Patients First Act of 2026
- Sponsor
- Sen. Marshall, Roger [R-KS]
- Committees
- Finance Committee (primary)
- Last action
- Sep 30, 2026
Bottom line
This bill overhauls Medicare physician payment structures to enhance financial stability for providers, especially independent primary care practices, and incentivizes value-based care through a new outcome-focused system.
What it actually does
The "Patients First Act of 2026" proposes significant reforms to Medicare physician payments, including modifying the annual conversion factor updates, establishing a new hybrid payment model for primary care services, and introducing a new performance-based payment system called the "Patient Outcome Improvement National Tabulation System" (POINTS) to replace MIPS. It also updates budget neutrality thresholds, refines direct cost calculations for practice expenses, and expands access to claims data for quality improvement. The bill aims to stabilize physician reimbursement, particularly for primary care, while shifting incentives towards value-based care and patient outcomes.
Proponents argue
Proponents argue that the bill is crucial for ensuring the financial viability of physician practices, particularly independent ones and those in primary care, by providing more stable and predictable payment updates. They emphasize that linking payments to patient outcomes and care efficiency, alongside reducing administrative burdens, will improve the quality of care for Medicare beneficiaries and potentially slow healthcare cost growth in the long run. The hybrid payment model for primary care is seen as a vital step to support comprehensive, longitudinal care.
Opponents contend
Critics might argue that while some reforms are needed, the proposed changes to conversion factors and budget neutrality thresholds could lead to unintended consequences, potentially shifting costs or creating new winners and losers among specialties. Concerns could also be raised about the complexity of implementing a new POINTS system and the potential for new administrative burdens, despite stated intentions to reduce them. Some might question the effectiveness of the hybrid payment model in achieving its goals or the criteria for "excluded practices."
The bill is moderately complex, requiring careful reading to understand the intricate changes to Medicare payment formulas and new program structures. It would take a dedicated informed reader a reasonable amount of time to fully grasp its implications.
Section 101, amending 1848(d) of the Social Security Act
Revised Medicare Conversion Factor Updates
For 2027 and subsequent years, this provision modifies how Medicare physician payments are updated. The non-qualifying APM conversion factor will be updated by the Secretary's estimate of the Medicare Economic Index (MEI) minus 1 percentage point, with a floor of 25% and a ceiling of 75% of the MEI increase. The qualifying APM conversion factor will be 0.5 percentage points higher than the non-qualifying one. This aims to provide more stable and predictable updates to physician reimbursement.
Supporters argue
Supporters argue this provision provides much-needed stability and predictability to physician payments, addressing long-standing concerns about inadequate updates that have led to financial strain on practices. The floor and ceiling aim to prevent extreme fluctuations in payment updates.
Critics contend
Critics might argue that while stability is beneficial, the specific formula, particularly the 'MEI less 1 percentage point' reduction, might not adequately keep pace with rising practice costs. The floor/ceiling could also be seen as arbitrary interventions.
Tradeoffs
This provision balances the need for physician payment stability and predictability against budget constraints and the desire to incentivize participation in Advanced Alternative Payment Models (APMs).
Section 102, inserting new Section 1866H into the Social Security Act
Primary Care Hybrid Payment Model
This section establishes a hybrid payment model for primary care services from 2027-2031. Under this model, qualifying primary care suppliers will receive a monthly payment for each attributed Medicare beneficiary, replacing traditional fee-for-service payments for designated primary care services. The monthly payment is risk-adjusted and geographically indexed, and importantly, no cost-sharing applies to it. The model specifically excludes practices that are majority-owned or controlled by non-physician/designated health care practitioner entities, with an exception for small practices (15 or fewer practitioners).
