2.31% cut. Both reductions are deeper than the Centers for Medicare & Medicaid Services (CMS) proposed in July. They follow the expiration of the temporary 2.5% increase Congress enacted for 2026 and fall further behind the Medicare Economic Index (MEI), which tracks the actual cost of running a practice.
On the hospital outpatient side, a 2.3% payment update is offset by policies aimed at 340B hospitals. CMS finalized paying for 340B-acquired drugs at the average sales price (ASP) minus 28%, down from ASP plus 6%, which CMS estimates will reduce Original Medicare drug payments by $4.35 billion in CY 2027. CMS also quadrupled the annual reduction used to recoup its 340B remedy payments, from 0.5% to 2% of the OPPS conversion factor for affected hospitals, and extended site-neutral payment cuts to imaging services without contrast furnished in off-campus hospital departments. While the final 340B policies are less severe than CMS proposed, they will still pull significant resources from health systems that serve vulnerable patients.
With the final rule now set, AMGA calls on Congress to act before the cuts take effect and to pursue lasting reform rather than another one-year patch. AMGA urges lawmakers to tie annual conversion factor updates to an inflation measure such as the MEI and to advance comprehensive reform of the Medicare Access and CHIP Reauthorization Act (MACRA), so physician and clinician payment no longer depends on last-minute legislative action each year.
“Year after year, Medicare payment falls further behind what it actually costs to care for patients,” said Dr. Penso. “Clinicians and the medical groups and health systems they practice in are navigating a payment system that largely ignores the real cost of care. It’s time for CMS and Congress to create a predictable, stable, and sustainable payment system.”
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About AMGA
AMGA is a trade association leading the transformation of healthcare in America. Representing multispecialty medical groups and integrated systems of care, we advocate, educate, innovate, and empower our members to deliver the next level of high-performance health. AMGA is the national voice promoting awareness of our members’ recognized excellence in the delivery of coordinated, high-quality, high-value care. More than 175,000 physicians practice in our member organizations, delivering care to one in three Americans.