House Passes Budget Reconciliation Bill with Modest Physician Pay Fix, Steep Medicaid Cuts

On May 22, 2025, the U.S. House of Representatives passed by a single vote an expansive budget reconciliation bill. If signed into law, the legislation will have implications for physician pay and Medicaid coverage.

Physician Pay: The House-passed bill does not address the 2.8 percent physician payment cut that took effect Jan. 1, 2025; however, it would provide physicians with inflationary updates to the conversion factor in 2026 and 2027. The updates, occurring under the Medicare physician fee schedule, would be 75 percent of the Medicare Economic Index (MEI), which is a measure of practice cost inflation. Based on current MEI data, the update is anticipated to be 2.25 percent in 2026. Beginning in 2027, the payment update would be 10 percent of the MEI.

ASNC has long advocated for a physician payment update tied to the MEI and considers the inflationary update in the House-passed bill a step in the right direction. It is important to note that this legislation does not deliver comprehensive reform of the Medicare physician payment system or revisions to budget-neutrality requirements. Without such actions, modest inflationary updates could quickly turn negative.

Medicaid: The bill also contains drastic cuts to Medicaid, including new work and eligibility requirements. The Congressional Budget Office estimates these policy changes could lead to lost healthcare coverage for millions of Americans. Prior to the House’s formal consideration of the bill, ASNC joined more than 40 medical societies in a letter urging Congress to refrain from making cuts to Medicaid that would result in harm to patient care. The societies warned of increased challenges with patients’ access to care, hospital and office closures, and reduced access to mental healthcare.

Now What? The reconciliation bill will now move to the Senate for consideration. For updates, stay tuned to ASNC.

ASNC Policy Priorities