Section 103, amending 1848(e)(1)(E) of the Social Security Act
Geographic Practice Cost Index (GPCI) Adjustment for Inflation
For 2027-2032, this provision introduces an adjustment to the work geographic index (a component of the GPCI) during "high inflationary years" (defined as CPI-U increase >2% in the preceding 12 months). Localities with a work GPCI below 1.00 will have it increased to 1.025 (instead of 1.00), while other localities will receive a 0.02 point increase. This aims to provide additional payment adjustments in areas with higher costs during periods of significant inflation.
Section 202, amending 1848(q) of the Social Security Act
New Care Efficiency Performance Category and Measure Requirements for POINTS
For performance periods beginning January 1, 2032, this provision introduces a new "care efficiency" performance category into POINTS (formerly MIPS), which will account for 15% of the total score. This category includes measures related to reductions in avoidable hospitalizations, medication burden, and complications from chronic diseases. Concurrently, the weight of the Quality category decreases to 65%, and the Promoting Interoperability and Improvement Activities categories are eliminated (0% weight). New requirements for measure inclusion are also introduced, mandating that quality, resource use, and care efficiency measures receive recommendations from the newly established Quality Reform Task Force.
Section 203, adding new 1848(q)(2)(E) to the Social Security Act
Establishment of Quality Reform Task Force
This provision mandates the establishment of a Quality Reform Task Force within 6 months of enactment. This Task Force will be responsible for issuing recommendations on quality, resource use, and care efficiency measures for use under POINTS (beginning 2032). The Task Force must have appropriate representation from medical specialties, with a majority comprising designated health care practitioners or professional organization representatives. The Secretary is required to formally respond to the Task Force's recommendations and generally include recommended measures in the final list, with higher hurdles for excluding measures supported by 75% or more of the Task Force members.
Section 204, amending 1848(q)(6)(B) and 1848(q)(12) of the Social Security Act
Revised MIPS/POINTS Payment Adjustments and Feedback Requirements
This section modifies the maximum MIPS/POINTS payment adjustment percentage, reducing it from 9% (2022-2026) to 2% (2027-2031), then gradually increasing it to 5% by 2034. It also introduces a "no reduction" clause if the Secretary fails to provide timely feedback on administrative claims-based measures. Beginning in 2032, the Secretary must provide quarterly feedback on these measures. Additionally, for 2032 and subsequent years, professionals who are part of "excluded practices" (as defined in Sec. 102) will have their positive MIPS/POINTS adjustments reduced by 50%.
Section 207, amending 1834(q) of the Social Security Act
Revised Appropriate Use Criteria (AUC) for Imaging Services
Beginning January 1, 2027, this provision overhauls the Appropriate Use Criteria (AUC) program for applicable imaging services. Qualified Clinical Decision Support Mechanisms (CDSMs) will now be required to report AUC consultation information directly to the Secretary, rather than the furnishing professional including it on the claim. The Secretary will identify "low compliant ordering professionals" based on CDSM reporting. Exemptions from AUC requirements are expanded to include clinical trials, small/rural practices, and specific preventive/screening services (mammography, lung cancer screening CT, colonography CT, emergency services). The Secretary must study and report on compliance rates and utilization every 5 years, proposing mechanisms for improvement (e.g., prior authorization for low compliant professionals).
Section 301, amending 1833(z)(2) and 1848(q)(1)(C)(iii) of the Social Security Act
Freezing and Modifying Advanced APM Thresholds
This provision freezes the qualifying APM participant (QP) thresholds for payment year 2029 (based on performance year 2027) and payment year 2030 (based on performance year 2028) at their current levels. Additionally, it grants the Secretary authority to specify lower thresholds for future years (2029 and 2030) for both Medicare-only and all-payer QP determinations. This aims to make it easier for providers to qualify for the 5% APM incentive payment.
Section 401, amending 1848(c)(2)(B)(ii)(II) of the Social Security Act
Increased Budget Neutrality Threshold
This provision significantly increases the budget neutrality threshold for Medicare physician fee schedule adjustments. The current $20 million threshold will increase to $57.64 million for 2028, and then be indexed annually based on the previous year's amount. Every five years starting in 2033, this amount will be further increased by the cumulative MEI percentage increase over the preceding 5 years. This means that smaller changes to relative value units (RVUs) will no longer trigger across-the-board budget neutrality adjustments.
