Provider Reimbursement Stability Act of 2026
- Sponsor
- Rep. Murphy, Gregory F. [R-NC-3]
- Committees
- Energy and Commerce Committee (primary)
- Last action
- May 21, 2026
Bottom line
The bill seeks to provide greater predictability and accuracy in Medicare payments for physicians and other providers by adjusting key elements of the payment formula.
What it actually does
This bill amends the Social Security Act to modify how Medicare physician payments are calculated, aiming to stabilize reimbursement rates. It increases the budget neutrality threshold, introduces a mechanism to correct for errors in estimated service utilization, mandates regular updates to direct cost inputs for practice expense calculations, and limits year-to-year fluctuations in the Medicare conversion factor.
Proponents argue
Supporters argue that these changes are crucial for ensuring the financial viability of healthcare providers, particularly physicians, who face increasing costs and unpredictable reimbursement rates. They contend that stable and accurate payments are essential for maintaining access to care for Medicare beneficiaries and preventing provider burnout or practice closures.
Opponents contend
Opponents might argue that increasing the budget neutrality threshold and limiting conversion factor variance could lead to higher overall Medicare expenditures or shift costs to other parts of the healthcare system. They might also contend that the proposed changes add further complexity to an already intricate payment system, potentially creating new administrative burdens or unintended consequences.
The bill is relatively short, but its technical nature requires a careful reading to understand the implications of the proposed changes to Medicare payment formulas.
Section 2
Increased Budget Neutrality Threshold for Physician Payments
This provision raises the threshold at which the Centers for Medicare & Medicaid Services (CMS) must apply budget neutrality adjustments to physician payments. Currently $20 million, it would increase to $54.3 million in 2027 and then be indexed annually to the previous year's amount, with a further adjustment every five years based on the Medicare Economic Index (MEI) starting in 2032. This means smaller changes in estimated expenditures will no longer trigger automatic cuts or increases to the conversion factor.
Supporters argue
Supporters argue that the current $20 million threshold is outdated and too low, leading to frequent and disruptive payment adjustments for minor changes in estimated expenditures. Raising it provides greater stability and predictability for providers, allowing them to better plan and invest in their practices.
Critics contend
Critics might contend that increasing the threshold could reduce the fiscal discipline intended by budget neutrality rules, potentially allowing for greater expenditure growth without corresponding adjustments, which could strain the Medicare trust fund in the long run.
Tradeoffs
Balances the need for provider payment stability against the imperative to control Medicare spending and ensure fiscal responsibility.
Section 3
Reconciliation of Estimated vs. Actual Service Utilization
This provision requires CMS to compare estimated utilization of certain "specified services" (newly unbundled or add-on services with significant expenditures) against actual utilization. If the difference exceeds 0.1% of total estimated expenditures, CMS must adjust the conversion factor in a future year (the "assumption correction period," which is two years later) to reconcile this difference. These reconciliation adjustments are explicitly excluded from other budget neutrality calculations.
Section 4
Regular Updates for Practice Expense Cost Inputs
This provision mandates that CMS update the prices and rates for direct cost inputs (like clinical staff wages, medical supplies, and equipment) used to calculate practice expense relative value units (RVUs) at least once every five years. Crucially, all categories of direct costs must be updated simultaneously. CMS is also required to consult with stakeholders, including physician specialty societies, during this process.
Section 5
Cap on Annual Medicare Conversion Factor Changes
Starting in 2027, this provision limits how much the Medicare conversion factor (a key multiplier in physician payments) can change year-over-year due to budget neutrality adjustments. The factor cannot vary by more than 2.5% compared to the previous year's factor. This cap applies specifically to the budget neutrality adjustment, and the overall budget neutrality requirement remains in effect, meaning any adjustments exceeding the cap would need to be carried forward or addressed through other mechanisms.
A "specified service" is defined as a service with expected expenditures exceeding 0.1% of total estimated expenditures AND for which payment was previously bundled into another service but is now separately paid or has an add-on payment.
Section 3(a), new clause (vii)(II)(cc)
Why it matters:This is standard legislative practice for defining terms within a complex regulatory framework.
Case for: Supporters would argue that this precise definition targets the specific types of services where utilization estimates are most likely to be inaccurate due to changes in payment policy (i.e., unbundling), ensuring that the reconciliation mechanism focuses on areas of genuine need for correction.
Case against: Critics might argue that the 0.1% threshold for total estimated expenditures, combined with the "unbundled" criteria, might be too narrow, potentially excluding other services where utilization estimates could also be significantly off and warrant correction.
Estimated impact: Directs the focus of utilization reconciliation efforts to a specific subset of services, potentially impacting their future payment rates more directly than other services.
For 2032 and every subsequent fifth year, the budget neutrality threshold amount is increased by the cumulative percentage increase in the Medicare Economic Index (MEI) applicable to physicians' services for each year occurring during the 5-year period ending on the last day of the preceding year.
Section 2(3), new item (cc)
Why it matters:This is standard legislative practice for detailing future-dated, technical adjustments.
Case for: Proponents would argue that indexing the threshold to the MEI ensures that it remains relevant over time, accounting for inflation and rising costs in healthcare, thereby maintaining the intended stability for providers in the long run.
Case against: Opponents might express concern that automatic indexing mechanisms, while seemingly benign, can contribute to long-term expenditure growth without explicit legislative review, potentially reducing future flexibility in budget management.
Estimated impact: Ensures the budget neutrality threshold continues to grow with healthcare inflation, preventing it from becoming irrelevant over decades.