Ensure the Long-Term Sustainability of High-Value Care

The Medicare Access and Children’s Health Insurance Program (CHIP) Reauthorization Act of 2015 (MACRA) was intended to establish a predictable and supportive framework to help providers transition to high-value care. Central to this framework were up-front incentives and stable financing, particularly through participation in Advanced Alternative Payment Models (APMs). However, MACRA was not designed to account for unforeseen disruptions like the COVID-19 public health emergency (PHE), which delayed many providers’ transitions to value. Despite these delays, the time-limited bonuses designed to encourage participation in APMs have not been extended to reflect this enormous setback. Instead, Congress has enacted a series of short-term legislative fixes to prevent Medicare reimbursement cuts, offering temporary relief but little long-term stability.

Critically, MACRA fails to link clinician payment to inflation. Unlike other components of Medicare, Part B lacks an automatic update tied to broader inflation metrics, such as the Consumer Price Index (CPI) or Producer Price Index (PPI). This disconnect leads to reimbursement rates that have not kept pace with real-world costs of medical supplies, technology, and staff salaries—all resulting in financial strain on ambulatory providers. Congressional interventions, while helpful, have done little to close the widening gap between clinician payments and the total cost of providing care.

For example, the Consolidated Appropriations Act of 2024 (CAA, 2024) provided partial relief for the 2024 MPFS, but was not enacted until March. This delay caused Part B providers to absorb lower reimbursements for the first quarter of 2024. Even when Congressional relief arrived, the 2024 conversion factor decreased 1.77% from the previous year. This is part of a broader downward trend since MACRA went into effect in 2015, with an overall decrease from $35.75 in 2015 to $32.34 in 2025 (Figure 1 ). Over the same period, the cost of operating a medical practice has increased by roughly 20%.³

This chronic lack of investment in ambulatory clinician services deprioritizes one of the most cost-effective ways to improve Medicare beneficiaries’ health. Regular office visits, chronic disease management, and preventative care can help patients avoid costly hospitalizations and complications, yet the payment system does not reflect or reward this value.

Looking ahead, the gap between clinician reimbursement and the cost of providing care is projected to widen. The Centers for Medicare & Medicaid Services (CMS) estimates the MEI will increase by an average of 2.3% annually from 2025 to 2033 (Figure 2 ).⁴ However, under existing legislation, clinician reimbursement remained flat in 2025, and will only rise by 0.75% per year for Advanced APM participants and 0.25% for all other clinicians in 2026 and beyond. This represents a sharp downturn from the modest bonuses (between 5% and 1.88% annually), that Congress created for Advanced APMs from 2017 to 2024.

Without meaningful reform, the trajectory of Medicare reimbursement for Part B providers will continue to erode participation, strain practice sustainability, and undermine the shift to high-value care.

The Medicare Part B reimbursement system is constrained by outdated budget neutrality requirements, which mandate offsetting reductions to clinician payments if any policy change increases projected spending by more than $20 million in a given year. This threshold, set in 1992, has never been adjusted for inflation or changes in the scope of Medicare services.⁵

While originally intended to control spending, budget neutrality often creates unintended consequences that disproportionately affect providers. When new services, such as advanced diagnostic tools or telehealth options, are added or updated, payment reductions are applied across all services—regardless of their actual cost or value. This results in an inequitable system in which certain providers, especially those offering primary or preventive care, face significant financial strain. These across-the-board reductions often hit primary and preventive care providers the hardest, creating disincentives to offer essential but lower-margin services.

These policies have had significant impacts on AMGA members and their patients. In a recent survey conducted after the January 2025 conversion factor cut, 40% of respondents reported eliminating services to Medicare patients. Another 25% of respondents furloughed or laid off clinical staff, and 31% furloughed or laid off nonclinical staff. Thirteen percent of survey respondents reported they are no longer accepting new Medicare patients in 2025 (Figure 3 ). If current trends continue, access and workforce challenges will only worsen.