This definition specifies that a 'qualifying supplier' for the hybrid payment model cannot be part of an 'excluded practice.' An 'excluded practice' is generally one where a non-physician/designated health care practitioner entity has an ownership interest or exercises de facto control over employment, clinical decisions, billing, or assets. However, there's an exception: practices consisting of 15 or fewer designated health care practitioners are NOT considered excluded, regardless of ownership/control.
Section 102(f)(3) (Definition of 'Excluded Practice')
Why it matters:While definitions are typically found in such subsections, the specific criteria for 'excluded practice' and its exception are highly consequential for who can participate in the new payment model, making it a key detail that could be missed by a casual reader focusing on the main payment mechanics. The exception for small practices is particularly important.
Case for: Proponents would argue that this definition is essential to ensure the hybrid payment model truly supports independent, physician-led primary care practices, preventing larger corporate entities from dominating the model. The exception for small practices acknowledges their unique operational structures while still promoting physician control.
Case against: Critics might argue that the definition of 'excluded practice' is overly broad or restrictive, potentially preventing innovative practice models or those with necessary external investment from participating. The 15-practitioner threshold for the exception could be seen as arbitrary.
Estimated impact: Significantly impacts the eligibility of primary care practices for the new hybrid payment model, potentially directing substantial new funding towards independent or smaller practices and away from larger, corporately-owned groups.
Beginning in 2032, this provision mandates a 50% reduction in positive MIPS/POINTS adjustment factors for MIPS eligible professionals who are part of an 'excluded practice' (as defined in Section 1866H(f)). This reduction is to be applied in a budget-neutral manner.
Section 204(d) (Reduction in positive adjustments for certain professionals)
Why it matters:While placed logically within the payment adjustment section, its full implications depend on understanding the 'excluded practice' definition from Title I. The budget-neutral application also adds a layer of complexity to its ultimate effect.
Case for: Proponents would argue this provision reinforces the bill's intent to support independent physician practices by providing stronger financial incentives for them within the POINTS system, while reducing the benefits for practices that are not physician-controlled.
Case against: Critics might argue this is a punitive measure that could disadvantage practices that have adopted different organizational structures for efficiency or access to capital, potentially limiting innovation or access to care in certain areas. The budget-neutral application means the funds are redistributed, not saved.
Estimated impact: Reduces the financial upside for a segment of MIPS/POINTS participants, potentially shifting millions in positive adjustments to independent practices, depending on the number of 'excluded practices' and their performance.
Beginning with 2027, this provision limits the Secretary's ability to apply budget neutrality adjustments to the conversion factor such that the factor varies by more than 2.5 percent compared to the preceding year, not accounting for statutory updates. It also clarifies that this limitation does not alter the underlying budget neutrality requirement.
Section 404 (Limitation on year-to-year conversion factor variance)
Why it matters:This is a highly technical but impactful provision that aims to mitigate extreme year-to-year fluctuations in the conversion factor caused by budget neutrality adjustments. Its technical phrasing and placement at the end of the bill could lead to it being missed by a casual reader.
Case for: Proponents would argue that this limitation provides much-needed stability and predictability to physician payments, preventing drastic cuts or increases that can disrupt practice operations, even while maintaining overall budget neutrality.
Case against: Critics might argue that this limitation could make it harder for CMS to achieve budget neutrality in a timely manner, potentially leading to larger, deferred adjustments or requiring more complex accounting maneuvers. It could also be seen as an artificial constraint on necessary revaluations.
Estimated impact: Stabilizes the annual Medicare physician payment conversion factor, reducing volatility for providers. The exact financial impact depends on how CMS manages budget neutrality within this new constraint, potentially leading to more gradual adjustments over time.