MedPAC's 2026 Verdict: Which IM Services Will Actually Survive

The MedPAC March 2026 Report reads like good news until you look at what is sitting underneath the headline. A one-time 2.5% conversion factor increase sounds like relief. It is not. The Medicare Economic Index projects practice cost inflation at 2.7% for 2026 — meaning the "raise" does not cover the bill, and it expires at year-end.

Independent Internal Medicine is not just caught in this squeeze — it is the primary target. According to the American Medical Association, as reported by Medical Economics, more than 56% of internists were projected to face cuts of at least 5% under the 2026 Medicare Physician Fee Schedule structure. That is not a rounding error. That is a structural problem.

What follows is not a policy summary. It is a financial triage guide — translating what MedPAC is signaling into the margin decisions a practice administrator needs to make before those signals become irreversible losses.

What MedPAC Is Actually Saying About Ambulatory Payment Adequacy in 2026

The MedPAC March 2026 Report is not optimistic reading for a 3-to-5 physician internal medicine practice. Strip away the policy language and three financial realities emerge.

The 2.5% conversion factor bump is already underwater. According to MedMoneyGuide citing AMA analysis, the Medicare Economic Index is projected at 2.7% for 2026 — meaning the increase Congress granted does not cover actual practice cost inflation. It expires at end of 2026 entirely, and KovorCM's analysis of the MedPAC report estimates clinicians will face rates 1.2% to 1.7% lower than current 2026 levels once it lapses.

Your Medicare panel is now majority MA. According to the MedPAC July 2026 Data Book, Medicare Advantage enrollment reached 35.5 million beneficiaries — 55% of all eligible Medicare beneficiaries. For most IM practices, MA reimbursement accuracy is no longer a billing detail. It is the primary revenue lever.

The physician supply signal is alarming. MedPAC's March 2026 Report, Chapter 4 documents a net decline of 5,000 primary care physicians billing Medicare between 2019 and 2024. That is not attrition. That is a structural exit signal driven by margin collapse.

• Conversion factor increase: +2.5% — expires December 31, 2026
• Medicare Economic Index: 2.7% — already exceeds the bump
• MA enrollment share: 55% of all Medicare eligibles
• Primary care physicians lost from Medicare billing: ~5,000 since 2019

MedPAC's access-to-care metrics confirm the competitive displacement: independent IM practices are losing ground to health system competitors who absorb margin pressure through scale. The commission's own data shows hospital outpatient departments are paid up to 60% more than physician offices for equivalent services — a structural disadvantage site-neutral reform has only partially addressed.

The Three Places Margin Compression Is Already Showing Up in Internal Medicine

Margin compression in IM rarely announces itself. It shows up quietly, in three recurring patterns that most practices don't recognize as revenue problems until they're already compounding.

1. Chronic Conditions That Are Documented but Not Coded

Consider a 72-year-old Medicare Advantage patient with diabetes, stage 3 CKD, and systolic heart failure. The internist manages all three conditions. The note reflects all three. But if even one condition isn't coded to specificity — or drops off in a renewal year — the RAF score falls, and so does the capitation payment.

According to Medical Billers and Coders, IM groups carry the densest chronic disease panels in ambulatory care, making their notes the primary source for MA plan diagnoses and RAF score generation. That's the asset. Underdocumented coding turns it into a liability.

2. Cardiovascular Risk Patients Who Leave Without a Diagnostic Billable

A 65-year-old with hypertension, obesity, and exertional fatigue gets a thorough clinical assessment. The internist suspects early cardiac disease. The patient gets a referral — and the diagnostic billing revenue goes to cardiology.

That's a billable encounter the IM practice assessed but didn't capture. With approximately one-third of U.S. adults at Stage A heart failure risk, according to the Heart Failure Society of America's 2025 report, this scenario repeats across nearly every MA panel in the country.

3. Wellness Visits With Incomplete CPT Capture

Annual wellness visits are high-opportunity encounters — but only when coded completely. Preventive services, screenings, and chronic condition counseling all carry separate billable codes that frequently go uncaptured when physicians are moving fast.

According to MGMA's June 2026 Stat poll, only 47% of medical groups reported revenue growth year-to-date — down from 56% a year earlier. Incomplete coding at high-volume visit types is a direct contributor to that gap.

Why Diagnostic Technology Investment Is a Reimbursement Strategy, Not a Capital Expense

Treating a diagnostic device as a depreciating asset is the wrong accounting frame. The right frame: every in-office diagnostic capability is a billable encounter that currently walks out your door to a cardiologist or hospital outpatient department.

Hospital outpatient departments are paid 60% more than physician offices for comparable services under current Medicare rules, according to MedMoneyGuide citing Health Affairs. That revenue gap doesn't disappear — it transfers. When your MA patient leaves for a cardiac workup, so does the CPT billing.

CorVista closes that gap directly. The FDA-cleared, AI-powered cardiovascular diagnostic platform — recently entering a research collaboration with Mayo Clinic to advance pulmonary hypertension detection — enables IM practices to assess CAD, PH, and heart failure at the point of care. No radiation. No referral. Billable in your office.

• CAD screening, HF risk assessment, and PH workup generate diagnostic CPT revenue that stays in-practice
• CorVista requires no fasting, no injections, no exercise — minimal workflow disruption
• Validated in clinical trials involving over 11,000 patients with FDA Breakthrough Device Designation for PH detection

According to the Doximity 2025 Physician Compensation Report citing AMA data, the share of physicians in private practice dropped from 60.1% to 42.2% between 2012 and 2024. Practices that survive that consolidation pressure share one trait: they built revenue streams that aren't dependent on the next fee schedule update.

