When adjusted for inflation, Medicare reimbursement for physician services has declined 33 percent from 2001 to 2026.

Reform is needed to stabilize Medicare physician payment and is why ASNC supports the bipartisan introduction of legislation that modernizes key physician fee schedule budget neutrality rules.

Budget neutrality is a statutory mechanism created in 1989. Under current law, increases or decreases of $20 million or more to the Medicare Physician Fee Schedule (PFS) — created by payment adjustments or the addition of new procedures or services — results in adjustments to the PFS conversion factor. Budget neutrality has led to five consecutive years of cuts (2021-2025) to the conversion factor. At the same time, there is still no inflationary update to the PFS. 

The Provider Reimbursement Stability Act (H.R. 8163) does the following:

• Raises the existing $20 million budget neutrality trigger to $54.3 million  and indexes it every five years based on the cumulative percentage increase in the Medical Economic Index (MEI).
• Requires the Secretary of Health and Human Services (HHS) to prospectively revise spending estimates and budget neutrality adjustments based on actual after-the-fact utilization rates derived from claims data.

The legislation also:

• Requires CMS to update the direct cost inputs for practice expense RVUs, specifically clinical wage rates, prices of medical supplies, and prices of equipment, simultaneously and no less often than every five years. More frequent updates will mitigate misalignment between reimbursement rates and the actual cost of providing services.
• Requires the HHS Secretary, starting in 2027, to limit increases or decreases to the Medicare PFS conversion factor to no greater than 2.5 percent each year. This cap will help to stabilize PFS payments and create some level of payment predictability.

The legislation was introduced by the following lawmakers:

Reps. Greg Murphy, MD (R-NC), Tom Suozzi (D-NY), John Joyce, MD (R-PA), Bob Onder, MD (R-MO), Brad Schneider (D-IL), Jimmy Panetta (D-CA), Mariannette Miller-Meeks, MD (R-IA), Kim Schrier, MD (D-WA), and Robin Kelly (D-IL). 

The bill represents a major component of overhauling the Medicare physician payment system. 

Make a difference by asking your representative to cosponsor the bill.