Provider Reimbursement Stability Act of 2026

This bill would increase the annual expenditure threshold for Medicare physician fee schedule adjustments from $20 million to $57.64 million, with future updates tied to inflation. It would also require the Centers for Medicare & Medicaid Services to reconcile payment differences when actual service utilization deviates significantly from estimates and would mandate that direct cost categories be updated at least every five years. Additionally, the proposal would limit annual variations in certain payment adjustment factors to no more than 2.5%.

This bill primarily affects the Centers for Medicare & Medicaid Services (CMS), which would be required to implement new expenditure thresholds, reconciliation processes, and cost update schedules. Medical professionals and healthcare providers paid under the Medicare physician fee schedule are also affected by changes to annual payment adjustments and direct cost updates for equipment and services. Additionally, the bill impacts entities involved in providing services where payments are bundled or include add-on components.

• Increased threshold for Medicare physician fee schedule adjustments. The bill raises the expenditure difference threshold for annual fee schedule adjustments from $20 million to $57.64 million starting in 2028. This threshold will be adjusted for inflation every five years beginning in 2033.
• Reconciliation of estimated versus actual service utilization. The Centers for Medicare & Medicaid Services (CMS) must calculate the difference between estimated and actual expenditures for certain services, such as bundled or add-on payments. If the difference exceeds a specific percentage of total expenditures, CMS must reconcile the gap by adjusting payments in the following year.
• Mandatory updates to direct cost categories. The bill requires CMS to update the prices and rates for all direct cost categories, including equipment, at least every five years. These updates must be applied to every category within the same year.
• Limits on adjustment factor variance. The legislation prohibits CMS from varying specific adjustment factors by more than 2.5% in any given year.

The bill increases the expenditure threshold for physician fee schedule adjustments beginning in 2028, with inflation adjustments occurring every five years starting in 2033. Additionally, the Centers for Medicare & Medicaid Services must update direct cost categories at least every five years.

The bill modifies current law regarding the Medicare physician fee schedule by increasing the expenditure threshold for annual adjustments from $20 million to $57.64 million. It also updates administrative requirements for the Centers for Medicare & Medicaid Services (CMS) regarding how the agency calculates expenditure differences, updates direct cost categories, and limits annual variations in specific adjustment factors.

The bill aims to stabilize Medicare physician payments by allowing for larger annual fee schedule adjustments, requiring the reconciliation of expenditure discrepancies based on actual service utilization, and mandating regular updates to direct cost categories. It also seeks to limit annual volatility in payment adjustment factors and increase the threshold for expenditure differences that trigger budget neutrality requirements.