Aligning Your Revenue Cycle to Absorb the 2026 Payment Environment

Diagnostic revenue means nothing if your billing infrastructure fails to capture it. According to a Tebra analysis, over half of independent practices have claim rates below 90% — bleeding revenue not from rate cuts but from execution gaps.

That is the problem ForeSee ESP is built to close. With V28 now fully implemented and RADV audits running quarterly across all ~550 eligible MA contracts, the two-way coding requirement — add what's missing, delete what's unsupported — is the new standard. ForeSee ESP's Delete Suspects report and InstaVu features handle both sides of that equation, surfacing clinically documented diagnoses that never made it into a claim and flagging unsupported codes before they become audit findings.

• Coding accuracy: NLP scans existing records for V28-compliant, MEAT-supported diagnoses already in the chart
• Audit defense: Delete Suspects removes unsupported HCCs before they create RADV exposure
• RAF revenue recovery: Captures legitimate reimbursement MA plans owe but aren't paying

The temporary 2.5% conversion factor increase expires at end of 2026. Practices that build reimbursement infrastructure now — before that cliff — will be structurally stronger when the next adjustment hits.

MedPAC's 2026 report is not a warning about what might happen — it is a description of what is already happening. According to Applied Policy's analysis of the MedPAC March 2026 Report, private equity ownership of physician practices climbed from 4.5% in 2022 to 6.5% in 2024, with consolidation giving health systems and PE-backed groups leverage that independent IM practices simply cannot match on reimbursement negotiation alone. That gap widens every quarter a practice delays building its own structural advantages.

The same report flags a workforce shift that compounds the problem: rapid growth in APRNs and PAs is outpacing primary care physician supply, while the number of primary care physicians billing Medicare has been in net decline since 2019. Independent IM practices are not just fighting for margin — they are competing for long-term relevance in a market that is actively consolidating around them.

The practices that hold their ground will not do it by waiting for Congress to fix the conversion factor. They will do it by closing the gap between the care they already deliver and the revenue that care should generate — through accurate RAF coding, in-office diagnostic billing, and insurance-independent revenue streams that do not require a single additional patient visit.

The window for proactive repositioning is narrow. The temporary 2.5% conversion factor increase expires at the end of 2026. V28 is fully in effect now. RADV audits are quarterly. The practices building their reimbursement infrastructure today will be structurally stronger when the next round of cuts lands — and there will be a next round.

• Request a revenue gap analysis from Perfect Rhythm to identify which billable diagnostic services your practice is currently underutilizing relative to your patient panel.
• Download Perfect Rhythm's IM Reimbursement Optimization Checklist — a practical reference for aligning your diagnostic workflow with the CPT codes most at risk from 2026 payment changes.
• Schedule a 20-minute call with a Perfect Rhythm practice consultant to model how diagnostic technology investment offsets projected Medicare reimbursement losses specific to your practice volume.

Frequently Asked Questions

What does the MedPAC 2026 Report say about payment adequacy for internal medicine?

The MedPAC March 2026 Report signals ongoing inadequacy in Medicare physician payment relative to practice cost growth, with the Medicare Economic Index projected at 2.7% for 2026 — exceeding the temporary 2.5% conversion factor increase. Independent internal medicine practices face compounding pressures from V28 RAF compression, RADV audit expansion, and a -2.5% efficiency adjustment on thousands of non-E/M procedure codes.

How does the CMS-HCC V28 model affect internal medicine reimbursement?

V28 removed approximately 2,000 diagnosis codes from HCC mapping and is now fully implemented at 100% for Payment Year 2026, after a three-year phase-in. Internal medicine practices with dense chronic disease panels — diabetes, CKD, heart failure, COPD — are disproportionately affected because many conditions their patients carry were devalued or removed under the new model, compressing RAF scores and MA reimbursement without any change in actual patient complexity.

What are RADV audits and why do they matter for IM practices in 2026?

RADV (Risk Adjustment Data Validation) audits are CMS reviews that verify whether diagnoses submitted by Medicare Advantage plans are supported by clinical documentation. CMS expanded RADV audits from approximately 60 contracts annually to all ~550 eligible MA contracts on a quarterly cadence beginning in 2025-2026. A June 2026 OIG audit found 100% error rates on acute stroke HCC codes in a 97-enrollee sample — making documentation accuracy an urgent compliance and financial priority for every IM practice with MA patients.

How can point-of-care diagnostic technology offset Medicare reimbursement losses?

In-office diagnostic platforms like CorVista generate billable CPT revenue from cardiovascular assessments — CAD screening, pulmonary hypertension detection, heart failure evaluation — that would otherwise be lost to a cardiology referral. This creates a new diagnostic revenue stream without adding patient volume, directly offsetting fee schedule compression on existing E/M billing.

Is independent internal medicine practice financially sustainable in 2026?

The structural headwinds are real: according to an MGMA June 2026 Stat poll, 84% of medical groups reported higher operating costs year-to-date versus 2025, while only 47% reported revenue growth — down sharply from 56% the prior year. Sustainability increasingly depends on practices diversifying revenue beyond fee-for-service Medicare through accurate MA coding, diagnostic billing capture, and insurance-independent cash revenue streams.