AMGA has long raised concerns that the Merit-Based Incentive Payment System (MIPS) is undercut by overly broad exemptions, especially the low-volume threshold, which precludes a significant number of clinicians from participation. These exclusions undermine the program’s goals of improving quality and prevents high-performing providers from receiving meaningful payment adjustments. As detailed in Chapter ⁵, “Support Practices Serving Rural and Underserved Populations in High-Value Care,” AMGA supports policies that ensure all providers engage in performance measurement and reporting. This would create a more comprehensive and equitable system for evaluating and improving care. Rather than broad exclusions, CMS should offer resources and tailored support, such as technical assistance and scalable models, as well as performance feedback tailored to small practices and low-volume providers. Simply put, exempting providers from MIPS undermines the integrity of MACRA and the broader transition to high-value care.

Achieving the long-term benefits of high-value care requires providers make upfront investments in staffing, care redesign, infrastructure, and cultural transformation within the practice. These changes demand both time and financial resources, which for most providers requires a predictable operating environment. To successfully transition to value, providers must allocate time to understanding value-based programs, forecast performance, implement the necessary initiatives for participation, and transition to team-based care models. This requires a shift in provider mindset and behaviors to prioritize patient-centered care and coordinated treatment plans. In addition, holding providers accountable for the quality and cost of beneficiary care demands financial risk, which requires payment stability. Even in one-sided or upside-only models, upfront investments can be significant. Given the instability of the Part B reimbursement environment, providers lack both stable financing and the capital needed to make the transition to high-value care.

As high-value care represents a fundamental transformation away from the traditional fee-for-service system, providers must be given adequate financial stability to support the transition. This should include a phased revenue transition period (Figure 4 ).⁶

Mid-agreement changes to model rules are a major source of contention, especially those impacting financial elements such as risk adjustment. These changes have historically disrupted provider confidence in high-value care and discouraged participation. Unlike mandatory models, voluntary models do not allow participants to provide feedback on mid-model changes through notice and comment periods.

For instance, the recent change in coding methodology for the MSSP from the 2020 CMS-Hierarchical Condition Category (HCC) model to the updated 2024 CMS-HCC model has required Accountable Care Organizations (ACOs) to revise their coding guidelines, retrain staff to ensure compliance, and adjust their financial forecasts. Similarly, in December 2017, CMS introduced a new risk adjustment factor in the Next Generation ACO Model, which reduced the average risk score by 4.82%, making it significantly harder for providers to achieve profitability under the program. Although the change was announced on December 7, 2017, it was retroactive to payments for the entire year, significantly impairing providers’ ability to achieve shared savings.

Similarly, the implementation of new mandatory models must allow providers sufficient time to prepare. Transitioning from fee-for-service to an accountable care model requires operational changes within individual practices and across the broader care continuum. For example, CMS’ recently finalized Transforming Episode Accountability Model (TEAM) holds hospitals accountable for most medical spending following select surgical procedures, including services outside of the hospital’s direct control, such as post-acute care or physical therapy.

To succeed under TEAM, participants will need time to accurately forecast the costs incurred at their own facilities and at partner facilities and provider groups. This may involve negotiating new or updated agreements and establishing new care coordination protocols with these partners. CMS has allotted 17 months of pre-implementation preparation time, followed by a 12-month performance period without downside financial risk.7 While AMGA has significant concerns about the feasibility of generating savings under TEAM, we appreciate the extended runway, which is essential for enabling providers to adapt their operations, build collaborative networks, and effectively manage episode-based care.

Underfunding Medicare Part B services to control short-term spending overlooks the long-term cost-savings achievable under Part A through innovations in care delivery. Since the COVID-19 PHE, tools like remote patient monitoring and telehealth visits have grown exponentially, enhancing access to care for patients (particularly in rural or underserved areas) and helping them prevent avoidable complications. Modest investments in preventive and outpatient care can result in significant savings by reducing hospital admissions, readmissions, and extended inpatient care covered by Part A.

However, Medicare’s current reimbursement policies do not recognize these downstream benefits. To address this, CMS should adopt an integrated approach that aligns financial incentives across Parts A and B. This includes considering projected Part A savings when setting Part B payment rates and encouraging a shift toward high-value care models that reward prevention and early intervention. This approach would not only reduce overall program costs, but also improve patient outcomes by fostering proactive, rather than reactive, care delivery.